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

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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

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PRIOR PRINTER'S NO. 349 PRINTER'S NO. 755
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 351 Session of2009
INTRODUCED BY GREENLEAF, ALLOWAY, O'PAKE AND BROWNE, FEBRUARY 20, 2009
SENATOR GREENLEAF, JUDICIARY, AS AMENDED, MARCH 24, 2009
AN ACT
Amending Titles 15 (Corporations and Unincorporated
Associations) and 54 (Names) of the Pennsylvania Consolidated
Statutes, 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.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. This act shall be known and may be cited as the
GAA Amendments Act of 2009.
Section 2. The definitions of "banking institution," "limited
liability company," "representative" and "savings association"
in section 102 of Title 15 of the Pennsylvania Consolidated
Statutes are amended and the section is amended by adding
definitions to read:
§ 102. Definitions.
Subject to additional or inconsistent definitions contained
in subsequent provisions of this title that are applicable to
specific provisions of this title, the following words and
phrases when used in this title shall have, unless the context
clearly indicates otherwise, the meanings given to them in this
section:
* * *
"Banking institution." A [banking institution as defined in
section 1103 (relating to definitions).] domestic corporation
for profit which is an institution as defined in the act of
November 30, 1965 (P.L.847, No.356), known as the Banking Code
of 1965.
"Bankrupt." A person who is the subject of any of the
following:
(1) An order for relief or a voluntary case under 11
U.S.C. (relating to bankruptcy).
(2) A comparable order or case under a State insolvency
statute.
* * *
"Debtor in bankruptcy." A bankrupt.
"Domestic banking institution." A domestic corporation for
profit which is an institution as defined in the act of November
30, 1965 (P.L.847, No.356), known as the Banking Code of 1965.
* * *
"Domestic insurance corporation." An insurance corporation as
defined in section 3102 (relating to definitions).
"Domestic savings association." A domestic corporation for
profit which is an association as defined in the act of December
20090SB0351PN0755 - 2 -
14, 1967 (P.L.746, No.345), known as the Savings Association
Code of 1967.
* * *
"Execute." When used with respect to authenticating or
adopting a filing, document or other record, means "sign."
* * *
"Limited liability company." A domestic or foreign limited
liability company as defined in section 8903 (relating to
definitions [and index of definitions)].
"Obligation." Includes a note or other form of indebtedness,
whether secured or unsecured.
"Officially publish." Publish in two newspapers of general
circulation in the English language in the county in which the
registered office of the association is located or, in the case
of a proposed association, will be located, one of which must be
the legal newspaper, if any, designated by the rules of court
for the publication of legal notices. If there is only one
newspaper of general circulation in the county, advertisement in
that newspaper is sufficient. If no other frequency is
specified, the notice must be published one time. See section
109(a)(2) (relating to name of commercial registered office
provider in lieu of registered address).
* * *
"Record form." Inscribed on a tangible medium or stored in an
electronic or other medium and retrievable in perceivable form.
"Representative." [A representative as defined in section
1103 (relating to definitions).] When used with respect to an
association, joint venture, trust or other enterprise, a person
occupying the position or discharging the functions of a
director, officer, partner, manager, trustee, fiduciary,
20090SB0351PN0755 - 3 -
employee or agent, regardless of the name or title by which the
person may be designated. The term does not imply that a
director, as such, is an agent of a corporation.
"Savings association." A [savings association as defined in
section 1103.] domestic corporation for profit which is an
association as defined in the act of December 14, 1967 (P.L.746,
No.345), known as the Savings Association Code of 1967.
"Sign." With present intent to authenticate or adopt
information in record form:
(1) to sign manually or adopt a tangible symbol; or
(2) to attach to, or logically associate with,
information in record form, an electronic sound, symbol or
process.
* * *
Section 3. Section 107 of Title 15 is amended to read:
§ 107. Form of records.
(a) General rule.--Any records maintained by a corporation
or other association in the regular course of its business,
including shareholder or membership records, books of account
and minute books, may be kept [on, or be in the form of, punch
cards, magnetic storage media, photographs, microphotographs or
any other information storage device if the records so kept can
be converted into reasonably legible written form within a
reasonable time] in record form. Any corporation or other
association shall [so] convert any of its records [so kept] into
a tangible and reasonably legible form to the extent they are
not kept in that form upon the request of any person entitled to
inspect the records. [Where] If records are kept in [this
manner, a] record form, a tangible and reasonably legible
[written] form [produced from the information storage device]
20090SB0351PN0755 - 4 -
that accurately portrays the record shall be admissible in
evidence, and shall be accepted for all other purposes, to the
same extent as an original written record of the same
information would have been accepted.
(b) Meaning of "written."--References in this title to a
document in writing or to a written provision of an agreement or
other document shall be deemed to include and be satisfied by a
document or provision of an agreement or document in record
form.
Section 3.1. Title 15 is amended by adding a section to
read:
§ 111. Relation of title to Electronic Signatures in Global and
National Commerce Act.
(a) General rule.--Except as set forth in subsection (b),
this title modifies, limits and supersedes the Electronic
Signatures in Global and National Commerce Act (Public Law
106-229, 15 U.S.C. § 7001, et seq.).
(b) Exception.--This title does not do any of the following:
(1) Modify, limit or supersede section 101(c) of the
Electronic Signatures in Global and National Commerce Act (15
U.S.C. § 7001(c)).
(2) Authorize electronic delivery of a notice described
in section 103(b) of the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. § 7003(b)).
Section 3.2. Sections 131, 133(a) and (d), 135(a)(7), 136(b)
(2) and (3), 152, 153(a) and 155(a) of Title 15 are amended to
read:
§ 131. Application of subchapter.
As used in this subchapter, the term "this title" includes
Titles 17 (relating to credit unions) and 54 (relating to names)
20090SB0351PN0755 - 5 -
and any other provision of law that makes reference to the
powers and procedures of this subchapter or, to the extent not
inconsistent with this subchapter, requires a filing in the
Corporation Bureau of the department and does not specify some
or all of the necessary procedures therefor provided in this
subchapter.
§ 133. Powers of Department of State.
(a) General rule.--The [Department of State shall have]
department has the power and authority reasonably necessary to
enable it to administer this subchapter efficiently and to
perform the functions specified in section 132 (relating to
functions of Department of State), in 13 Pa.C.S. (relating to
commercial code) and in 17 Pa.C.S. (relating to credit unions).
The following shall not be agency regulations for the purposes
of section 612 of the act of April 9, 1929 (P.L.177, No.175),
known as The Administrative Code of 1929, the act of October 15,
1980 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
the act of June 25, 1982 (P.L.633, No.181), known as the
Regulatory Review Act, or any similar provision of law, but
shall be subject to the opportunity of public comment
requirement under section 201 of the act of July 31, 1968 (P.L.
769, No.240), referred to as the Commonwealth Documents Law:
(1) Sample filing forms promulgated by the department
under subsection (d).
(2) Instructions accompanying sample filing forms and
other explanatory material published in the Pennsylvania Code
that is intended to substantially track applicable statutory
provisions relating to the particular filing or to any of the
functions of the department covered by this subsection, if a
regulation of the department expressly states that [such]
20090SB0351PN0755 - 6 -
those instructions or explanatory materials shall not have
the force of law.
(3) Regulations, which the department is hereby
authorized to promulgate, that:
(i) Authorize payment of fees and other remittances
through or by a credit or debit card issuer or other
financial intermediary.
(ii) Authorize contracts with credit or debit card
issuers and other financial intermediaries relating to
the collection, transmission and payment of fees and
other remittances.
[(iii) Adjust the level of fees and other
remittances as otherwise fixed by law so as to facilitate
their transmission through or by a credit card issuer or
other financial intermediary pursuant to such regulations
without net cost to the department.]
(iv) Adjust, not more than once per year, the fees
set forth in section 153(a) (relating to fee schedule)
and 13 Pa.C.S. § 9525 (relating to fees) for filings
transmitted to the department electronically.
* * *
(d) [Physical characteristics and copies of documents]
Format of filings.--All articles and other documents authorized
or required to be filed in the department under this title shall
be in such format as [to size, shape and other physical
characteristics as shall be] prescribed by regulations
promulgated by the department. [The regulations may require the
submission of not to exceed three conformed copies of any
document in addition to the original and any copies thereof
otherwise required by law.] All formats promulgated by the
20090SB0351PN0755 - 7 -
department for use under this title shall [include a statement
of the number of copies required to be filed and shall] be
published in the Pennsylvania Code.
* * *
§ 135. Requirements to be met by filed documents.
(a) General rule.--A document shall be accepted for filing
by the Department of State if it satisfies the following
requirements:
* * *
(7) It is in record form and executed. The department
shall not examine a document to determine whether the
document has been executed by an authorized person or by
sufficient authorized persons or otherwise is duly executed.
[A document shall be deemed executed if it contains a
facsimile signature, so long as the operative portions of the
document meet any applicable requirements prescribed under
section 133(d) (relating to physical characteristics and
copies of documents).]
* * *
§ 136. Processing of documents by Department of State.
* * *
(b) Immediate certified copy.--
* * *
[(2) If the duplicate copy is delivered by hand to the
office of the department at the seat of government at least
four hours before the close of business on any day not a
holiday and relates to a matter other than a label or other
mark requiring examination under Title 54 (relating to names)
or the reservation or registration of a name under this title
and, in the case of a document that creates a new
20090SB0351PN0755 - 8 -
association, effects or reflects a change in name or
qualifies a foreign association to do business in this
Commonwealth, if the duplicate copy is accompanied by
evidence that the proposed name has been reserved or
registered by or on behalf of the applicant, the department
before the close of business on that day shall either:
(i) Certify the duplicate copy as required by this
subsection and make such certified copy available at the
office of the department to or upon the order of the
person who delivered it to the department.
(ii) Make available at the office of the department
to or upon the order of the person who delivered it to
the department a brief statement in writing of the
reasons of the department for refusing to certify such
duplicate copy.
See section 153(a)(10) (relating to certification fees).]
(3) In lieu of comparing the duplicate copy with the
original signed document as provided in [paragraphs (1) and
(2)] paragraph (1), the department may make a copy of the
original signed document at the cost of the person who
delivered it to the department.
* * *
§ 152. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Ancillary transaction." Includes:
(1) preclearance of document[,];
(2) amendment of articles, charter, certificate or other
organic document, restatement of articles, charter,
20090SB0351PN0755 - 9 -
certificate or other organic document[, change in registered
or principal office, change in share structure,];
(3) dissolution, cancellation or termination[,
reorganization,] of an association;
(4) withdrawal by foreign association[,];
(5) withdrawal by a partner[, or];
(6) any [similar transaction,] transaction similar to
any item listed in paragraphs (1) through (5); or
(7) the deposit in the Department of State for filing
in, by or with the Department of State or the Secretary of
the Commonwealth of any articles, statements, proceedings,
agreements or any [like] similar papers affecting
associations under the statutes of this Commonwealth[.] for
which a specific fee is not set forth in section 153
(relating to fee schedule) or other applicable statute.
"Bureau." The Corporation Bureau of the Department of State
or any successor agency within the department.
§ 153. Fee schedule.
(a) General rule.--The fees of the bureau, including fees
for the public acts and transactions of the Secretary of the
Commonwealth administered through the bureau, shall be as
follows:
(1) Domestic corporations:
(i) Articles of incorporation, letters patent or similar instruments incorporating a corporation or association....................... $125
(ii) Articles or agreement or similar instrument of merger, consolidation or division.. 70
(iii) Additional fee for each association which is a party to a merger or consolidation.... 40
20090SB0351PN0755 - 10 -
(iv) Additional fee for each new association resulting from a division........................ 125
(v) Articles of conversion or a similar instrument....................................... 70
(vi) Each ancillary transaction............ 70
(2) Foreign corporations:
(i) Certificates of authority or similar qualifications to do business.................... 250
(ii) Amended certificate of authority or similar change in qualification to do business... 250
(iii) Domestication......................... 125
(iv) Statement of merger or consolidation or similar instrument reporting occurrence of merger or consolidation not effected by a filing in the department....................................... 70
(v) Additional fee for each qualified foreign corporation which is named in a statement of merger or consolidation or similar instrument. 40
(vi) Each ancillary transaction............. 70
(3) Partnerships and limited liability companies:
(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
(ii) Certificate of merger, consolidation or division......................................... 70
(iii) Additional fee for each association which is a party to a merger or consolidation.... 40
(iv) Additional fee for each new association
20090SB0351PN0755 - 11 -
resulting from a division.................. 125
(v) Application for registration of foreign limited partnership or limited liability company.......................................... 250
(vi) Certificate of amendment of registration of foreign limited partnership or limited liability company........................ 250
(vii) Statement of registration of registered limited liability partnership or statement of election as an electing partnership...................................... 125
(viii) Domestication of foreign limited liability company................................ 125
(ix) Each ancillary transaction............. 70
(4) Business trusts:
(i) Deed of trust or other initial instrument for a business trust.................. 125
(ii) Each ancillary transaction.............. 70
(5) Fictitious names:
(i) Registration............................ 70
(ii) Each ancillary transaction............. 70
(6) Service of process:
(i) Each defendant named or served.......... 70
(ii) (Reserved)..............................
(7) Trademarks, emblems, union labels, description of bottles and similar matters:
(i) Trademark registration.................. 50
(ii) Each ancillary trademark transaction... 50
(iii) Any other registration under this paragraph........................................ 70
20090SB0351PN0755 - 12 -
(iv) Any other ancillary transaction under this paragraph................................... 70
(8) Uniform Commercial Code: As provided in 13 Pa.C.S. § 9525 (relating to fees).
(9) Copy fees, including copies furnished under the Uniform Commercial Code:
(i) Each page of photocopy furnished........ 3
(ii) (Reserved).............................
(10) Certification fees:
(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
(ii) (Reserved).............................
(iii) For issuing any other certificate of the Secretary of the Commonwealth or the department (other than an engrossed certificate)..................................... 40
(11) Report of record search other than a search under paragraph (8):
(i) For preparing and providing a report of a record search, the fee specified in paragraph (9), if any, plus................................ 15
(ii) (Reserved).............................
(12) Reservation and registration of names:
(i) Reservation of association name......... 70
(ii) Registration of foreign or other corporation name................................. 70
(13) Change of registered office or address:
(i) Each statement of change of registered office by agent.................................. 5
20090SB0351PN0755 - 13 -
(ii) Each statement or certificate of change of registered office............................. 5
(iii) Each statement of change of address... 5
(14) Contingent domestication:
(i) Statement of contingent domestication... 125
(ii) Each year, or portion of a year, during which a contingent domestication or temporary domiciliary status is in effect.................. 1,500
(15) Expedited service:
(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
(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
(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
(16) Unincorporated nonprofit associations: <--
(i) Statement appointing an agent to receive service of process......................... 70
(ii) Resignation of appointed agent.......... 40
(iii) Amendment or cancellation of statement appointing an agent............................... 70
* * *
20090SB0351PN0755 - 14 -
§ 155. Disposition of funds.
(a) [Establishment of restricted account.--] Corporation
Bureau Restricted Account.--The Corporation Bureau Restricted
Account, established under section 814 of the act of April 9,
1929 (P.L.177, No.175), known as The Administrative Code of
1929, is continued. This account shall receive 30% of the amount
received by the department under this subchapter except for the
fees collected under 13 Pa.C.S. § 9525(a)(1)(ii) (relating to
fees). This account shall receive 5% of the amount received by
the department under 13 Pa.C.S. § 9525(a)(1)(ii). The balance of
the amount received by the department under this subchapter
shall be deposited in the General Fund. Money in the account
shall be used solely for the operation of the bureau and for its
modernization as may be required for improved operations of the
bureau unless a surplus arises after two consecutive years, at
which time the Secretary of the Commonwealth shall transfer any
amount in excess of the bureau's budget into the General Fund.
* * *
Section 4. The introductory paragraph and the definitions of
"act," "banking institution," "corporation for profit,"
"corporation not-for-profit," "court," "credit union,"
"department," "distribution," "domestic corporation for profit,"
"domestic corporation not-for-profit," "foreign corporation for
profit," "foreign corporation not-for-profit," "insurance
corporation," "Internal Revenue Code of 1986," "obligation,"
"officially publish," "representative," "savings association"
and "voting" in section 1103 of Title 15 are amended and the
section is amended by adding a subsection to read:
§ 1103. Definitions.
(a) General definitions.--Subject to additional definitions
20090SB0351PN0755 - 15 -
contained in subsequent provisions of this subpart that are
applicable to specific provisions of this subpart, the following
words and phrases when used in this subpart shall have the
meanings given to them in this section unless the context
clearly indicates otherwise:
["Act" or "action." Includes failure to act.]
* * *
["Banking institution" or "domestic banking institution." A
domestic corporation for profit that is an institution as
defined in the act of November 30, 1965 (P.L.847, No.356), known
as the Banking Code of 1965.]
* * *
["Corporation for profit." A corporation incorporated for a
purpose or purposes involving pecuniary profit, incidental or
otherwise, to its shareholders or members.
"Corporation not-for-profit." A corporation not incorporated
for a purpose or purposes involving pecuniary profit, incidental
or otherwise.
"Court." Subject to any inconsistent general rule prescribed
by the Supreme Court of Pennsylvania:
(1) the court of common pleas of the judicial district
embracing the county where the registered office of the
corporation is or is to be located; or
(2) where a corporation results from a merger,
consolidation, division or other transaction without
establishing a registered office in this Commonwealth or
withdraws as a foreign corporation, the court of common pleas
in which venue would have been laid immediately prior to the
transaction or withdrawal.
"Credit union." A credit union as defined in 17 Pa.C.S. §
20090SB0351PN0755 - 16 -
102 (relating to application of title).
"Department." The Department of State of the Commonwealth.]
* * *
"Distribution." A direct or indirect transfer of money or
other property (except its own shares or options, rights or
warrants to acquire its own shares) or incurrence of
indebtedness by a corporation to or for the benefit of any or
all of its shareholders in respect of any of its shares whether
by dividend or by purchase, redemption or other acquisition of
its shares or otherwise. Neither the making of, nor payment or
performance upon, a guaranty or similar arrangement by a
corporation for the benefit of any or all of its shareholders
nor a direct or indirect transfer or allocation of assets or
liabilities effected under Chapter 19 (relating to fundamental
changes) with the approval of the shareholders shall constitute
a distribution for the purposes of this subpart.
["Domestic corporation for profit." A corporation for profit
incorporated under the laws of this Commonwealth.
"Domestic corporation not-for-profit." A corporation not-
for-profit incorporated under the laws of this Commonwealth.]
* * *
["Foreign corporation for profit." A corporation for profit
incorporated under any laws other than those of this
Commonwealth.
"Foreign corporation not-for-profit." A corporation not-for-
profit incorporated under any laws other than those of this
Commonwealth.]
* * *
["Insurance corporation" or "domestic insurance corporation."
An insurance corporation as defined in section 3102 (relating to
20090SB0351PN0755 - 17 -
definitions).
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).]
* * *
["Obligation." Includes a note or other form of
indebtedness, whether secured or unsecured.]
* * *
["Officially publish." Publish in two newspapers of general
circulation in the English language in the county in which the
registered office of the corporation is located, or in the case
of a proposed corporation is to be located, one of which shall
be the legal newspaper, if any, designated by the rules of court
for the publication of legal notices or, if there is no legal
newspaper, in two newspapers of general circulation in the
county. When there is but one newspaper of general circulation
in any county, advertisement in that newspaper shall be
sufficient. Where no other frequency is specified, the notice
shall be published one time in the appropriate newspaper or
newspapers. See section 109(a)(2) (relating to name of
commercial registered office provider in lieu of registered
address).]
* * *
["Representative." When used with respect to an association,
joint venture, trust or other enterprise, means a person
occupying the position or discharging the functions of a
director, officer, employee or agent thereof, regardless of the
name or title by which the person may be designated. The term
does not imply that a director, as such, is an agent of a
corporation.
"Savings association" or "domestic savings association." A
20090SB0351PN0755 - 18 -
domestic corporation for profit that is an association as
defined in the act of December 14, 1967 (P.L.746, No.345), known
as the Savings Association Code of 1967.]
* * *
"Voting" or "casting a vote." Includes the giving of
[written] consent in lieu of voting. The term does not include
either recording the fact of abstention or failing to vote for a
candidate or for approval or disapproval of a matter, whether or
not the person entitled to vote characterizes the conduct as
voting or casting a vote.
(b) Index of other definitions.--The following is a
nonexclusive list of words and phrases which when used in this
subpart shall have the meanings given to them in section 102
(relating to definitions):
"Act" or "action."
"Banking institution" or "domestic banking institution."
"Corporation for profit."
"Corporation not-for-profit."
"Court."
"Credit union."
"Department."
"Domestic corporation for profit."
"Domestic corporation not-for-profit."
"Execute."
"Foreign corporation for profit."
"Foreign corporation not-for-profit."
"Insurance corporation" or "domestic insurance corporation."
"Internal Revenue Code of 1986."
"Obligation."
"Officially publish."
20090SB0351PN0755 - 19 -
"Record form."
"Representative."
"Savings association" or "domestic savings association."
"Sign."
Section 5. Section 1104 of Title 15 is repealed:
[§ 1104. Other general provisions.
The following provisions of this title are applicable to
corporations subject to this subpart:
Section 101 (relating to short title and application of
title).
Section 102 (relating to definitions).
Section 103 (relating to subordination of title to regulatory
laws).
Section 104 (relating to equitable remedies).
Section 105 (relating to fees).
Section 106 (relating to effect of filing papers required to
be filed).
Section 107 (relating to form of records).
Section 108 (relating to change in location or status of
registered office provided by agent).
Section 109 (relating to name of commercial registered office
provider in lieu of registered address).
Section 110 (relating to supplementary general principles of
law applicable).
Section 132 (relating to functions of Department of State).
Section 133 (relating to powers of Department of State).
Section 134 (relating to docketing statement).
Section 135 (relating to requirements to be met by filed
documents).
Section 136 (relating to processing of documents by
20090SB0351PN0755 - 20 -
Department of State).
Section 137 (relating to court to pass upon rejection of
documents by Department of State).
Section 138 (relating to statement of correction).
Section 139 (relating to tax clearance of certain fundamental
transactions).
Section 140 (relating to custody and management of orphan
corporate and business records).
Section 152 (relating to definitions).
Section 153 (relating to fee schedule).
Section 154 (relating to enforcement and collection).
Section 155 (relating to disposition of funds).
Section 162 (relating to contingent domestication of certain
foreign associations).
Section 501 (relating to reserved power of General Assembly).
Section 503 (relating to actions to revoke corporate
franchises).
Section 504 (relating to validation of certain defective
corporations).
Section 505 (relating to validation of certain defective
corporate acts).
Section 506 (relating to scope and duration of certain
franchises).
Section 507 (relating to validation of certain share
authorizations).]
Section 6. Section 1306 of Title 15 is amended by adding a
subsection to read:
§ 1306. Articles of incorporation.
* * *
(e) Reference to external facts.--Except for the provisions
20090SB0351PN0755 - 21 -
required by subsection (a)(1), (2), (3), (4)(i), (5) and (7),
any provision of the articles of incorporation may be made
dependent upon facts ascertainable outside of the articles if
the manner in which the facts will operate upon the provision is
set forth in the articles. The facts may include actions or
events within the control of or determinations made by the
corporation or a representative of the corporation.
Section 7. Sections 1504(c), 1521(d) and 1523 of Title 15
are amended to read:
§ 1504. Adoption, amendment and contents of bylaws.
* * *
(c) Bylaw provisions in articles.--Where any provision of
this subpart or any other provision of law refers to a rule as
set forth in the bylaws of a corporation or in a bylaw adopted
by the shareholders, the reference shall be construed to include
and be satisfied by any rule on the same subject as set forth in
the articles of the corporation.
* * *
§ 1521. Authorized shares.
* * *
(d) Status and rights.--Shares of a business corporation
shall be deemed personal property. Except as otherwise provided
by the articles or, when so permitted by subsection (c), by one
or more bylaws adopted by the shareholders, the terms of each
share shall be in all respects equal to every other share. See
section 1906(d)(4) (relating to special treatment of holders of
shares of same class or series).
§ 1523. Pricing and issuance of shares.
Except as otherwise restricted in the bylaws, shares of a
business corporation may be issued at a price determined by the
20090SB0351PN0755 - 22 -
board of directors[,]; or the board may [set a minimum price or
establish a formula or method by which the price may be
determined] authorize one or more directors or one or more
officers, acting alone or with the participation of one or more
directors, to determine the purchasers, number of shares, price
or consideration and other terms on which shares will be issued,
within limits, pursuant to a formula or method or subject to
relevant criteria specifically prescribed by the board.
Section 7.1. Section 1527(a)(3) of Title 15 is amended and
the section is amended by adding a subsection to read:
§ 1527. Issuance of fractional shares or scrip.
(a) General rule.--A business corporation may but shall not
be required to create and issue fractions of a share, either
represented by a certificate or uncertificated, which, unless
otherwise provided in the articles, shall represent proportional
interests in all the voting rights, preferences, limitations and
special rights, if any, of full shares. If the corporation
creates but does not provide for the issuance of fractions of a
share, it shall:
* * *
(3) issue scrip or other evidence of ownership, in
registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a
certificate), entitling the holder to receive a full share
upon the surrender of the scrip or other evidence of
ownership aggregating a full share, or the transfer of
uncertificated scrip aggregating a full share, but which
shall not[, unless otherwise provided therein or with respect
thereto,] entitle the holder to exercise any voting right, to
receive dividends or to participate in any of the assets of
20090SB0351PN0755 - 23 -
the corporation in the event of liquidation.
* * *
(c) Limitation.--The articles may not provide that scrip or
other evidence of ownership entitles the holder to exercise any
voting right, to receive dividends or to participate in any of
the assets of the corporation in the event of liquidation.
Section 7.2. Section 1528 of Title 15 is amended by adding a
subsection to read:
§ 1528. Shares represented by certificates and uncertificated
shares.
* * *
(g) Bearer shares prohibited.--A business corporation may
not issue share certificates in bearer form. This subsection may
not be varied by the articles.
Section 7.3. Section 1529(b) of Title 15 is amended to read:
§ 1529. Transfer of securities; restrictions.
* * *
(b) Transfer restrictions generally.--A restriction on the
transfer or registration of transfer of securities of a business
corporation may be imposed by the bylaws or by an agreement
among any number of securityholders or among them and the
corporation. A restriction so imposed shall not be binding with
respect to securities issued prior to the adoption of the
restriction unless the holders of the securities are parties to
the agreement or voted in favor of the restriction. A
restriction may be amended by the vote or consent, and otherwise
in the manner, provided in the bylaws or agreement for amending
the restriction or, in the absence of such a provision, as
provided for amending the bylaws or agreement generally.
* * *
20090SB0351PN0755 - 24 -
Section 8. Section 1552(b) of Title 15 is amended and the
section is amended by adding subsections to read:
§ 1552. Power of corporation to acquire its own shares.
* * *
(b) Security for acquisition.--In connection with an
acquisition by a corporation of its shares, the corporation may
grant a security interest in the acquired shares to secure an
obligation to pay for the acquisition. The shares shall not be
canceled on the books of the corporation until the obligation of
the corporation is fully paid or discharged.
(c) Application of distribution tests.--A corporation may
acquire or agree to acquire its shares, even though the
acquisition would violate section 1551 (relating to
distributions to shareholders), if payment of all or part of the
purchase price is deferred until the payment would not violate
that section.
[(b)] (d) Cross reference.--See section 1914(c)(2) (relating
to adoption by board of directors).
Section 9. Section 1575(a) introductory paragraph of Title
15 is amended to read:
§ 1575. Notice to demand payment.
(a) General rule.--If the proposed corporate action is
approved by the required vote at a meeting of shareholders of a
business corporation, the corporation shall mail a further
notice to all dissenters who gave due notice of intention to
demand payment of the fair value of their shares and who
refrained from voting in favor of the proposed action. If the
proposed corporate action is [to be] approved by the
shareholders by less than unanimous consent without a meeting or
is taken without [a vote of] the need for approval by the
20090SB0351PN0755 - 25 -
shareholders, the corporation shall send to all shareholders who
are entitled to dissent and demand payment of the fair value of
their shares a notice of the adoption of the plan or other
corporate action. In either case, the notice shall:
* * *
Section 10. Section 1704(a) and (b) of Title 15 are amended
and the section is amended by adding subsections to read:
§ 1704. Place and notice of meetings of shareholders.
(a) Place.--Meetings of shareholders may be held at such
geographic location within or without this Commonwealth as may
be provided in or fixed pursuant to the bylaws. Unless otherwise
provided in or pursuant to the bylaws, all meetings of the
shareholders shall be held at the executive office of the
corporation wherever situated. If a meeting of the shareholders
is held by means of the Internet or other electronic
communications technology in a fashion pursuant to which the
shareholders have the opportunity to read or hear the
proceedings substantially concurrently with their occurrence,
vote on matters submitted to the shareholders [and], pose
questions to the directors, make appropriate motions and comment
on the business of the meeting, the meeting need not be held at
a particular geographic location.
(b) Notice.--[Written notice] Notice in record form of every
meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each
shareholder of record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting that
will consider a fundamental change under Chapter 19 (relating
to fundamental changes); or
(2) five days prior to the day named for the meeting in
20090SB0351PN0755 - 26 -
any other case.
[If the secretary or other authorized person neglects or refuses
to give notice of a meeting, the person or persons calling the
meeting may do so.]
* * *
(d) Alternative authority.--If the secretary or other
authorized person neglects or refuses to give notice of a
meeting, a person calling the meeting may do so.
(e) Cross reference.--See section 2528 (relating to notice
of shareholder meetings).
Section 11. Sections 1705(a), 1727(b), 1756(a)(4) and <--
1759(a), (c) and (e) of Title 15 are amended to read:
§ 1705. Waiver of notice.
(a) [Written waiver] General rule.--Whenever any [written]
notice is required to be given under the provisions of this
subpart or the articles or bylaws of any business corporation, a
waiver thereof [in writing, signed] which is filed with the
secretary of the corporation in record form signed by the person
or persons entitled to the notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of
the notice. Neither the business to be transacted at, nor the
purpose of, a meeting need be specified in the waiver of notice
of the meeting.
* * *
§ 1727. Quorum of and action by directors.
* * *
(b) Action by consent.--Unless otherwise restricted in the
bylaws, any action required or permitted to be [taken]approved <--
at a meeting of the directors may be taken without a meeting
if[, prior or subsequent to the action,] a consent or consents
20090SB0351PN0755 - 27 -
[thereto] to the action in record form are signed, before, on or
after the effective date of the action, by all of the directors
in office [is] on the date the last consent is signed. The
consent or consents must be filed with the secretary of the
corporation.
§ 1756. Quorum. <--
(a) General rule.--A meeting of shareholders of a business
corporation duly called shall not be organized for the
transaction of business unless a quorum is present. Unless
otherwise provided in a bylaw adopted by the shareholders:
* * *
(4) If a proxy casts a vote or takes other action on
behalf of a shareholder on any issue other than a procedural
motion considered at a meeting of shareholders, the
shareholder shall be deemed to be present during the entire
meeting for purposes of determining whether a quorum is
present for consideration of any other issue.
* * *
§ 1759. Voting and other action by proxy.
(a) General rule.--
(1) Every shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate
action [in writing] without a meeting may authorize another
person to act for him by proxy.
(2) The [presence of, or] vote or other action on behalf <--
of a shareholder at a meeting of shareholders, or the
expression of consent or dissent to corporate action [in
writing], by a proxy of a shareholder shall constitute the
presence of, or vote or action by, or [written] consent or
dissent of the shareholder for the purposes of this subpart.
20090SB0351PN0755 - 28 -
(3) Where two or more proxies of a shareholder are
present, the corporation shall, unless otherwise expressly
provided in the proxy, accept as the vote or other action of
all shares represented thereby the vote cast or other action
taken by a majority of them and, if a majority of the proxies
cannot agree whether the shares represented shall be voted or
upon the manner of voting the shares or taking the other
action, the voting of the shares or right to take other
action shall be divided equally among those persons.
* * *
(c) Revocation.--A proxy, unless coupled with an interest,
shall be revocable at will, notwithstanding any other agreement
or any provision in the proxy to the contrary, but the
revocation of a proxy shall not be effective until notice
thereof has been given to the secretary of the corporation or
its designated agent in writing or by electronic transmission.
An unrevoked proxy shall not be valid after three years from the
date of its execution, authentication or transmission unless a
longer time is expressly provided therein. A proxy shall not be
revoked by the death or incapacity of the maker unless, before
the vote is counted or the authority is exercised, [written]
notice in record form of the death or incapacity is given to the
secretary of the corporation or its designated agent.
* * *
(e) Cross [reference] references.--See [section] sections
1702 (relating to manner of giving notice) and 3135 (relating to
proxies of members of mutual insurance companies).
Section 12. Section 1764(a) of Title 15 is amended and the
section is amended by adding a subsection to read:
§ 1764. Voting lists.
20090SB0351PN0755 - 29 -
(a) General rule.--The officer or agent having charge of the
transfer books for shares of a business corporation shall make a
complete list of the shareholders entitled to vote at any
meeting of shareholders, arranged in alphabetical order, with
the address of and the number of shares held by each. This
section does not require the corporation to include electronic
mail addresses or other electronic contact information on the
list. The list shall be produced and kept open at the time and
place of [the] each meeting of shareholders of a nonregistered
corporation held at a geographic location and shall be subject
to the inspection of any shareholder during the whole time of
the meeting for the purposes thereof [except that, if a business
corporation has 5,000 or more shareholders, in lieu of the
making of the list the corporation may make the information
therein available at the meeting by any other means]. See
section 2529 (relating to voting lists).
* * *
(c) Electronic meetings.--If a meeting of shareholders of a
nonregistered corporation is not held at a geographic location,
the corporation shall make the list of shareholders required by
subsection (a) available on a reasonably accessible electronic
network during the whole time of the meeting and shall provide
the information required to gain access to the list with the
notice of the meeting.
Section 13. Section 1766(a), (b) and (d) of Title 15 are
amended to read:
§ 1766. Consent of shareholders in lieu of meeting.
(a) Unanimous consent.--Unless otherwise restricted in the
bylaws, any action required or permitted to be taken at a
meeting of the shareholders or of a class of shareholders of a
20090SB0351PN0755 - 30 -
business corporation may be taken without a meeting if[, prior
or subsequent to the action,] a consent or consents [thereto] to
the action in record form are signed, before, on or after the
effective date of the action, by all of the shareholders who
would be entitled to vote at a meeting for such purpose [shall
be filed], the. The consent or consents must be filed with the <--
secretary of the corporation.
(b) Partial consent.--If the bylaws so provide, any action
required or permitted to be taken at a meeting of the
shareholders or of a class of shareholders may be taken without
a meeting upon the signed consent of shareholders who would have
been entitled to cast the minimum number of votes that would be
necessary to authorize the action at a meeting at which all
shareholders entitled to vote thereon were present and voting.
The consents shall be filed in record form with the secretary of
the corporation.
* * *
(d) Cross [reference] references.--See [section] sections
1702 (relating to manner of giving notice) and 2524 (relating to
consent of shareholders in lieu of meeting).
Section 14. Section 1906(d)(3) of Title 15 is amended and
the section is amended by adding a subsection to read:
§ 1906. Special treatment of holders of shares of same class or
series.
* * *
(c.1) Determination of groups.--For purposes of applying
subsections (a)(1) and (b), the determination of which
shareholders are part of each group receiving special treatment
shall be made as of the record date for shareholder action on
the plan.
20090SB0351PN0755 - 31 -
(d) Exceptions.--This section shall not apply to:
* * *
(3) A plan that contains an express provision that this
section shall not apply or that fails to contain an express
provision that this section shall apply. [The shareholders of
a corporation that proposes a plan to which this section is
not applicable by reason of this paragraph shall have the
remedies contemplated by section 1105 (relating to
restriction on equitable relief).]
* * *
Section 15. Title 15 is amended by adding sections to read:
§ 1907. Purpose of fundamental transactions.
A transaction under this chapter does not require an
independent business purpose in order for the transaction to be
lawful.
§ 1908. Submission of matters to shareholders.
A business corporation may agree, in record form, to submit <--
an amendment, plan or other matter to its shareholders whether
or not the board of directors determines, at any time after <--
approving the matter, that the matter is no longer advisable and
recommends that the shareholders reject or vote against it, <--
regardless of whether the board of directors changes its
recommendation. If a corporation so agrees to submit a matter to
its shareholders, the matter is deemed to have been validly
adopted by the corporation when it has been approved by the
shareholders.
Section 16. Sections 1911(a)(4), 1913, 1922(a)(3), 1923,
1931(a), (b)(2), (d) and (g), 1957(b)(1)(iv), 1973 and, 1978(b) <--
and 2522 of Title 15 are amended to read: <--
§ 1911. Amendment of articles authorized.
20090SB0351PN0755 - 32 -
(a) General rule.--A business corporation, in the manner
provided in this subchapter, may from time to time amend its
articles for one or more of the following purposes:
* * *
(4) To cancel or otherwise affect the right of holders
of the shares of any class or series to receive dividends
that have accrued but have not been declared or to otherwise
effect a reclassification of or otherwise affect the
substantial rights of the holders of any shares, including,
without limitation, by providing special treatment of shares
held by any shareholder or group of shareholders [as
authorized by, and subject to the provisions of,] consistent
with section 1906 (relating to special treatment of holders
of shares of same class or series).
* * *
§ 1913. Notice of meeting of shareholders.
(a) General rule.--[Written notice] Notice in record form of
the meeting of shareholders of a business corporation that will
act on the proposed amendment [shall] must be given to each
shareholder entitled to vote thereon. [There shall be included
in, or enclosed with, the notice] The notice must include a copy
of the proposed amendment or a summary of the changes to be
effected thereby and, if Subchapter D of Chapter 15 (relating to
dissenters rights) is applicable, a copy of that subchapter.
(b) Cross [reference] references.--See Subchapter A of
Chapter 17 (relating to notice and meetings generally) and
section 2528 (relating to notice of shareholder meetings).
§ 1922. Plan of merger or consolidation.
(a) Preparation of plan.--A plan of merger or consolidation,
as the case may be, shall be prepared, setting forth:
20090SB0351PN0755 - 33 -
* * *
(3) The manner and basis of canceling or converting the <--
shares of each corporation into shares or other securities or
obligations of the surviving or new corporation, or of <--
canceling some or all of the shares of a corporation, as the
case may be, and, if any of the shares of any of the
corporations that are parties to the merger or consolidation
are not to be canceled or converted solely into shares or
other securities or obligations of the surviving or new
corporation, the shares or other securities or obligations of
any other person or cash, property or rights that the holders
of such shares are to receive in exchange for, or upon
conversion of, such shares, and the surrender of any
certificates evidencing them, which securities or
obligations, if any, of any other person or cash, property or
rights may be in addition to or in lieu of the shares or
other securities or obligations of the surviving or new
corporation.
* * *
§ 1923. Notice of meeting of shareholders.
(a) General rule.--[Written notice] Notice in record form of
the meeting of shareholders that will act on the proposed plan
[shall] must be given to each shareholder of record, whether or
not entitled to vote thereon, of each domestic business
corporation that is a party to the merger or consolidation.
[There shall be included in, or enclosed with, the notice] The
notice must include or be accompanied by a copy of the proposed
plan or a summary thereof [and, if]. If Subchapter D of Chapter
15 (relating to dissenters rights) is applicable to the holders
of shares of any class or series, a copy of that subchapter and
20090SB0351PN0755 - 34 -
of section 1930 (relating to dissenters rights) [shall] must be
furnished to the holders of shares of that class or series. If
the surviving or new corporation will be a nonregistered
corporation, the notice [shall] must state that a copy of its
bylaws as they will be in effect immediately following the
merger or consolidation will be furnished to any shareholder on
request and without cost.
(b) Cross references.--See Subchapter A of Chapter 17
(relating to notice and meetings generally) and [section]
sections 2512 (relating to dissenters rights procedure) and 2528
(relating to notice of shareholder meetings).
§ 1931. Share exchanges.
(a) General rule.--All the outstanding shares of one or more
classes or series of a domestic business corporation, designated
in this section as the exchanging corporation, may, in the
manner provided in this section, be acquired by any person,
designated in this section as the acquiring person, through an
exchange of all the shares pursuant to a plan of exchange. The
plan of exchange may also provide for the [conversion of any
other] shares of any other class or series of the exchanging
corporation to be canceled or converted into shares, other
securities or obligations of any person or cash, property or
rights. The procedure authorized by this section shall not be
deemed to limit the power of any person to acquire all or part
of the shares or other securities of any class or series of a
corporation through a voluntary exchange or otherwise by
agreement with the holders of the shares or other securities.
(b) Plan of exchange.--A plan of exchange shall be prepared,
setting forth:
* * *
20090SB0351PN0755 - 35 -
(2) The manner and basis of canceling the shares of the
exchanging corporation or exchanging or converting the shares
of the exchanging corporation into shares or other securities
or obligations of the acquiring person, and, if any of the
shares of the exchanging corporation are not to be exchanged
or converted solely into shares or other securities or
obligations of the acquiring person, the shares or other
securities or obligations of any other person or cash,
property or rights that the holders of the shares of the
exchanging corporation are to receive in exchange for, or
upon conversion of, the shares and the surrender of any
certificates evidencing them, which securities or
obligations, if any, of any other person or cash, property
and rights may be in addition to or in lieu of the shares or
other securities or obligations of the acquiring person.
* * *
(d) Dissenters rights in share exchanges.--Any holder of
shares that are to be canceled, exchanged or converted pursuant
to a plan of exchange who objects to the plan and complies with
the provisions of Subchapter D of Chapter 15 shall be entitled
to the rights and remedies of dissenting shareholders therein
provided, if any. See section 1906(c) (relating to dissenters
rights upon special treatment).
* * *
(g) Effect of plan.--Upon the plan of exchange becoming
effective, the shares of the exchanging corporation that are,
under the terms of the plan, to be canceled, converted or
exchanged shall cease to exist or shall be converted or
exchanged. The former holders of the shares shall thereafter be
entitled only to the shares, other securities or obligations or
20090SB0351PN0755 - 36 -
cash, property or rights into which they have been converted or
for which they have been exchanged in accordance with the plan,
and the acquiring person shall be the holder of the shares of
the exchanging corporation stated in the plan to be acquired by
such person. The articles of incorporation of the exchanging
corporation shall be deemed to be amended to the extent, if any,
that changes in its articles are stated in the plan of exchange.
* * *
§ 1957. Effect of division.
* * *
(b) Property rights; allocations of assets and
liabilities.--
(1) * * *
(iv) [To] Except as provided in section 1952(g)
(relating to proposal and adoption of plan of division),
to the extent allocations of liabilities are contemplated
by the plan of division, the liabilities of the dividing
corporation shall be deemed without further action to be
allocated to and become the liabilities of the resulting
corporations on such a manner and basis and with such
effect as is specified in the plan; and one or more, but
less than all, of the resulting corporations shall be
free of the liabilities of the dividing corporation to
the extent, if any, specified in the plan, if in either
case:
(A) no fraud on minority shareholders or
shareholders without voting rights or violation of
law shall be effected thereby; and
(B) the plan does not constitute a fraudulent
transfer under 12 Pa.C.S. Ch. 51 (relating to
20090SB0351PN0755 - 37 -
fraudulent transfers).
* * *
§ 1973. Notice of meeting of shareholders.
(a) General rule.--[Written notice] Notice in record form of
the meeting of shareholders that will consider the resolution
recommending dissolution of the business corporation [shall]
must be given to each shareholder of record entitled to vote
thereon [and the purpose shall be included]. The purpose of the
meeting must be stated in the notice [of the meeting].
(b) Cross [reference] references.--See Subchapter A of
Chapter 17 (relating to notice and meetings generally) and
section 2528 (relating to notice of shareholder meetings).
§ 1978. Winding up of corporation after dissolution.
* * *
(b) Standard of care of directors and officers.--The
dissolution of the corporation shall not subject its directors
or officers to standards of conduct different from those
prescribed by or pursuant to Chapter 17 (relating to officers,
directors and shareholders). Directors of a dissolved
corporation who have complied with section 1975 (relating to
predissolution provision for liabilities) or Subchapter H
(relating to postdissolution provision for liabilities) and
governing persons of a successor entity who have complied with
Subchapter H shall not be personally liable to the creditors or
claimants of the dissolved corporation.
§ 2522. Adjournment of meetings of shareholders. <--
[Any] Except as otherwise provided in the bylaws, any regular
or special meeting of the shareholders of a registered
corporation, including one at which directors are to be elected,
may be adjourned for such period as the shareholders present and
20090SB0351PN0755 - 38 -
entitled to vote shall direct.
Section 17. Title 15 is amended by adding sections to read:
§ 2528. Notice of shareholder meetings.
If a registered corporation solicits proxies generally with
respect to a meeting of its shareholders, the corporation need <--
notis not required to give notice of the meeting to any <--
shareholder to whom the corporation is not required to send a
proxy statement pursuant to the rules of the Securities and
Exchange Commission.
§ 2529. Voting lists.
A registered corporation is not required to produce or make
available to its shareholders a list of shareholders in
connection with any meeting of its shareholders for which a
judge or judges of election are appointed, but such a list must
be furnished to the judge or judges of election.
Section 18. Section 2545(b) of Title 15 is amended and the
section is amended by adding a subsection to read:
§ 2545. Notice to shareholders.
* * *
(b) Obligations of the corporation.--If the controlling
person or group so requests, the corporation shall, at the
option of the corporation and at the expense of the person or
group, either furnish a list of all such shareholders and their
postal addresses to the person or group or [mail] provide the
notice to all such shareholders.
* * *
(e) Cross reference.--See section 1702 (relating to manner
of giving notice).
Section 19. Sections 3133(a) introductory paragraph, 3135
and 4127(a) introductory paragraph and (5), (b) and (d) are
20090SB0351PN0755 - 39 -
amended to read:
§ 3133. Notice of meetings of members of mutual insurance
companies.
(a) General rule.--Unless otherwise restricted in the
bylaws, persons authorized or required to give notice of an
annual meeting of members of a mutual insurance company for the
election of directors or of a meeting of members of a mutual
insurance company called for the purpose of considering
amendment of the articles or bylaws, or both, of the corporation
may, in lieu of any [written] notice of meeting of members
required to be given by this subpart, give notice of such
meeting by causing notice of such meeting to be officially
published. Such notice shall be published each week for at
least:
* * *
§ 3135. Proxies of members of mutual insurance companies.
In no event shall a proxy given by a member of a mutual
insurance company, unless coupled with an interest, be voted on
or utilized to express consent or dissent to corporate action
[in writing] after 11 months from the date of execution of the
proxy.
§ 4127. Merger, consolidation or division of qualified foreign
corporations.
(a) General rule.--Whenever a qualified foreign business
corporation is a nonsurviving party to a statutory merger,
consolidation or division permitted by the laws of the
jurisdiction under which it is incorporated, the corporation or
other association surviving the merger, or the new corporation
or other association resulting from the consolidation or
division, as the case may be, shall file in the Department of
20090SB0351PN0755 - 40 -
State a statement of merger, consolidation or division, which
shall be executed by the surviving or new corporation or other
association and shall set forth:
* * *
(5) In the case of a merger, consolidation or division
in which any of the new or resulting associations is a
corporation, or if the surviving corporation in a merger was
a nonqualified foreign business corporation prior to the
merger, the statements on the part of the surviving or each
new or resulting corporation required by section 4124(a)
(relating to application for a certificate of authority).
(b) Effect of filing.--The filing of the statement shall
operate, as of the effective date of the merger, consolidation
or division, to cancel the certificate of authority of each
nonsurviving constituent corporation that was a qualified
foreign business corporation and to qualify the surviving [or
new corporation], new or resulting corporations, under this
subchapter. If the surviving [or new corporation does], new or
resulting corporations do not desire to continue as [a]
qualified foreign business [corporation, it] corporations, they
may thereafter withdraw in the manner provided by section 4129
(relating to application for termination of authority).
* * *
(d) Cross [reference] references.--See [section] sections
134 (relating to docketing statement) and 135 (relating to
requirements to be met by filed documents).
Section 20. The introductory paragraph and the definitions
of "act," "board of directors," "bylaws," "charitable purposes,"
"corporation for profit," "corporation not-for-profit," "court,"
"department," "directors," "domestic corporation for profit,"
20090SB0351PN0755 - 41 -
"domestic corporation not-for-profit," "foreign corporation for
profit," "foreign corporation not-for-profit," "fraternal
benefit society," "member," "nonprofit corporation,"
"nonqualified foreign corporation," "other body,"
"representative," "trust instrument," "unless otherwise
provided" and "unless otherwise restricted," in section 5103 of
Title 15 are amended and the section is amended by adding
definitions and a subsection to read:
§ 5103. Definitions.
(a) General definitions.--Subject to additional definitions
contained in subsequent provisions of this subpart that are
applicable to specific provisions of this subpart, the following
words and phrases when used in this subpart shall have the
meanings given to them in this section unless the context
clearly indicates otherwise:
["Act" or "action." Includes failure to act.]
"Amendment." An amendment of the articles.
* * *
"Board of directors" or "board." The group of persons
[vested with the management of] under the direction of whom the
business and affairs of the corporation are managed irrespective
of the name by which [such] the group is designated. The term
does not include an other body. [The term, when used in any
provision of this subpart relating to the organization or
procedures of or the manner of taking action by the board of
directors, shall be construed to include and refer to any
executive or other committee of the board. Any provision of this
subpart relating or referring to action to be taken by the board
of directors or the procedure required therefor shall be
satisfied by the taking of corresponding action by a committee
20090SB0351PN0755 - 42 -
of the board of directors to the extent authority to take such
action has been delegated to such committee pursuant to section
5731 (relating to executive and other committees of the board).]
See section 5731(c) (relating to executive and other committees
of the board).
* * *
"Business corporation." A domestic corporation for profit
defined in section 1103 (relating to definitions).
"Bylaws." The code or codes of rules adopted for the
regulation or management of the business and affairs of the
corporation irrespective of the name or names by which [such]
the rules are designated. The term includes provisions of the
articles as provided by section 5504(c) (relating to adoption,
amendment and contents of bylaws).
"Charitable purposes." The relief of poverty, the
advancement and provision of education, including postsecondary
education, the advancement of religion, [the promotion of
health,] the prevention and treatment of disease or injury,
including mental retardation and mental disorders, governmental
or municipal purposes, and any other [purposes] purpose the
accomplishment of which is recognized as important and
beneficial to the [community] public.
* * *
["Corporation for profit." A corporation incorporated for a
purpose or purposes involving pecuniary profit, incidental or
otherwise, to its shareholders or members.
"Corporation not-for-profit." A corporation not incorporated
for a purpose or purposes involving pecuniary profit, incidental
or otherwise.
"Court." Subject to any inconsistent general rule prescribed
20090SB0351PN0755 - 43 -
by the Supreme Court of Pennsylvania:
(1) the court of common pleas of the judicial district
embracing the county where the registered office of the
corporation is or is to be located; or
(2) where a corporation results from a merger,
consolidation, division or other transaction without
establishing a registered office in this Commonwealth or
withdraws as a foreign corporation, the court of common pleas
in which venue would have been laid immediately prior to the
transaction or withdrawal.
"Department." The Department of State of the Commonwealth.]
"Directors." [Persons] Individuals designated, elected or
appointed, by that or any other name or title, to act as members <--
of the board of directors, and their successors. The term does
not include a member of an other body, [as such] unless the
person is also a director. The term, when used in relation to
any power or duty requiring collective action, shall be
construed to mean "board of directors."
* * *
["Domestic corporation for profit." A corporation for profit
incorporated under the laws of this Commonwealth.
"Domestic corporation not-for-profit." A corporation not-
for-profit incorporated under the laws of this Commonwealth.]
"Employee." The term does not include a member, director or
member of an other body, unless the person is also an employee.
See section 5730 (relating to compensation of directors) as to
acceptance by a director of duties that make the director also
an employee.
* * *
["Foreign corporation for profit." A corporation for profit
20090SB0351PN0755 - 44 -
incorporated under any laws other than those of this
Commonwealth.
"Foreign corporation not-for-profit." A corporation not-for-
profit incorporated under any laws other than those of this
Commonwealth.]
"Foreign domiciliary corporation." A foreign nonprofit
corporation described in section 6102 (relating to foreign
domiciliary corporations).
* * *
"Fraternal benefit society." A domestic corporation not-for-
profit that is a society as defined in [the act of July 29, 1977
(P.L.105, No.38) known as the Fraternal Benefit Society Code]
Article XXIV of the act of May 17, 1921 (P.L.682, No.284), known
as The Insurance Company Law of 1921.
* * *
"Member." [One having membership rights in a corporation in
accordance with the provisions of its bylaws. The term, when
used in relation to the taking of corporate action includes:
(1) the proxy of a member, if action by proxy is
permitted under the bylaws of the corporation; and
(2) a delegate to any convention or assembly of
delegates of members established pursuant to any provision of
this subpart.
If and to the extent the bylaws confer rights of members upon
holders of securities evidencing indebtedness or governmental or
other entities pursuant to any provision of this subpart the
term shall be construed to include such security holders and
governmental or other entities. The term shall be construed to
include "shareholder" if the corporation issues shares of
stock.] Any of the following:
20090SB0351PN0755 - 45 -
(1) A person that has voting rights.
(2) When used in relation to the taking of corporate
action by a membership corporation, a delegate to a
convention or assembly of delegates of members established
pursuant to any provision of this subpart who has the right
to vote at the convention or assembly in accordance with the
rules of the convention or assembly.
(3) A person that has been given voting rights or other
membership rights in a membership corporation by a bylaw
adopted by the members pursuant to section 5770 (relating to
voting powers and other rights of certain securityholders and
other entities) or other provision of law, but only to the
extent of those rights.
(4) A shareholder of a corporation, if the corporation
issues shares of stock.
"Membership corporation." A nonprofit corporation having
articles of incorporation that do not provide that the
corporation is to have no members.
"Nonprofit corporation" or "domestic nonprofit corporation."
A domestic corporation not-for-profit [which] that is not
excluded from the scope of this subpart by section 5102
(relating to application of subpart).
"Nonqualified foreign corporation" or "nonqualified foreign
nonprofit corporation." A foreign corporation not-for-profit
[which] that is not a qualified foreign corporation, as defined
in this section.
* * *
"Other body." A term employed in this subpart to denote a
person or group, other than the board of directors or a
committee thereof, who pursuant to authority expressly conferred
20090SB0351PN0755 - 46 -
by this subpart may be vested by the bylaws of the corporation
with powers [which] that, if not vested by the bylaws in [such]
the person or group, would by this subpart be required to be
exercised by [either]:
(1) the [membership of a corporation taken as a whole]
members;
(2) a convention or assembly of delegates of members
established pursuant to any provision of this subpart; or
(3) the board of directors.
Except as otherwise provided in this subpart, a corporation may
establish distinct persons or groups to exercise different
powers [which] that this subpart authorizes a corporation to
vest in an other body.
"Plan." A plan of reclassification, merger, consolidation,
asset transfer, division or conversion.
* * *
["Representative." When used with respect to a corporation,
partnership, joint venture, trust or other enterprise, means a
director, officer, employee or agent thereof.]
"Trust instrument." Any lawful deed of gift, grant, will or
other document by which the donor, grantor or testator [shall
give, grant or devise] gives, grants or devises any real or
personal property or the income [therefrom] from any real or
personal property in trust for any charitable purpose.
"Unless otherwise provided" or "except as otherwise
provided." When used to introduce or modify a rule, the term
implies that the alternative provisions contemplated may either
relax or restrict the stated rule.
"Unless otherwise restricted" or "except as otherwise
restricted." When used to introduce or modify a rule, the term
20090SB0351PN0755 - 47 -
implies that the alternative provisions contemplated may further
restrict, but may not relax, the stated rule.
"Voting" or "casting a vote." Includes the giving of consent
in lieu of voting. Whether or not the person entitled to vote
characterizes the conduct as voting or casting a vote, the term
does not include:
(1) recording the fact of abstention; or
(2) failing to vote for a candidate or for approval or
disapproval of a matter.
"Voting rights." The right of a person in a membership
corporation, other than in the capacity of a director or member
of an other body, to vote on the election or removal of
directors or members of an other body or on approval of an
amendment, a plan or the dissolution of the corporation.
(b) Index of other definitions.--The following is a
nonexclusive list of words and phrases which when used in this
subpart shall have the meanings given to them in section 102
(relating to definitions):
"Act" or "action."
"Corporation for profit."
"Corporation not-for-profit."
"Court."
"Department."
"Domestic corporation for profit."
"Domestic corporation not-for-profit."
"Execute."
"Foreign corporation for profit."
"Foreign corporation not-for-profit."
"Internal Revenue Code of 1986."
"Obligation."
20090SB0351PN0755 - 48 -
"Officially publish."
"Record form."
"Representative."
"Sign."
Section 21. Sections 5104, 5105, 5106, 5107, 5108, 5109,
5302, 5306(a)(6) introductory paragraph and (11)(ii), 5307,
5308, 5309, 5310, 5331 and 5501 of Title 15 are amended to read:
[§ 5104. Other general provisions.
The following provisions of this title are applicable to
corporations subject to this subpart:
Section 101 (relating to short title and application of
title).
Section 102 (relating to definitions).
Section 103 (relating to subordination of title to regulatory
laws).
Section 104 (relating to equitable remedies).
Section 105 (relating to fees).
Section 106 (relating to effect of filing papers required to
be filed).
Section 107 (relating to form of records).
Section 108 (relating to change in location or status of
registered office provided by agent).
Section 109 (relating to name of commercial registered office
provider in lieu of registered address).
Section 110 (relating to supplementary general principles of
law applicable).
Section 132 (relating to functions of Department of State).
Section 133 (relating to powers of Department of State).
Section 134 (relating to docketing statement).
Section 135 (relating to requirements to be met by filed
20090SB0351PN0755 - 49 -
documents).
Section 136 (relating to processing of documents by
Department of State).
Section 137 (relating to court to pass upon rejection of
documents by Department of State).
Section 138 (relating to statement of correction).
Section 139 (relating to tax clearance of certain fundamental
transactions).
Section 140 (relating to custody and management of orphan
corporate and business records).
Section 152 (relating to definitions).
Section 153 (relating to fee schedule).
Section 154 (relating to enforcement and collection).
Section 155 (relating to disposition of funds).
Section 162 (relating to contingent domestication of certain
foreign associations).
Section 501 (relating to reserved power of General Assembly).
Section 503 (relating to actions to revoke corporate
franchises).
Section 504 (relating to validation of certain defective
corporations).
Section 505 (relating to validation of certain defective
corporate acts).
Section 2552 (relating to definitions) (definitions of
"affiliate" and "associate").]
§ 5105. [Saving clause and restriction] Restriction on
equitable relief.
[(a) General rule.--Except as otherwise provided in
subsection (b) of this section, this subpart and its amendments
shall not impair or affect any act done, offense committed, or
20090SB0351PN0755 - 50 -
substantial right accruing, accrued, or acquired, or liability,
duty, obligation, penalty, judgment or punishment incurred prior
to the time this subpart or any amendment thereto takes effect,
but the same may be enjoyed, asserted, enforced, prosecuted, or
inflicted as fully and to the same extent as if this subpart or
any amendment thereto had not been enacted.
(b) Exception.--] A member of a nonprofit corporation shall
not have any right to claim the right to valuation [of] and
payment [for] of the fair value of his membership interest or
shares because of any proposed plan or amendment [of articles]
authorized under any provision of this subpart, or to obtain, in
the absence of fraud or fundamental unfairness, an injunction
against [any such] the plan or amendment.
§ 5106. [Limited uniform] Uniform application of subpart.
(a) General rule.--Except as provided in subsection (b),
this subpart and its amendments are intended to provide uniform
rules for the government and regulation of the affairs of
nonprofit corporations and of their officers, directors and
members, regardless of the date or manner of incorporation or
qualification, or of the issuance of any evidences of membership
in or shares [thereof] of a nonprofit corporation.
(b) Exceptions.--
(1) Unless expressly provided otherwise in any amendment
to this subpart [any such], the amendment shall take effect
only prospectively.
(2) Any existing corporation lawfully using a name[,]
or, as a part of its name, a word[, which] that could not be
used as or included in the name of a corporation [hereafter]
subsequently incorporated or qualified under this subpart[,]
may continue to use [such] the name[,] or word as part of its
20090SB0351PN0755 - 51 -
name[, provided] if the use or inclusion of [such] the word
or name was lawful when first adopted by the corporation in
this Commonwealth.
(3) [Nothing in subsection] Subsection (a) shall not
adversely affect the rights specifically provided for or
saved [by the general terms of section 5105 (relating to
saving clause and restriction on equitable relief)] in this
subpart, including, without limiting the generality of the
foregoing, the provisions of section 5952(d) (relating to
proposal and adoption of plan of division).
(4) Nothing in this subpart shall be deemed to repeal or
supersede any provision in section 7 of the act of April 26,
1855 (P.L.328, No.347), entitled "An act relating to
Corporations and to Estates held for Corporate, Religious and
Charitable uses."
§ 5107. Subordination of subpart to canon law.
If and to the extent canon law or similar principles <--
applicable to a corporation incorporated for religious purposes
[shall set] sets forth provisions relating to the government and
regulation of the affairs of the corporation [which] that are
inconsistent with the provisions of this subpart on the same
subject, the [provisions of] canon law or similar principles <--
shall control except to the extent[, and only to the extent,
required] prohibited by the Constitution of the United States or
the Constitution of Pennsylvania[, or both].
§ 5108. Limitation on incorporation.
[No corporation which might] A corporation that can be
incorporated under this subpart shall [hereafter] not be
incorporated except under the provisions of this subpart.
§ 5109. Execution of documents.
20090SB0351PN0755 - 52 -
(a) General rule.--Any document filed in the Department of
State under this title by a domestic or foreign nonprofit
corporation [or a foreign corporation not-for-profit] subject to
this subpart may be executed on behalf of the corporation by any
one duly authorized officer [thereof] of the corporation. The
corporate seal may be affixed and attested, but the affixation
or attestation of the corporate seal shall not be necessary for
the due execution of any filing by a corporation under this
title.
(b) Cross reference.--See section 135 (relating to
requirements to be met by filed documents).
[(c) Transitional provision.--This section supersedes any
contrary provision of this subpart enacted prior to the
enactment of the act of December 21, 1988 (P.L.1444, No.177),
known as the General Association Act of 1988.]
§ 5302. Number and qualifications of incorporators.
One or more corporations for profit or not-for-profit or
natural persons of full age may incorporate a nonprofit
corporation under the provisions of this [article] subpart.
§ 5306. Articles of incorporation.
(a) General rule.--Articles of incorporation shall be signed
by each of the incorporators and shall set forth in the English
language:
* * *
(6) [A] If the corporation is a membership corporation,
a statement whether the corporation is to be organized upon a
nonstock basis or a stock share basis, and, if it is to be
organized on a stock share basis:
* * *
(11) Any other provisions that the incorporators may
20090SB0351PN0755 - 53 -
choose to insert if:
* * *
(ii) such provisions are not inconsistent with this
subpart and relate to the purpose or purposes of the
corporation, the management of its business or affairs or
the rights, powers or duties of its members, security
holders, directors, members of an other body or officers.
* * *
§ 5307. Advertisement.
The incorporators or the corporation shall officially publish
a notice of intention to file or of the filing of articles of
incorporation. The notice may appear prior to or after the day
the articles of incorporation are filed in the [Department of
State,] department and shall set forth briefly:
(1) The name of the proposed corporation.
(2) A statement that the corporation is to be or has
been incorporated under the provisions of this [article]
subpart.
[(3) A brief summary of the purpose or purposes of the
corporation.
(4) A date on or before which the articles will be filed
in the Department of State or the date the articles were
filed.]
§ 5308. Filing of articles.
(a) General rule.--The articles of incorporation shall be
filed in the [Department of State] department.
(b) Cross [reference] references.--See [section] sections
134 (relating to docketing statement) and 135 (relating to
requirements to be met by filed documents).
§ 5309. Effect of filing of articles of incorporation.
20090SB0351PN0755 - 54 -
(a) Corporate existence.--Upon the filing of the articles of
incorporation in the [Department of State] department or upon
the effective date specified in the articles of incorporation,
whichever is later, the corporate existence shall begin.
(b) Evidence of incorporation.--Subject to the provisions of
section 503 (relating to actions to revoke corporate
franchises), the articles of incorporation filed in the
[Department of State, or approved by the court and] department,
or recorded in the office of the recorder of deeds under the
former provisions of law, shall be conclusive evidence of the
fact that the corporation has been incorporated.
§ 5310. Organization meeting.
(a) General rule.--After the [filing of the articles of
incorporation] corporate existence begins, an organization
meeting of the initial directors[,] or, if directors are not
named in the articles, of the incorporator [or incorporators],
shall be held, within or without this Commonwealth, for the
purpose of adopting bylaws, [which they shall have authority to
do at such meeting, of] electing directors [to hold office as
provided in the bylaws,] if directors are not named in the
articles[,] and the transaction of such other business as may
come before the meeting. A bylaw adopted at [such] the
organization meeting of directors or incorporators shall be
deemed to be a bylaw adopted by the members for the purposes of
this [article and of] subpart and any other provision of law.
(b) Call of and action at meeting.--The meeting may be held
at the call of any director or, if directors are not named in
the articles, of any incorporator, who shall give at least five
days' [written notice thereof] notice of the meeting to each
other director or incorporator[, which]. The notice shall set
20090SB0351PN0755 - 55 -
forth the time and place of the meeting. For the purposes of
this section [an], any director or incorporator may act in
person, by consent or by proxy signed by him or his [attorney in
fact] attorney-in-fact.
(c) Death or incapacity of directors or incorporators.--If a
designated director or an incorporator dies or is for any reason
unable to act at the meeting, the other or others may act. If
there is no other designated director or incorporator able to
act, any person for whom [an] a director or incorporator was
acting as agent may act or appoint another to act in his stead.
§ 5331. [Unincorporated] Incorporation of unincorporated
associations.
In the case of the incorporation as a nonprofit corporation
under this [article] subpart of an unincorporated association
the articles of incorporation shall contain, in addition to the
provisions [heretofore required in this chapter] required in
Subchapter A (relating to incorporation generally), a statement
that the incorporators constitute a majority of the members of
the committee authorized to incorporate [such] the association
by the requisite vote required by the organic law of the
association for the amendment of [such] the organic law.
§ 5501. Corporate capacity.
Except as provided in section 103 [of this title] (relating
to subordination of title to regulatory laws), a nonprofit
corporation shall have the legal capacity of natural persons to
act.
Section 22. Section 5504(b), (c) and (d) of Title 15 are
amended and the section is amended by adding a subsection to
read:
§ 5504. Adoption, amendment and contents of bylaws.
20090SB0351PN0755 - 56 -
* * *
(b) Exception.--Except as provided in section 5310(a)
(relating to organization meeting), the board of directors or
other body shall not have the authority to adopt or change a
bylaw on any subject that is committed expressly to the members
by any of the provisions of this subpart. See:
Subsection (d) (relating to amendment of voting provisions).
Section 5713 (relating to personal liability of directors).
Section 5721 (relating to board of directors).
Section 5725(b) (relating to selection of directors).
Section 5726(a) (relating to removal of directors by the
members).
Section 5726(b) (relating to removal of directors by the
board).
Section 5729 (relating to voting rights of directors).
Section 5751(a) (relating to classes and qualifications of
membership).
Section 5752(c) (relating to rights of shareholders).
Section 5754(a) (relating to members grouped in local units).
Section 5755(a) (relating to regular meetings).
Section 5756 (relating to quorum).
Section 5757 (relating to action by members).
Section 5758 (relating to voting rights of members).
Section 5759(a) (relating to voting and other action by
proxy).
Section [5760(a)] 5762(a) (relating to voting [in nonprofit
corporation matters] by corporations).
Section [5762] 5765 (relating to judges of election).
Section [5766(a)] 5769(a) (relating to termination and
transfer of membership).
20090SB0351PN0755 - 57 -
Section [5767] 5770 (relating to voting powers and other
rights of certain [security holders] securityholders and other
entities).
Section 5975(c) (relating to winding up and distribution).
(c) Bylaw provisions in articles.--Where any provision of
this subpart or any other provision of law refers to a rule as
set forth in the bylaws of a corporation or in a bylaw adopted
by the members, the reference shall be construed to include and
be satisfied by any rule on the same subject as set forth in the
articles of the corporation.
(d) Amendment of voting provisions.--
(1) Unless otherwise restricted in a bylaw adopted by
the members, whenever the bylaws require for the taking of
any action by the members or a class of members a specific
number or percentage of votes, the provision of the bylaws
setting forth that requirement shall not be amended or
repealed by any lesser number or percentage of votes of the
members or of the class of members.
(2) Paragraph (1) shall not apply to a bylaw setting
forth the right of members to act by unanimous written
consent as provided in section 5766(a) (relating to consent
of members in lieu of meeting).
(e) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
Section 23. Section 5509 of Title 15 is amended to read:
§ 5509. Bylaws and other powers in emergency.
(a) General rule.--[The] Except as otherwise restricted in
the bylaws, the board of directors or other body of any
nonprofit corporation may adopt emergency bylaws, subject to
20090SB0351PN0755 - 58 -
repeal or change by action of the members, which shall,
notwithstanding any different provisions of law or of the
articles or bylaws, be [operative] effective during any
emergency resulting from [warlike damage or] an attack on the
United States [or any], a nuclear [or atomic] disaster or
another catastrophe a result of which a quorum of the board
cannot readily be assembled. The emergency bylaws may make any
provision that may be [practical and necessary] appropriate for
the circumstances of the emergency, including [provisions that]:
(1) [A meeting of the board of directors or other body
may be called by any officer or director or member of such
other body in such manner and under such conditions as shall
be prescribed in the emergency bylaws.] Procedures for
calling meetings of the board or other body.
(2) [The director or directors or the member or members
of such other body in attendance at the meeting, or any other
number fixed in the emergency bylaws, shall constitute a
quorum.] Quorum requirements for meetings.
(3) [The officers or other persons designated on a list
approved by the board of directors or other body before the
emergency, all in such order of priority and subject to such
conditions and for such period of time, not longer than
reasonably necessary after the termination of the emergency
as may be provided in the emergency bylaws or in the
resolution approving the list, shall, to the extent required
to provide a quorum at any meeting of the board of directors
or such other body, be deemed directors or members of such
other body for such meeting.] Procedures for designating
additional or substitute directors or members of an other
body.
20090SB0351PN0755 - 59 -
(b) Lines of succession; head office.--The board of
directors or [such] other body, or the officers, if given
authorization by the board of directors or other body, either
before or during any [such] emergency, may [provide,]:
(1) provide, and from time to time modify, lines of
succession in the event that during [such an] the emergency
any or all officers or agents of the corporation shall for
any reason be rendered incapable of discharging their
duties[, and may,]; and
(2) effective in the emergency, change the head offices
or designate several alternative head offices or regional
offices of the corporation[, or authorize the officers so to
do].
(c) Personnel not liable.--[No officer, director, member of
such other body, or employee acting in accordance with any
emergency bylaws shall be liable except for wilful misconduct.]
A representative of the corporation:
(1) Acting in accordance with any emergency bylaws shall
not be liable except for willful misconduct.
(2) Shall not be liable for any action taken by him in
good faith in an emergency in furtherance of the ordinary
business affairs of the corporation even though not
authorized by the emergency or other bylaws then in effect.
(d) Effect on regular bylaws.--To the extent that they are
not inconsistent with any emergency bylaws [so] adopted, the
bylaws of the corporation shall remain in effect during any
emergency[,] and, upon its termination, the emergency bylaws
shall cease to be [operative] effective.
(e) Procedure in absence of emergency bylaws.--Unless
otherwise provided in emergency bylaws, notice of any meeting of
20090SB0351PN0755 - 60 -
the board of directors or [such] an other body during [such] an
emergency shall be given only to [such of the] those directors
or members of [such] an other body [as it may be] it is feasible
to reach at the time and by such means as [may be] are feasible
at the time, including publication [or], radio or television. To
the extent required to constitute a quorum at any meeting of the
board of directors or [such] an other body during [such an] any
emergency, the officers of the corporation who are present
shall, unless otherwise provided in emergency bylaws, be deemed,
in order of rank and within the same rank in order of seniority,
directors or members of [such] the other body, as the case may
be, for [such] the meeting.
Section 24. Section 5511 of Title 15 is reenacted to read:
§ 5511. Establishment of subordinate units.
A nonprofit corporation may establish and terminate local
branches, chapters, councils, clubs, churches, lodges, parishes
or other subordinate units regardless of their designation, form
of government, incorporated or unincorporated status or
relationship to the corporation or other supervising and
controlling organization of which the corporation is a member or
with which it is in allegiance and to which it is subordinate.
Section 25. Sections 5541, 5542, 5543, 5544, 5546, 5547(b), <--
5548(b) and 5550 of Title 15 are amended to read:
§ 5541. Capital contributions of members.
(a) General rule.--A nonprofit corporation organized on a
nonstock basis may provide in its bylaws that members, upon or
subsequent to admission, shall make capital contributions. The
amount shall be specified in, or fixed by the board of directors
or other body pursuant to authority granted by, the bylaws. The
requirement of a capital contribution may apply to all members,
20090SB0351PN0755 - 61 -
[or] to the members of a single class, or to members of
different classes in different amounts or proportions.
(b) Consideration receivable.--[The capital contribution of
a member shall consist of money or other property, tangible or
intangible, or labor or services actually received by or
performed for the corporation or for its benefit or in its
formation or reorganization, or a combination thereof. In the
absence of fraud in the transaction, the judgment of the board
of directors or other body as to the value of the consideration
received by the corporation shall be conclusive.] The capital
contribution of a member, unless otherwise provided in the
bylaws:
(1) May consist of money, obligations (including an
obligation of a member), services performed whether or not
contracted for, contracts for services to be performed,
memberships in or securities or obligations of the
corporation, or any other tangible or intangible property or
benefit to the corporation. If a capital contribution is made
in a form other than money, the value of the contribution
shall be determined by or in the manner provided by the board
of directors or other body.
(2) Shall be provided or paid to or as ordered by the
corporation.
(c) Evidence of contribution.--The capital contribution of a
member shall be recorded on the books of the corporation and may
be evidenced by a written instrument delivered to the member,
but [such] the instrument shall not be denominated a "share
certificate" or by any other word or term implying that the
instrument is a share certificate subject to section 5752
(relating to organization on a stock share basis).
20090SB0351PN0755 - 62 -
(d) Transferability of interest.--Unless otherwise provided
in the bylaws, the capital contribution of a member shall not be
transferable.
(e) Repayment of contribution.--The capital contribution of
a member shall not be repaid by the corporation except upon
dissolution of the corporation or as provided in this [article]
subpart. A corporation may provide in its bylaws that its
capital contributions, or some of them, shall be repayable, in
whole or in part, at the option of the corporation only, [at
such] in the amount or amounts (not to exceed the amount of the
capital contribution), within [such] the period or periods[,]
and on [such] the terms and conditions, not inconsistent with
this [article] subpart, as are stated in, or fixed by the board
of directors or other body pursuant to authority granted by, the
bylaws.
§ 5542. Subventions.
(a) General rule.--The bylaws of a nonprofit corporation may
provide that the corporation shall be authorized by resolution
of the board of directors or other body to accept subventions
from members or nonmembers on terms and conditions not
inconsistent with this [article, and to issue certificates
therefor] subpart. The resolution of the board or other body may
provide that [holders of] the maker of a subvention
[certificates] shall be entitled to a fixed or contingent
periodic payment out of the corporate assets equal to a
percentage of the original amount or value of the subvention.
The rights of [holders of subvention certificates] makers of
subventions shall at all times be subordinate to the rights of
creditors of the corporation.
(b) Consideration receivable.--[A subvention shall consist
20090SB0351PN0755 - 63 -
of money or other property, tangible or intangible, actually
received by the corporation or expended for its benefit or in
its formation or reorganization, or a combination thereof. In
the absence of fraud in the transaction, the judgment of the
board of directors or other body as to the value of the
consideration received by the corporation shall be conclusive.
(c) Form of certificate.--Each subvention certificate shall
be signed by two duly authorized officers of the corporation,
and may be sealed with the seal of the corporation or a
facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar
other than the corporation itself or its employees. In case any
officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at
the date of issue. The fact that the corporation is a nonprofit
corporation shall be noted conspicuously on the face or back of
each certificate.] Consideration for subventions, unless
otherwise provided in the bylaws:
(1) May consist of money, obligations (including an
obligation of a subventor), services performed whether or not
contracted for, contracts for services to be performed,
memberships in or securities or obligations of the
corporation, or any other tangible or intangible property or
benefit to the corporation. If subventions are issued for
other than money, the value of the consideration shall be
determined by or in the manner provided by the board of
directors or other body.
20090SB0351PN0755 - 64 -
(2) Shall be provided or paid to or as ordered by the
corporation.
(c.1) Form of subventions.--Subventions shall be represented
by certificates or shall be uncertificated subventions. Each
subvention certificate shall be executed by or on behalf of the
corporation issuing the subvention in the manner it may
determine. The fact that the corporation is a nonprofit
corporation shall be noted conspicuously on the face or back of
each certificate.
(d) Transferability of subvention.--[Subvention
certificates] Subventions shall be nontransferable unless the
resolution of the board of directors or other body [shall
provide] provides that they shall be transferable either at will
or subject to specified restrictions.
(e) Redemption at option of corporation.--The resolution of
the board of directors or other body may provide that a
subvention shall be redeemable, in whole or in part, at the
option of the corporation at [such] the price or prices (not to
exceed the original amount or value of the subvention plus any
periodic payments due or accrued thereon), within [such] the
period or periods, and on [such] the terms and conditions, not
inconsistent with this [article] subpart, as are stated in the
resolution.
(f) Redemption at option of holders.--The resolution of the
board of directors or other body may provide that makers or
holders of all or some [subvention certificates] subventions
shall have the right to require the corporation after a
specified period of time to redeem [such certificates] the
subventions, in whole or in part, at a price or prices that do
not exceed the original amount or value of the subvention plus
20090SB0351PN0755 - 65 -
any periodic payments due or accrued [thereon] on the
subvention, upon an affirmative showing that the financial
condition of the corporation will permit the required payment to
be made without impairment of its operations or injury to its
creditors. The right to require redemption may in addition be
conditioned upon the occurrence of a specified event. For the
purpose of enforcing their rights under this subsection, makers
or holders of [subvention certificates] subventions shall be
entitled to inspect the books and records of the corporation.
(g) Rights of makers or holders on dissolution.--[Holders]
Makers or holders of [subvention certificates] subventions, upon
dissolution of the corporation, shall be entitled, after the
claims of creditors have been satisfied, to repayment of the
original amount or value of the subvention plus any periodic
payments due or accrued [thereon] on the subvention, unless a
lesser sum is specified in the resolution of the board of
directors or other body concerning [such] the subvention.
§ 5543. Debt and security interests.
(a) General rule.--[No corporation shall issue bonds or
other evidences of indebtedness except for money or other
property, tangible or intangible, or labor or services actually
received by or performed for the corporation or for its benefit
or in its formation or reorganization, or a combination thereof.
In the absence of fraud in the transaction, the judgment of the
board of directors or other body as to the value of the
consideration received by the corporation shall be conclusive.]
Unless otherwise provided in the bylaws, a nonprofit corporation
may issue its bonds or other obligations for an amount and form
of consideration as may be determined by or in the manner
provided by the board of directors or other body.
20090SB0351PN0755 - 66 -
(b) Creation of lien on real or personal property.--The
board of directors or other body may authorize any mortgage or
pledge of, or the creation of a security interest in, all or any
part of the real or personal property of the corporation, or any
interest [therein. Unless] in the real or personal property. No
application to or confirmation by a court shall be required and,
unless otherwise restricted in the bylaws, no vote or consent of
the members shall be required to make effective [such] the
action by the board or other body.
§ 5544. [Fees, dues] Dues and assessments.
(a) General rule.--A nonprofit corporation may levy dues or
assessments, or both, on its members, if authority to do so is
conferred by the bylaws, subject to any limitations [therein]
contained in the bylaws. [Such] The dues or assessments, or
both, may be imposed upon all members of the same class either
alike or in different amounts or proportions, and upon a
different basis upon different classes of members. Members of
one or more classes may be made exempt from either dues or
assessments, or both, in the manner or to the extent provided in
the bylaws.
(b) Amount and method of collection.--The amount of the levy
and method of collection of [such] the dues or assessments, or
both, may be fixed in the bylaws, or the bylaws may authorize
the board of directors or other body to fix the amount [thereof]
of the dues or assessments from time to time, and make them
payable at [such] the time and by [such] the methods of
collection as the board of directors or other body may
prescribe.
(c) Enforcement of payment.--A nonprofit corporation may
make bylaws necessary to enforce the collection of [such] dues
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or assessments, including provisions for the termination of
membership, upon reasonable notice, for nonpayment of [such]
dues or assessments, and for reinstatement of membership.
§ 5546. Purchase, sale, mortgage and lease of real property.
[Except for an industrial development corporation whose
articles or bylaws otherwise provide, no purchase of real
property shall be made by a nonprofit corporation and no
corporation shall sell, mortgage, lease away or otherwise
dispose of its real property, unless authorized by the vote of
two-thirds of the members in office of the board of directors or
other body, except that if there are 21 or more directors or
members of such other body, the vote of a majority of the
members in office shall be sufficient. No application to or
confirmation of any court shall be required and, unless
otherwise restricted in the bylaws, no vote or consent of the
members shall be required to make effective such action by the
board or other body. If the real property is subject to a trust
the conveyance away shall be free of trust and the trust shall
be impinged upon the proceeds of such conveyance.] Except as
otherwise provided in this subpart and unless otherwise provided
in the bylaws, no application to or confirmation of any court
shall be required for the purchase by or the sale, lease or
other disposition of the real or personal property, or any part
of the real or personal property of a nonprofit corporation,
and, unless otherwise restricted in section 5930 (relating to
voluntary transfer of corporate assets) or in the bylaws, no
vote or consent of the members shall be required to make
effective such action by the board or other body. If the
property is subject to a trust, the conveyance away shall be
free of trust, and the trust shall be impinged upon the proceeds
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of the conveyance.
§ 5547. Authority to take and hold trust property. <--
* * *
(b) Nondiversion of certain property.--Property committed to
charitable purposes shall not, by any proceeding under Chapter
59 (relating to fundamental changes) or otherwise, be diverted
from the objects to which it was donated, granted or devised,
unless and until the board of directors or other body obtains
from the court an order under 20 Pa.C.S. Ch. [61] 77 (relating
to [estates] trusts) specifying the disposition of the property.
§ 5548. Investment of trust funds.
* * *
(b) Use and management.--Except as otherwise permitted under
20 Pa.C.S. Ch. [61] 77 (relating to [estates] trusts), the board
of directors or other body shall apply all assets thus received
to the purposes specified in the trust instrument. The directors
or other body shall keep accurate accounts of all trust funds,
separate and apart from the accounts of other assets of the
corporation.
* * *
§ 5550. Devises, bequests and gifts after certain fundamental
changes.
A devise, bequest or gift to be effective in the future, in
trust or otherwise, to or for a nonprofit corporation which has:
(1) changed its purposes;
(2) sold, leased away or exchanged all or substantially
all its property and assets;
(3) been converted into a business corporation;
(4) become a party to a consolidation or a division;
(5) become a party to a merger which it did not survive;
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or
(6) been dissolved;
after the execution of the document containing [such] the
devise, bequest or gift and before the nonprofit corporation
acquires a vested interest in the devise, bequest or gift shall
be effective only as a court having jurisdiction over the assets
may order under [the Estates Act of 1947] 20 Pa.C.S. Ch. 6177 <--
(relating to estatestrusts) or other applicable provisions of <--
law.
Section 26. Section 5551 of Title 15 is reenacted to read:
§ 5551. Dividends prohibited; compensation and certain payments
authorized.
(a) General rule.--A nonprofit corporation shall not pay
dividends or distribute any part of its income or profits to its
members, directors, or officers. Nothing herein contained shall
prohibit a fraternal benefit society operating under the
insurance laws of Pennsylvania from paying dividends or refunds
by whatever name known pursuant to the terms of its insurance
contracts.
(b) Reasonable compensation for services.--A nonprofit
corporation may pay compensation in a reasonable amount to
members, directors, or officers for services rendered.
(c) Certain payments authorized.--A nonprofit corporation
may confer benefits upon members or nonmembers in conformity
with its purposes, may repay capital contributions, and may
redeem its subvention certificates or evidences of indebtedness,
as authorized by this article, except when the corporation is
currently insolvent or would thereby be made insolvent or
rendered unable to carry on its corporate purposes, or when the
fair value of the assets of the corporation remaining after such
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conferring of benefits, payment or redemption would be
insufficient to meet its liabilities. A nonprofit corporation
may make distributions of cash or property to members upon
dissolution or final liquidation as permitted by this article.
Section 27. Title 15 is amended by adding a section to read:
§ 5552. (Reserved).
Section 28. Section 5552 of Title 15 is renumbered to read:
§ [5552] 5553. Liabilities of members.
* * *
Section 29. Section 5553 of Title 15 is renumbered and
amended to read:
§ [5553] 5554. Annual report of directors or other body.
(a) Contents.--The board of directors or other body of a
nonprofit corporation shall present annually to the members a
report, verified by the president and treasurer or by a majority
of the directors or members of [such] the other body, showing in
appropriate detail the following:
(1) The assets and liabilities, including [the] trust
funds, of the corporation as of the end of the fiscal year
immediately preceding the date of the report.
(2) The principal changes in assets and liabilities,
including trust funds, during the fiscal year immediately
preceding the date of the report.
(3) The revenue or receipts of the corporation, both
unrestricted and restricted to particular purposes, for the
fiscal year immediately preceding the date of the report,
including separate data with respect to each trust fund held
by or for the corporation.
(4) The expenses or disbursements of the corporation,
for both general and restricted purposes, during the fiscal
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year immediately preceding the date of the report, including
separate data with respect to each trust fund held by or for
the corporation.
(5) The number of members of the corporation as of the
date of the report, together with a statement of increase or
decrease in [such] their number during the year immediately
preceding the date of the report, and a statement of the
place where the names and addresses of the current members
may be found.
(b) Place of filing.--The annual report of the board of
directors or other body shall be filed with the minutes of the
meetings of members.
(c) Report in absence of meeting of members.--The board of
directors or other body of a corporation having no members shall
direct the president and treasurer to present at the annual
meeting of the board or [of such] other body a report in
accordance with subsection (a) [of this section], but omitting
the requirement of paragraph (5) [thereof]. [Such] The report
shall be filed with the minutes of the annual meeting of the
board or [of such] other body.
(d) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
Section 30. Sections 5585, 5586, 5587, 5588, 5589, 5702(a),
5704(a) and (b), 5705(a), 5708, 5722(a), 5723, 5724, 5725, 5726,
5727, 5728(a) and (b), 5729(b) and 5730 of Title 15 are amended
to read:
§ 5585. Establishment or use of common trust funds authorized.
(a) General rule.--Every nonprofit corporation may establish
and maintain one or more common trust funds, the assets of which
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shall be held, invested and reinvested by the corporation itself
or by a corporate trustee to which the assets have been
transferred pursuant to section 5549 (relating to transfer of
trust or other assets to institutional trustee). Upon the
payment by the corporate trustee to the nonprofit corporation of
the net income from [such] the assets, which income may be
determined under section 5548(c) (relating to investment of
trust funds) if [such] the election is properly made by the
board of directors or other body of the corporation, for use and
application to the several participating interests in [such] the
common trust fund, the proportionate participation of each
interest in [such] the net income shall be designated by the
corporate trustee. The nonprofit corporation may, at any time,
withdraw the whole or part of any participating interest in
[such] the common trust fund for distribution by it as provided
in this subchapter.
(b) Limitations in trust instrument.--Nothing contained in
this section shall be construed to authorize the corporation to
invest assets of a trust or fund in any [such] common trust fund
contrary to any specific limitation or restriction contained in
the trust instrument[,] nor to limit or restrict the authority
conferred upon the corporation with respect to investments by
[any such] the trust instrument.
(c) Effect of good faith mistakes.--[No mistakes] Mistakes
made in good faith[,] and in the exercise of due care and
prudence[,] in connection with the administration of any [such]
common trust fund[,] shall not be held to exceed any power
granted to or violate any duty imposed upon the corporation[,]
if, promptly after the discovery of the mistake, the corporation
takes [such] whatever action [as] may be practicable under the
20090SB0351PN0755 - 73 -
circumstances to remedy the mistake.
§ 5586. Restrictions on investments.
(a) Legal investments.--If the trust instrument [shall limit
or restrict] limits or restricts the investment of [such] the
assets to investments of the class authorized by law as legal
investments, [the] a nonprofit corporation may invest and
reinvest the assets of the trust or fund in any [such] common
trust fund maintained by the corporation[, provided] if the
investments composing [such] the fund consist solely of
investments of the class authorized by [the Fiduciaries
Investment Act of 1949] 20 Pa.C.S. Ch. 72 (relating to prudent
investor rule) to be held by fiduciaries.
(b) Other than legal investments.--If the trust instrument
[shall] does not limit or restrict the investment of [such] the
assets to investments of the class authorized by law as legal
investments, the corporation may invest and reinvest the assets
of the trust or fund in any [such] common trust fund maintained
by the corporation[,] composed of [such] the investments as in
the honest exercise of the judgment of the directors or other
body of the corporation they may, after investigation, determine
to be safe and proper investments.
§ 5587. Determination of interests.
A nonprofit corporation shall invest the assets of a trust or
fund in a common trust fund authorized by this subchapter by
adding [such] those assets thereto, and by apportioning a
participation therein to [such] the trust or fund in the
proportion that the assets of the trust or fund added thereto
bears to the aggregate value of all the assets of [such] the
common trust fund at the time of [such] the investment,
including in [such] those assets the assets of the trust or fund
20090SB0351PN0755 - 74 -
so added. The withdrawal of a participation from [such] the
common trust fund shall be on a basis of its proportionate
interest in the aggregate value of all the assets of [such] the
common trust fund at the time of [such] the withdrawal. The
participating interest of any trust or fund in [such] the common
trust fund may from time to time be withdrawn, in whole or in
part, by the corporation. Upon [such withdrawals] a withdrawal,
the corporation may make distribution in cash, or ratably in
kind, or partly in cash and partly in kind. Participations in
[such] the common trust funds shall not be sold by the
corporation to any other corporation or person, but this
sentence shall not prevent a corporate trustee designated under
section 5585 (relating to establishment or use of common trust
funds authorized) from investing the assets of [such a] the
common trust fund in any collective investment fund established
and maintained by it in accordance with law and to which the
assets comprising [such a] the common trust fund are eligible
contributions.
§ 5588. Amortization of premiums on securities held.
If a bond or other obligation for the payment of money is
acquired as an investment for any common trust fund at a cost in
excess of the par or maturity value thereof, the nonprofit
corporation may, during [(but not beyond)] but not beyond the
period that [such] the obligation is held as an investment in
[such] the fund, amortize [such] the excess cost out of the
income on [such] the obligation, by deducting from each payment
of income and adding to principal an amount equal to the sum
obtained by dividing [such] the excess cost by the number of
periodic payments of income to accrue on [such] the obligation
from the date of [such] the acquisition until its maturity date.
20090SB0351PN0755 - 75 -
§ 5589. Records; ownership of assets.
The nonprofit corporation shall designate clearly upon its
records the names of the trusts or funds on behalf of which
[such] the corporation, as fiduciary or otherwise, owns a
participation in any common trust fund and the extent of the
interest of the trust or fund therein. [No such] The trust or
fund shall not be deemed to have individual ownership of any
asset in [such] the common trust fund, but shall be deemed to
have a proportionate undivided interest in the common trust
fund. The ownership of the individual assets comprising any
common trust fund shall be solely in the nonprofit corporation
as fiduciary or otherwise.
§ 5702. Manner of giving notice.
(a) General rule.--[Whenever written]
(1) Any notice [is] required to be given to any person
under the provisions of this subpart or by the articles or
bylaws of any nonprofit corporation[, it may] shall be given
to the person either personally or by sending a copy thereof
[by]:
(i) By first class or express mail, postage prepaid,
[or by telegram (with messenger service specified), telex
or TWX (with answer back received)] or courier service,
charges prepaid, [or by facsimile transmission,] to [his]
the person's postal address [(or to his telex, TWX or
facsimile number)] appearing on the books of the
corporation or, in the case of directors or members of an
other body, supplied by [him] the person to the
corporation for the purpose of notice. [If the notice is
sent by mail, telegraph or courier service, it shall be
deemed to have been given to the person entitled thereto
20090SB0351PN0755 - 76 -
when deposited in the United States mail or with a
telegraph office or courier service for delivery to that
person or, in the case of telex or TWX, when dispatched.]
Notice under this subparagraph shall be deemed to have
been given to the person entitled thereto when deposited
in the United States mail or with a courier service for
delivery to that person.
(ii) By facsimile transmission, e-mail or other
electronic communication to the person's facsimile number
or address for e-mail or other electronic communications
supplied by the person to the corporation for the purpose
of notice. Notice under this subparagraph shall be deemed
to have been given to the person entitled thereto when
sent.
(2) A notice of meeting shall specify the [place,] day
[and], hour and geographic location, if any, of the meeting
and any other information required by any other provision of
this subpart.
* * *
§ 5704. Place and notice of meetings of members.
(a) Place.--Meetings of members may be held at [such place]
the geographic location within or without this Commonwealth as
may be provided in or fixed pursuant to the bylaws. Unless
otherwise provided in or pursuant to the bylaws, all meetings of
the members shall be held [in this Commonwealth at the
registered office of the corporation.] at the executive office
of the corporation wherever situated. If a meeting of members is
held by means of the Internet or other electronic communications
technology in a fashion pursuant to which the members have the
opportunity to read or hear the proceedings substantially
20090SB0351PN0755 - 77 -
concurrently with their occurrence, vote on matters submitted to
the members, pose questions to the directors and members of any
other body, make appropriate motions and comment on the business
of the meeting, the meeting need not be held at a particular
geographic location.
(b) Notice.--[Written notice] Notice in record form of every
meeting of the members shall be given by, or at the direction
of, the secretary or other authorized person to each member of
record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting that
will consider a fundamental change under Chapter 59 (relating
to fundamental changes); or
(2) five days prior to the day named for the meeting in
any other case.
If the secretary or other authorized person neglects or refuses
to give notice of a meeting, the person or persons calling the
meeting may do so.
* * *
§ 5705. Waiver of notice.
(a) [Written waiver] General rule.--Whenever any [written]
notice is required to be given under the provisions of this
subpart or the articles or bylaws of any nonprofit corporation,
a waiver thereof [in writing, signed] that is filed with the
secretary of the corporation in record form signed by the person
or persons entitled to the notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of
the notice. [Except as otherwise required by this subsection,
neither] Neither the business to be transacted at, nor the
purpose of, a meeting need be specified in the waiver of notice
of the meeting.
20090SB0351PN0755 - 78 -
* * *
§ 5708. Use of conference telephone [and similar equipment.] or
other electronic technology.
(a) Incorporators, directors and members of an other body.--
Except as otherwise provided in the bylaws, one or more persons
may participate in a meeting of the incorporators, the board of
directors or an other body[, or the members] of a nonprofit
corporation by means of conference telephone or [similar
communications equipment] other electronic technology by means
of which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this section shall
constitute presence in person at the meeting.
(b) Members.--Except as otherwise provided in the bylaws,
the presence or participation, including voting and taking other
action, at a meeting of members, or the expression of consent or
dissent to corporate action, by a member by conference telephone
or other electronic means, including, without limitation, the
Internet, shall constitute the presence of, or vote or action
by, or consent or dissent of the member for the purposes of this
subpart.
§ 5722. Qualifications of directors.
(a) General rule.--Each director of a nonprofit corporation
shall be a natural person of full age, except as provided in
subsection (b), who, unless otherwise restricted in the bylaws,
need not be a resident of this Commonwealth or a member of the
corporation. Except as otherwise provided in this section, the
qualifications of directors may be prescribed in the bylaws.
* * *
§ 5723. Number of directors.
The board of directors of a nonprofit corporation shall
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consist of one or more members. [Except as otherwise provided in
this section, the] The number of directors shall be fixed by[,]
or in the manner provided in[,] the bylaws[; or if]. If not so
fixed, the number of directors shall be the same as that stated
in the articles or three if no number is so stated.
§ 5724. Term of office of directors.
(a) General rule.--Each director of a nonprofit corporation
shall hold office until the expiration of the term for which
[he] the director was selected and until [his] a successor has
been selected and qualified or until [his] the director's
earlier death, resignation or removal. Directors, other than
those selected by virtue of their office or former office in the
corporation or in any other entity or organization, shall be
selected for the term of office provided in the bylaws. In the
absence of a provision fixing the term, it shall be one year.
(b) Resignations.--Any director may resign at any time upon
notice in record form to the corporation. The resignation shall
be effective upon its receipt by the corporation or at a
subsequent time specified in the notice of resignation.
(c) Decrease in number.--A decrease in the number of
directors shall not have the effect of shortening the term of
any incumbent director.
(d) Classified board of directors.--Except as otherwise
provided in the bylaws, if the directors are classified in
respect of the time for which they shall severally hold office:
(1) Each class shall be as nearly equal in number as
possible.
(2) The term of office of at least one class shall
expire in each year.
(3) The members of a class shall not be elected for a
20090SB0351PN0755 - 80 -
longer period than four years.
§ 5725. Selection of directors.
(a) General rule.--Except as otherwise provided in this
section, directors of a nonprofit corporation, other than those
[named in the articles, if any,] constituting the first board of
directors, shall be elected by the members.
(b) Other methods.--If a bylaw adopted by the members so
provides, directors may be elected, appointed, designated or
otherwise selected by [such] the person or persons or by [such]
the method or methods as shall be fixed by, or in the manner
provided in, [such] the bylaw, and the directors may be
classified as to the members who exercise the power to select
directors.
(c) Vacancies.--Except as otherwise provided in the
bylaws[,]:
(1) [vacancies] Vacancies in the board of directors,
including vacancies resulting from an increase in the number
of directors, [shall] may be filled by a majority of the
remaining members of the board though less than a quorum, or
by a sole remaining director, and each person so [elected]
selected shall be a director to serve for the balance of the
unexpired term unless otherwise restricted in the bylaws.
(2) When one or more directors resign from the board
effective at a future date, the directors then in office,
including those who have so resigned, shall have power by the
applicable vote to fill the vacancies, the vote thereon to
take effect when the resignations become effective.
(3) In the case of a corporation having a board of
directors classified in respect of the time for which
directors shall severally hold office, any director chosen to
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fill a vacancy, including a vacancy resulting from an
increase in the number of directors, shall hold office until
the next election of the class for which the director has
been chosen and until a successor has been selected and
qualified or until the director's earlier death, resignation
or removal.
(d) Alternate directors.--If the bylaws so provide, a person
or group of persons entitled to elect, appoint, designate or
otherwise select one or more directors may select [one or more
alternates] an alternate for each [such] director. In the
absence of a director from a meeting of the board [one of his
alternates], the director's alternate may, in the manner and
upon [such] the notice, if any, as may be provided in the
bylaws, attend [such] the meeting or execute a consent in record
form and exercise at the meeting [such of] or in the consent,
the powers of the absent director as may be specified by, or in
the manner provided in, the bylaws. When so exercising the
powers of the absent director, [such] the alternate shall be
subject in all respects to the provisions of this [article]
subpart relating to directors.
(e) Nomination of directors.--Unless otherwise provided in
the bylaws [provide otherwise], directors shall be nominated by
a nominating committee or from the floor.
(f) Cross references.--See the definition of "member" in
section 5103 (relating to definitions) and section 5758(c)
(relating to voting rights of members).
§ 5726. Removal of directors.
(a) [By] Removal by the members.--
(1) Unless otherwise provided in a bylaw adopted by the
members, the entire board of directors, or a class of the
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board[,] where the board is classified with respect to the
power to select directors, or any individual director[,] of a
nonprofit corporation may be removed from office without
assigning any cause by the vote of members, or a class of
members, entitled to [cast at least a majority of the votes
which all members present would be entitled to cast at any
annual or other regular election of the directors or of such
class of directors] elect directors, or the class of
directors. In case the board or [such] a class of the board
or any one or more directors are so removed, new directors
may be elected at the same meeting. [If members are entitled
to vote cumulatively for the board or a class of the board,
no individual director shall be removed unless the entire
board or class of the board is removed in case sufficient
votes are cast against the resolution for his removal, which,
if cumulatively voted at an annual or other regular election
of directors, would be sufficient to elect one or more
directors to the board or to the class.]
(2) An individual director shall not be removed, unless
the entire board or class of the board is removed, from the
board of a corporation in which members are entitled to vote
cumulatively for the board or a class of the board if
sufficient votes are cast against the resolution for removal
of the director which, if cumulatively voted at an annual or
other regular election of directors, would be sufficient to
elect one or more directors to the board or to the class.
(b) [By] Removal by the board.--Unless otherwise provided in
a bylaw adopted by the members, the board of directors may
declare vacant the office of a director [if he is declared] who
has been judicially declared of unsound mind [by an order of
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court or is convicted of felony] or who has been convicted of an
offense punishable by imprisonment for a term of more than one
year, or for any other proper cause which the bylaws may
specify, or if, within 60 days, or [such] other time as the
bylaws may specify, after notice of [his] selection, [he] a
director does not accept [such] the office either in writing or
by attending a meeting of the board of directors[,] and fulfill
[such] the other requirements of qualification as the bylaws may
specify.
(c) [By] Removal by the court.--[The court may, upon
petition of any member or director, remove from office any
director in case of fraudulent or dishonest acts, or gross abuse
of authority or discretion with reference to the corporation, or
for any other proper cause, and may bar from office any director
so removed for a period prescribed by the court. The corporation
shall be made a party to such action.] Upon application of any
member or director, the court may remove from office any
director in case of fraudulent or dishonest acts, or gross abuse
of authority or discretion with reference to the corporation, or
for any other proper cause, and may bar from office any director
so removed for a period prescribed by the court. The corporation
shall be made a party to the action and as a prerequisite to the
maintenance of an action under this subsection a member shall
comply with Subchapter G (relating to judicial supervision of
corporate action).
(d) Effect of reinstatement.--An act of the board done
during the period when a director has been suspended or removed
for cause shall not be impugned or invalidated if the suspension
or removal is thereafter rescinded by the members or by the
board or by the final judgment of a court.
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§ 5727. Quorum of and action by directors.
(a) General rule.--Unless otherwise provided in the bylaws,
a majority of the directors in office of a nonprofit corporation
shall be necessary to constitute a quorum for the transaction of
business, and the acts of a majority of the directors present
and voting at a meeting at which a quorum is present shall be
the acts of the board of directors.
(b) Action by [written] consent.--Unless otherwise
restricted in the bylaws, any action [which may] required or
permitted to be [taken]approved at a meeting of the directors <--
may be [taken]approved without a meeting[,] if a consent or <--
consents [in writing setting forth the action so taken shall be
signed] to the action in record form are signed, before, on or
after the effective date of the action, by all of the directors
in office [and shall be] on the date the last consent is signed.
The consent or consents must be filed with the secretary of the
corporation.
§ 5728. Interested [members,] directors or officers; quorum.
(a) General rule.--[No] A contract or transaction between a
nonprofit corporation and one or more of its [members,]
directors or officers or between a nonprofit corporation and
[any other corporation, partnership, association, or other
organization] another domestic or foreign corporation for profit
or not-for-profit, partnership, joint venture, trust or other
association in which one or more of its directors or officers
are directors or officers[,] or have a financial or other
interest, shall not be void or voidable solely for [such] that
reason, or solely because the [member,] director or officer is
present at or participates in the meeting of the board of
directors [which] that authorizes the contract or transaction,
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or solely because [his or their votes are] the vote of the
director or officer is counted for [such] that purpose, if:
(1) the material facts as to the relationship or
interest and as to the contract or transaction are disclosed
or are known to the board of directors and the board [in good
faith] authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested
directors even though the disinterested directors are less
than a quorum;
(2) the material facts as to [his] the director's or
officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the members
entitled to vote thereon, if any, and the contract or
transaction is specifically approved in good faith by vote of
[such] those members; or
(3) the contract or transaction is fair as to the
corporation as of the time it is authorized, approved or
ratified by the board of directors or the members.
(b) Quorum.--Common or interested directors may be counted
in determining the presence of a quorum at a meeting of the
board [which] that authorizes a contract or transaction
specified in subsection (a) [of this section].
* * *
§ 5729. Voting rights of directors.
* * *
(b) Multiple and fractional voting.--The requirement of this
[article] subpart for the presence of or vote or other action by
a specified percentage of directors shall be satisfied by the
presence of or vote or other action by directors entitled to
cast [such] the specified percentage of the votes which all
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directors are entitled to cast.
§ 5730. Compensation of directors.
Except as otherwise restricted in the bylaws, the board of
directors of a nonprofit corporation shall have the authority to
fix the compensation of directors for their services as [such]
directors, and a director may be a salaried officer of the
corporation.
Section 31. Section 5731 of Title 15 is amended by adding a
subsection to read:
§ 5731. Executive and other committees of the board.
* * *
(c) Status of committee action.--The term "board of
directors" or "board," when used in any provision of this
subpart relating to the organization or procedures of or the
manner of taking action by the board of directors, shall be
construed to include and refer to any executive or other
committee of the board. Any provision of this subpart relating
or referring to action to be taken by the board of directors or
the procedure required therefor shall be satisfied by the taking
of corresponding action by a committee of the board of directors
to the extent authority to take the action has been delegated to
the committee under this section.
Section 32. Sections 5733, 5746(a), 5751, 5752, 5753, 5754,
5755, 5756(a)(1) and (3) and (b), 5757 and 5759 of Title 15 are
amended to read:
§ 5733. Removal of officers and agents.
Unless otherwise provided in the bylaws, any officer or agent
of a nonprofit corporation may be removed by the board of
directors or other body [whenever in its judgment the best
interests of the corporation will be served thereby, but such]
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with or without cause. The removal shall be without prejudice to
the contract rights, if any, of any person so removed. Election
or appointment of an officer or agent shall not of itself create
contract rights.
§ 5746. Supplementary coverage.
(a) General rule.--The indemnification and advancement of
expenses provided by or granted pursuant to the other sections
of this subchapter shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement
of expenses may be entitled under any bylaw, agreement, vote of
members or disinterested directors or otherwise, both as to
action in [his] an official capacity and as to action in another
capacity while holding that office. Section 5728 (relating to
interested [members,] directors or officers; quorum) shall be
applicable to any bylaw, contract or transaction authorized by
the directors under this section. A corporation may create a
fund of any nature, which may, but need not, be under the
control of a trustee, or otherwise secure or insure in any
manner its indemnification obligations, whether arising under or
pursuant to this section or otherwise.
* * *
§ 5751. Classes and qualifications of membership.
(a) General rule.--Membership in a nonprofit corporation
shall be of [such] the classes, and shall be governed by [such]
the rules of admission, retention, suspension and expulsion,
[as] prescribed in bylaws adopted by the members [shall
prescribe], except that [all such] the rules shall be
reasonable, germane to the purpose or purposes of the
corporation[,] and equally enforced as to all members of the
same class. Unless otherwise provided by a bylaw adopted by the
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members[, there]:
(1) There shall be one class of members whose voting and
other rights and interests shall be equal.
(2) If there is only one class of members, the members
shall have all the rights of members generally in a nonprofit
corporation.
(b) Corporations without voting members.--Where the articles
provide that the corporation shall have no members, as such, or
where a nonprofit corporation has under its bylaws or in fact no
members entitled to vote on a matter, any provision of this
[article] subpart or any other provision of law requiring notice
to, the presence of, or the vote, consent or other action by
members of the corporation in connection with [such] the matter
shall be satisfied by notice to, the presence of, or the vote,
consent or other action by the board of directors or other body
of the corporation.
(c) Membership status.--Regardless of whether a nonprofit
corporation designates or refers to a person as a member of the
corporation, the person is not a member of the corporation for
purposes of this subpart unless the person satisfies the
definition of "member" in section 5103(a) (relating to
definitions).
§ 5752. Organization on a stock share basis.
(a) General rule.--A nonprofit corporation may be organized
upon either a nonstock basis or, if so provided in its articles,
upon a stock share basis[, as set forth in its articles].
(b) Form of certificates; uncertificated shares.--The shares
of nonprofit corporations organized upon a stock share basis
shall be of [such] the denominations [as] provided in the bylaws
[shall provide] and shall be represented by share
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certificates[.] unless the articles provide that any or all
classes and series of shares, or any part thereof, shall be
uncertificated shares. A provision of the articles providing for
uncertificated shares shall not apply to shares represented by a
certificate until the certificate is surrendered to the
corporation. Except as otherwise expressly provided by law, the
rights and obligations of the holders of shares represented by
certificates and the rights and obligations of the holders of
uncertificated shares of the same class and series shall be
identical. The fact that the corporation is a nonprofit
corporation shall be noted conspicuously on the face of each
certificate. Within a reasonable time after the issuance or
transfer of uncertificated shares, the corporation shall send to
the registered owner thereof a written notice stating:
(1) That the corporation is a nonprofit corporation
incorporated under the laws of this Commonwealth.
(2) The name of the registered owner.
(3) The denomination and class of shares and the
designation of the series, if any, of the shares issued or
transferred.
(c) Rights of shareholders.--Unless otherwise provided in a
bylaw adopted by the members, each share shall entitle the
holder thereof to one vote. No dividends shall be directly or
indirectly paid on [any such] the shares, nor shall the
shareholders be entitled to any portion of the earnings of
[such] the corporation derived through increment of value upon
its property, or otherwise incidentally made, until the
dissolution of [any such] the corporation.
(d) Transferability of shares.--Unless otherwise provided in
the bylaws, [such] the shares shall not be transferable by
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operation of law or otherwise.
(e) Power to cancel shares.--A nonprofit corporation shall
have power to exclude from further membership any shareholder
who fails to comply with the reasonable and lawful bylaws of the
corporation, and may cancel the shares of any [such] offending
member without liability for an accounting[,] except as may be
provided in the bylaws.
(f) Applicability of the Uniform Commercial Code.--The
provisions of [Division 8 of Title 13] 13 Pa.C.S. Div. 8
(relating to investment securities) shall not apply in any
manner to the shares of a nonprofit corporation.
(g) Cross reference.--See the definition of "member" in
section 5103 (relating to definitions).
§ 5753. Membership certificates.
A nonprofit corporation organized upon a nonstock basis shall
not issue shares of stock, but membership in [such] the
corporation may be evidenced by certificates of membership. The
fact that the corporation is a nonprofit corporation shall be
noted conspicuously on the face of each certificate.
§ 5754. Members grouped in local units.
(a) General rule.--The bylaws of a nonprofit corporation may
provide that the members of the corporation shall be grouped in
incorporated or unincorporated local units formed upon the basis
of territorial areas, or [such] other basis as may be determined
in the bylaws, for the purpose of election of delegates or
representatives to represent the members of [such] the local
units at any regular or special meetings of [such] the
corporation. Unless otherwise provided in a bylaw adopted by the
members, each local unit participating in a representative
capacity by means of one or more delegates or otherwise at a
20090SB0351PN0755 - 91 -
meeting of the corporation shall have a number of votes equal to
the total membership of the local unit.
(b) Voting at meetings of delegates.--The requirements of
this [article] subpart for action by or the consent of a
specified number or percentage of the members shall be satisfied
by action by or the consent of [such] that number or percentage
of votes of delegates or representatives of members selected
pursuant to this section.
(c) Calling and holding meetings of delegates.--The
provisions of this [article] subpart relating to the manner of
the calling and holding of and the taking of action at meetings
of members shall be applicable to meetings of delegates or
representatives of members.
(d) Incorporation of local units.--A local unit of an
incorporated or unincorporated parent body [which] that is
incorporated or organized for a purpose or purposes not
involving pecuniary profit, incidental or otherwise, to its
members[,] may be incorporated under this [article] subpart by
an incorporated parent body or by the members of [such] the
local unit.
§ 5755. Time of holding meetings of members.
(a) Regular meetings.--The bylaws of a nonprofit corporation
may provide for the number and the time of meetings of members,
but unless otherwise provided in a bylaw adopted by the members
at least one meeting of the members of a corporation [which]
that has members, as such, entitled to vote, shall be held in
each calendar year for the election of directors[, at such] at
the time [as shall be] provided in or fixed pursuant to
authority granted by the bylaws. Failure to hold the annual or
other regular meeting at the designated time shall not work a
20090SB0351PN0755 - 92 -
dissolution of the corporation or affect otherwise valid
corporate acts. If the annual or other regular meeting [shall
not be] is not called and held within six months after the
designated time, any member may call [such] the meeting at any
time thereafter.
(b) Special meetings.--Special meetings of the members may
be called at any time by:
(1) [by] the board of directors[, or];
(2) members entitled to cast at least 10% of the votes
[which] that all members are entitled to cast at the
particular meeting[, or by such]; or
(3) other officers or persons as may be provided in the
bylaws.
At any time, upon written request of any person who has called a
special meeting, it shall be the duty of the secretary to fix
the time of the meeting[,] which, if the meeting is called
pursuant to a statutory right, shall be held not more than 60
days after the receipt of the request. If the secretary [shall
neglect or refuse] neglects or refuses to fix the time of the
meeting, the person or persons calling the meeting may do so.
(c) Adjournments.--Adjournments of any regular or special
meeting may be taken[,] but any meeting at which directors are
to be elected shall be adjourned only from day to day, or for
[such] longer periods not exceeding 15 days each, as the members
present and entitled to [cast at least a majority of the votes
which all members present and voting are entitled to cast] vote
shall direct, until [such] the directors have been elected.
(d) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
20090SB0351PN0755 - 93 -
§ 5756. Quorum.
(a) General rule.--A meeting of members of a nonprofit
corporation duly called shall not be organized for the
transaction of business unless a quorum is present. Unless
otherwise provided in a bylaw adopted by the members:
(1) The presence of members entitled to cast at least a
majority of the votes [which] that all members are entitled
to cast on [the matters] a particular matter to be acted upon
at the meeting shall constitute a quorum for the purposes of
consideration and action on the matter.
* * *
(3) If a meeting cannot be organized because a quorum
has not attended, those present may, except as otherwise
provided in this [article] subpart, adjourn the meeting to
[such] a time and place [as] they may determine.
(b) Exceptions.--Notwithstanding any contrary provision in
the articles or bylaws, those members entitled to vote who
attend a meeting of members:
(1) [In the case of any meeting called for the election
of directors those who attend the second of such adjourned
meetings] at which directors are to be elected that has been
previously adjourned for lack of a quorum, although less than
a quorum as fixed in this section[,] or in the [articles or]
bylaws, shall nevertheless constitute a quorum for the
purpose of election of directors[.];
(2) [In the case of any meeting called for any other
purpose those who attend the second of such adjourned
meetings] that has been previously adjourned for one or more
periods aggregating at least 15 days because of an absence of
a quorum, although less than a quorum as fixed in this
20090SB0351PN0755 - 94 -
section[,] or in the [articles or] bylaws, shall nevertheless
constitute a quorum for the purpose of acting upon any
[resolution or other] matter set forth in the notice of the
meeting[, if written notice of such second adjourned meeting,
stating] if the notice states that those members who attend
the adjourned meeting shall nevertheless constitute a quorum
for the purpose of acting upon [such resolution or other] the
matter[, is given to each member of record entitled to vote
at such second adjourned meeting at least ten days prior to
the day named for the second adjourned meeting].
§ 5757. Action by members.
(a) General rule.--[Except as otherwise provided in this
article or in a bylaw adopted by the members, the acts at a duly
organized meeting of members present entitled to cast at least a
majority of the votes which all members present and voting are
entitled to cast shall be the acts of the members.
(b) Increased minimum vote.--Whenever in this article a
specified number or percentage of votes of members or of a class
of members is required for the taking of any action, a nonprofit
corporation may prescribe in a bylaw adopted by the members that
a higher number or percentage of votes shall be required for
such action.] Except as otherwise provided in this subpart or in
a bylaw adopted by the members, whenever any corporate action is
to be taken by vote of the members of a nonprofit corporation,
it shall be authorized upon receiving the affirmative vote of a
majority of the votes cast by the members entitled to vote
thereon and, if any members are entitled to vote thereon as a
class, upon receiving the affirmative vote of a majority of the
votes cast by the members entitled to vote as a class.
(b) Changes in required vote.--Whenever a provision of this
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subpart requires a specified number or percentage of votes of
members or of a class of members for the taking of any action, a
nonprofit corporation may prescribe in a bylaw adopted by the
members that a higher number or percentage of votes shall be
required for the action. The number or percentage of members
necessary to call a special meeting of members or to petition
for the proposal of an amendment of articles under this subpart
may not be increased under this subsection. See sections 5504(d)
(relating to adoption, amendment and contents of bylaws) and
5914(d) (relating to adoption of amendments).
(c) Expenses.--Unless otherwise restricted in the articles,
the corporation shall pay the reasonable expenses of
solicitation of votes, proxies or consents of members by or on
behalf of the board of directors or its nominees for election to
the board, including solicitation by professional proxy
solicitors and otherwise, and may pay the reasonable expenses of
a solicitation by or on behalf of other persons.
§ 5759. Voting and other action by proxy.
(a) General rule.--Voting by members of a nonprofit
corporation shall be only in person unless a bylaw adopted by
the members provides for voting by proxy. [The presence of or
vote or other action at a meeting of members, or the expression
of consent or dissent to corporate action in writing, by a proxy
of a member pursuant to such a bylaw shall constitute the
presence of, or vote or action by, or written consent or dissent
of such member for the purposes of this article.] Unless
otherwise restricted by a bylaw adopted by the members:
(1) The presence of, or vote or other action at a
meeting of members, or the expression of consent or dissent
to corporate action, by a proxy of a member pursuant to a
20090SB0351PN0755 - 96 -
bylaw shall constitute the presence of, or vote or action by,
or consent or dissent of the member for the purposes of this
subpart.
(2) Where two or more proxies of a member are present,
the corporation shall, unless otherwise expressly provided in
the proxy, accept as the vote or other action of all the
members or shares represented thereby the vote cast or other
action taken by a majority of them, and, if a majority of the
proxies cannot agree whether the memberships or shares
represented shall be voted or upon the manner of voting the
memberships or shares or taking the other action, the voting
of the memberships or shares or right to take other action
shall be divided equally among those persons.
(b) [Minimum requirements] Execution and filing.--Every
proxy shall be executed [in writing] or authenticated by the
member or by [his] the member's duly authorized [attorney in
fact] attorney-in-fact and filed with or transmitted to the
secretary of the corporation[.] or its designated agent. A
member or the member's duly authorized attorney-in-fact may
execute or authenticate a writing or transmit an electronic
message authorizing another person to act for the member by
proxy. A telegram, telex, cablegram, datagram, e-mail, Internet
communication or other means of electronic transmission from a
member or attorney-in-fact, or a photographic, facsimile or
similar reproduction of a writing executed by a member or
attorney-in-fact:
(1) may be treated as properly executed or authenticated
for purposes of this subsection; and
(2) shall be so treated if it sets forth or utilizes a
confidential and unique identification number or other mark
20090SB0351PN0755 - 97 -
furnished by the corporation to the member for the purposes
of a particular meeting or transaction.
(c) Revocation.--A proxy shall be revocable at will,
notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not
be effective until notice thereof has been given to the
secretary of the corporation[. No] or its designated agent in
writing or by electronic transmission. An unrevoked proxy shall
not be valid after 11 months from the date of its execution,
authentication or transmission unless a longer time is expressly
provided therein[, but in no event shall a proxy be voted on
after three years from the date of its execution]. A proxy shall
not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised,
[written] notice of [such] the death or incapacity is given to
the secretary of the corporation[.] or its designated agent. See
section 6145 (relating to applicability of certain safeguards to
foreign domiciliary corporations).
Section 33. Title 15 is amended by adding sections to read:
§ 5760. (Reserved).
§ 5761. (Reserved).
Section 34. Sections 5760 and 5761 of Title 15 are
renumbered and amended to read:
§ [5760] 5762. Voting by corporations.
(a) Voting in nonprofit corporation matters.--Unless
otherwise provided in a bylaw of a nonprofit corporation adopted
by the members, any other [corporation which is a member of such
a nonprofit corporation may vote therein by any of its
officers,] domestic or foreign corporation for profit or not-
for-profit that is a member of the nonprofit corporation may
20090SB0351PN0755 - 98 -
vote by any of its officers or agents, or by proxy appointed by
any officer or agent, unless some other person, by resolution of
the board of directors of [such] the other corporation[,] or a
provision of its articles or bylaws, a copy of which resolution
or provision certified to be correct by one of its officers
[shall have] has been filed with the secretary of the nonprofit
corporation, [shall be] is appointed its general or special
proxy[,] in which case [such] that person shall be entitled to
vote [therein] as the proxy.
(b) Voting by nonprofit corporations.--Shares of or
memberships in a domestic or foreign corporation for profit or
not-for-profit other than a nonprofit corporation, standing in
the name of a shareholder or member [which] that is a nonprofit
corporation, may be voted by the persons and in the manner
provided for in the case of nonprofit corporations by subsection
(a) [of this section] unless the laws of the jurisdiction in
which the issuer of [any such] the shares or memberships is
incorporated [shall] require the shares or memberships to be
voted by some other person or persons or in some other manner[,]
in which case, to the extent that [such] those laws are
inconsistent [herewith] with this subsection, this subsection
shall not apply.
§ [5761] 5763. Determination of members of record.
(a) Fixing record date.--Unless otherwise restricted in the
bylaws, the board of directors of a nonprofit corporation may
fix a time[, not more than 70 days] prior to the date of any
meeting of members [or any adjournment thereof,] as a record
date for the determination of the members entitled to notice of,
or to vote at, [such] the meeting[. In such case only], which
time, except in the case of an adjourned meeting, shall not be
20090SB0351PN0755 - 99 -
more than 90 days prior to the date of the meeting of members.
Only members of record on the date [so] fixed shall [so] be so
entitled notwithstanding any increase or other change in
membership on the books of the corporation after any record date
fixed as [aforesaid] provided in this subsection. Unless
otherwise [restricted] provided in the bylaws, the board of
directors may similarly fix a record date for the determination
of members of record for any other purpose. When a determination
of members of record has been made as provided in this section
for purposes of a meeting, the determination shall apply to any
adjournment thereof unless otherwise restricted in the bylaws or
unless the board fixes a new record date for the adjourned
meeting.
(b) Determination when no record date fixed.--Unless
otherwise [restricted] provided in the bylaws, if [no] a record
date is not fixed:
(1) The record date for determining members entitled to
notice of or to vote at a meeting of members shall be at the
close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of
business on the day [next] immediately preceding the day on
which the meeting is held.
(2) The record date for determining members entitled to:
(i) express consent or dissent to corporate action
in writing without a meeting, when [no] prior action by
the board of directors or other body is not necessary[,];
(ii) call a special meeting of the members; or
(iii) propose an amendment of the articles;
shall be the close of business on the day on which the first
written consent or dissent, request for a special meeting or
20090SB0351PN0755 - 100 -
petition proposing an amendment of the articles is
[expressed] filed with the secretary of the corporation.
(3) The record date for determining members for any
other purpose shall be at the close of business on the day on
which the board of directors or other body adopts the
resolution relating thereto.
Section 35. Title 15 is amended by adding a section to read:
§ 5764. (Reserved).
Section 36. Sections 5762, 5763, 5764, 5765, 5766 and 5767
of Title 15 are renumbered and amended to read:
§ [5762] 5765. Judges of election.
(a) General rule.--Unless otherwise provided in a bylaw
adopted by the members:
(1) In advance of any meeting of members of a nonprofit
corporation, the board of directors or other body may appoint
judges of election, who need not be members, to act at [such]
the meeting or any adjournment thereof. If judges of election
are not so appointed, the presiding officer of [any such] the
meeting may, and on the request of any member shall, [make
such appointment] appoint judges of election at the meeting.
The number of judges shall be one or three. [No] A person who
is a candidate for office to be filled at the meeting shall
not act as a judge.
(2) In case any person appointed as judge fails to
appear or fails or refuses to act, the vacancy may be filled
by appointment made by the board of directors or other body
in advance of the convening of the meeting, or at the meeting
by the presiding officer thereof.
(3) The judges of election shall determine the number of
members of record and the voting power of each, the members
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present at the meeting, the existence of a quorum, the
authenticity, validity[,] and effect of proxies, if voting by
proxy is permitted under the bylaws, receive votes or
ballots, hear and determine all challenges and questions in
any way arising in connection with the right to vote, count
and tabulate all votes, determine the result[,] and [do such]
perform the acts as may be proper to conduct the election or
vote with fairness to all members. The judges of election
shall perform their duties impartially, in good faith, to the
best of their ability[,] and as expeditiously as is
practical. If there are three judges of election, the
decision, act or certificate of a majority shall be effective
in all respects as the decision, act or certificate of all.
(4) On request of the presiding officer of the meeting,
or of any member, the judges shall make a report in writing
of any challenge or question or matter determined by them,
and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie
evidence of the facts stated therein.
(b) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ [5763] 5766. Consent of members in lieu of meeting.
(a) Unanimous consent.--Unless otherwise restricted in the
bylaws, any action [which may] required or permitted to be taken
at a meeting of the members or of a class of members of a
nonprofit corporation may be taken without a meeting[,] if a
consent or consents [in writing, setting forth the action so
taken, shall be signed] to the action in record form are signed,
before, on or after the effective date of the action, by all of
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the members who would be entitled to vote at a meeting for [such
purpose and shall be filed] that purpose. The consent or
consents must be filed with the secretary of the corporation.
(b) Partial consent.--If the bylaws so provide, any action
required or permitted to be taken at a meeting of the members or
of a class of members may be taken without a meeting upon the
signed consent of members who would have been entitled to cast
the minimum number of votes that would be necessary to authorize
the action at a meeting at which all members entitled to vote
thereon were present and voting. The consents must be filed in
record form with the secretary of the corporation.
(c) Effectiveness of action by partial consent.--An action
taken pursuant to subsection (b) shall not become effective
until after at least ten days' notice of the action has been
given to each member entitled to vote thereon who has not
consented thereto.
§ [5764] 5767. Appointment of custodian of corporation on
deadlock or other cause.
(a) General rule.--[The court, upon] Upon application of any
member, the court may appoint one or more persons to be
custodians of and for any nonprofit corporation when it [is made
to appear] appears that:
(1) [that] at any meeting for the election of directors
or members of an other body, the members are so divided that
they have failed to elect successors to [directors] those
whose terms have expired or would have expired upon the
qualification of their successors; or
(2) [that] any of the conditions specified in section
5981 (relating to proceedings upon [petition of member, etc.)
exists] application of member or director), other than that
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it is beneficial to the interest of the members that the
corporation be wound up and dissolved, exist with respect to
the corporation.
(a.1) Exception.--The court shall not appoint a custodian to
resolve a deadlock if the members by agreement or otherwise have
provided for the appointment of a provisional director or member
of an other body or other means for the resolution of the
deadlock, but the court shall enforce the remedy so provided if
appropriate.
(b) Power and title of custodian.--A custodian appointed
under this section shall have all the power and title of a
receiver appointed under Subchapter G of Chapter 59 (relating to
involuntary liquidation and dissolution), but the authority of
the custodian shall be to continue the business of the
corporation and not to liquidate its affairs and distribute its
assets[,] except when the court shall otherwise order [and
except in cases arising under section 5981(1), (2) and (3)
(relating to proceedings upon petition of member, etc.)].
(c) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ [5765] 5768. Reduction of membership below stated number.
Whenever the membership of a nonprofit corporation having a
stated number of members [shall be] is reduced below [such] that
number by death, withdrawal[,] or otherwise, the corporation
shall not on that account be dissolved, but it shall be lawful
for the surviving or continuing members to continue the
corporate existence[,] unless otherwise restricted in the
bylaws.
§ [5766] 5769. Termination and transfer of membership.
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(a) General rule.--Membership in a nonprofit corporation
shall be terminated in the manner provided in a bylaw adopted by
the members. If [the] membership in any such corporation is
limited to persons who are members in good standing in another
corporation, or in any lodge, church, club, society or other
entity or organization, the bylaws shall in each case define
[such] the limitations, and may provide that failure on the part
of [any such] a member to keep himself in good standing in
[such] the other entity or organization shall be sufficient
cause for [expelling the member from] terminating the membership
of the member in the corporation requiring such eligibility.
(b) Expulsion.--
(1) [No] A member shall not be expelled from any
nonprofit corporation without notice, trial and conviction,
the form of which shall be prescribed by the bylaws.
(2) Paragraph (1) [of this subsection] shall not apply
to termination of membership pursuant to section 5544[(c)]
(relating to [enforcement of payment of fees,] dues and
assessments).
(3) See section 6145 (relating to applicability of
certain safeguards to foreign domiciliary corporations).
(c) Effect of termination of membership.--Unless otherwise
provided in the bylaws, the right of a member of a nonprofit
corporation to vote, and his right, title and interest in or to
the corporation or its property, shall cease [on the] upon
termination of [his] membership.
(d) Transfer of membership.--Unless otherwise provided in
the bylaws, [no] a member may not transfer his membership or any
right arising therefrom. The adoption of an amendment to the
articles or bylaws of a nonprofit corporation that changes the
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identity of some or all of the members or the criteria for
membership does not constitute a transfer for purposes of this
subsection.
§ [5767] 5770. Voting powers and other rights of certain
securityholders and other entities.
[Such] The power to vote in respect to the corporate affairs
and management of a [nonprofit] membership corporation and other
membership rights as may be provided in a bylaw adopted by the
members may be conferred upon:
(1) Registered holders of [securities evidencing
indebtedness] obligations issued or to be issued by the
corporation.
(2) The United States of America, the Commonwealth, a
state, or any political subdivision [thereof or other] of any
of the foregoing, or any entity prohibited by law from
becoming a member of a corporation.
Section 37. Sections 5791, 5792, 5793, 5911, 5913, 5914,
5921, 5923(a), 5924, 5925, 5926(2) and (4), 5928, 5930, 5951,
5956, 5957(b)(1)(ii) and (iv) and (h)(1) and (3), 5972(b),
5973(a), 5975(c), 5976(a), 5977(a) and 5978(b) of Title 15 are
amended to read:
§ 5791. Corporate action subject to subchapter.
(a) General rule.--This subchapter shall apply to, and the
term "corporate action" in this subchapter shall mean any of the
following actions:
(1) The election, appointment, designation or other
selection and the suspension, removal or expulsion of
members, directors, members of an other body or officers of a
nonprofit corporation.
(2) The taking of any action on any matter [which] that
20090SB0351PN0755 - 106 -
is required under this [article] subpart or under any other
provision of law to be, or [which] that under the bylaws may
be, submitted for action to the members, directors, members
of an other body or officers of a nonprofit corporation.
(b) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ 5792. Proceedings prior to corporate action.
(a) General rule.--Where under applicable law or the bylaws
of a nonprofit corporation there has been a failure to hold a
meeting to take corporate action and [such] the failure has
continued for 30 days after the [date] designated or appropriate
[therefor] date, the court may summarily order a meeting to be
held upon the application of any person entitled, either alone
or in conjunction with other persons similarly seeking relief
under this section, to call a meeting to consider the corporate
action in issue.
(b) Conduct of meeting.--The court may determine the right
to vote at [such] the meeting of persons claiming [such] that
right, may appoint a master to hold [such] the meeting under
such orders and powers as the court [may deem proper,] deems
proper and may take [such action as may be] any action required
to give due notice of the meeting and to convene and conduct the
meeting in the interests of justice.
(c) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ 5793. Review of contested corporate action.
(a) General rule.--Upon [petition] application of any person
[whose status as, or whose rights or duties as, a member,
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director, member of an other body, officer or otherwise of a
nonprofit corporation are or may be affected] aggrieved by any
corporate action, the court may hear and determine the validity
of [such] the corporate action.
(b) Powers and procedures.--[The court may make such orders
in any such case as may be just and proper, with power to] By
entering an appropriate order, the court may enforce the
production of any books, papers and records of the corporation
and other relevant evidence [which] that may relate to the
issue. The court shall provide for notice of the pendency of the
proceedings under this section to all persons affected thereby.
If it is determined that no valid corporate action has been
taken, the court may order a meeting to be held in accordance
with section 5792 (relating to proceedings prior to corporate
action).
(c) Cross reference.--See section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ 5911. Amendment of articles authorized.
(a) General rule.--A nonprofit corporation, in the manner
[hereinafter] provided in this subchapter, may [from time to
time] amend its articles for one or more of the following
purposes:
(1) To adopt a new name, subject to the restrictions
[heretofore] provided in this [article] subpart.
(2) To modify any provision of the articles relating to
its term of existence.
(3) To change, add to[,] or diminish its purposes[,] or
to set forth different or additional purposes.
(4) To restate the articles in their entirety.
20090SB0351PN0755 - 108 -
(5) [In] To make any and as many other [respects]
changes as desired.
(b) Exceptions.--[No] An amendment adopted under this
section shall not amend articles in such a way that as so
amended they would not be authorized by this [article] subpart
as original articles of incorporation[,] except that:
(1) Restated articles shall, subject to section 109
(relating to name of commercial registered office provider in
lieu of registered address), state the address of the current
instead of the initial registered office of the corporation
in this Commonwealth[,] and need not state the names and
addresses [of the first directors or] of the incorporators.
(2) The corporation shall not be required to revise any
other provision of its articles if [such] the provision is
valid and operative immediately prior to the filing of [such]
the amendment in the Department of State.
§ 5913. Notice of meeting of members.
[Written notice shall, not less than ten days before the
meeting of members called for the purpose of considering the
proposed amendment,] (a) General rule.--Notice in record form
of the meeting of members of a nonprofit corporation that will
act on the proposed amendment shall be given to each member of
record entitled to vote thereon. [There shall be included in, or
enclosed with, such notice] The notice shall include a copy of
the proposed amendment or a summary of the changes to be
effected thereby.
(b) Cross reference.--See Subchapter A of Chapter 57
(relating to notice and meetings generally).
§ 5914. Adoption of amendments.
(a) General rule.--[The] Unless a bylaw adopted by the
20090SB0351PN0755 - 109 -
members or a specific provision of this subpart requires a
greater vote, a proposed amendment of the articles of a
nonprofit corporation shall be adopted upon receiving the
affirmative vote of the members present entitled to cast at
least a majority of the votes [which] that all members present
are entitled to cast thereon, and if any class of members is
entitled to vote thereon as a class, the affirmative vote of the
members present of such class entitled to cast at least a
majority of the votes [which] that all members present of such
class are entitled to cast thereon. Any number of amendments may
be submitted to the members and voted upon by them at one
meeting.
(a.1) Adoption by board of directors or other body.--Unless
otherwise restricted in the bylaws, an amendment of articles
shall not require the approval of the members of the corporation
if:
(1) the amendment is to provide for perpetual existence;
(2) to the extent the amendment has not been approved by
the members, it restates without change all of the operative
provisions of the articles as theretofore amended or as
amended thereby; or
(3) the amendment accomplishes any combination of
purposes specified in this subsection.
Whenever a provision of this subpart authorizes the board of
directors or other body to take any action without the approval
of the members and provides that a statement, certificate, plan
or other document relating to such action shall be filed in the
Department of State and shall operate as an amendment of the
articles, the board upon taking such action may, in lieu of
filing the statement, certificate, plan or other document, amend
20090SB0351PN0755 - 110 -
the articles under this subsection without the approval of the
members to reflect the taking of such action. The amendment
shall be deemed adopted by the corporation when it has been
adopted by the board of directors or other body in the manner
provided by subsection (b).
(b) Adoption in absence of voting members.--If the
corporation has no members entitled to vote thereon, or no
members entitled to vote thereon other than persons who also
constitute the board of directors or other body, the amendment
shall be deemed adopted by the corporation when it has been
adopted by the board of directors or other body pursuant to
section 5912 (relating to proposal of amendments).
(c) Termination of proposal.--[The resolution or petition
may contain a provision that at any time prior to the filing of
articles of amendment in the Department of State the proposal
may be terminated by the board of directors or other body
notwithstanding the adoption of the amendment by the
corporation.] Prior to the time when an amendment becomes
effective, the amendment may be terminated pursuant to
provisions for amendment, if any, set forth in the resolution or
petition. If articles of amendment have been filed in the
department prior to the termination, a statement under section
5902 (relating to statement of termination) shall be filed in
the department.
(d) Amendment of voting provisions.--[Notwithstanding any
contrary provision of the articles or bylaws,] Unless otherwise
provided in the articles, whenever the articles [shall] require
for the taking of any action by the members or a class of
members a specific number or percentage of votes, the provision
of the articles setting forth [such] that requirement shall not
20090SB0351PN0755 - 111 -
be amended or repealed by any lesser number or percentage of
votes of the members or of [such] the class of members.
§ 5921. Merger and consolidation authorized.
(a) Domestic surviving or new corporation.--Any two or more
domestic nonprofit corporations, or any two or more foreign
nonprofit corporations [not-for-profit], or any one or more
domestic nonprofit corporations[,] and any one or more foreign
nonprofit corporations [not-for-profit], may, in the manner
provided in this subchapter, be merged into one of [such] the
domestic nonprofit corporations, [hereinafter] designated in
this subchapter as the surviving corporation, or consolidated
into a new corporation to be formed under this [article, if
such] subpart, if the foreign corporations [not-for-profit] are
authorized by the [law or] laws of the jurisdiction under which
they are incorporated to effect [such] a merger or consolidation
with a corporation of another jurisdiction.
(b) Foreign surviving or new corporation.--Any one or more
domestic nonprofit corporations, and any one or more foreign
nonprofit corporations [not-for-profit], may, in the manner
[hereinafter] provided in this subchapter, be merged into one of
[such foreign corporations not-for-profit, hereinafter] the
foreign nonprofit corporations, designated in this subchapter as
the surviving corporation, or consolidated into a new
corporation to be incorporated under the [law or] laws of the
jurisdiction under which one of the foreign nonprofit
corporations [not-for-profit] is incorporated, if the laws of
[such] that jurisdiction authorize [such] a merger with or
consolidation into a corporation of another jurisdiction.
§ 5923. Notice of meeting of members.
(a) General rule.--[Written notice] Notice in record form of
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the meeting of members that will act on the proposed plan shall
be given to each member of record, whether or not entitled to
vote thereon, of each domestic nonprofit corporation that is a
party to the merger or consolidation. [There shall be included
in, or enclosed with, the notice] The notice shall include or be
accompanied by a copy of the proposed plan or a summary thereof.
The notice shall [state] provide that a copy of the bylaws of
the surviving or new corporation will be furnished to any member
on request and without cost.
* * *
§ 5924. Adoption of plan.
(a) General rule.--The plan of merger or consolidation shall
be adopted upon receiving the affirmative vote of the members
present entitled to cast at least a majority of the votes
[which] that all members present are entitled to cast thereon of
each of the [merging or consolidating] domestic nonprofit
corporations[,] that is a party to the merger or consolidation
and, if any class of members is entitled to vote thereon as a
class, the affirmative vote of the members present of such class
entitled to cast at least a majority of the votes [which] that
all members present of such class are entitled to cast thereon.
(b) Adoption in absence of voting members.--If [the] a
merging or consolidating corporation has no members entitled to
vote thereon, or no members entitled to vote thereon other than
persons who also constitute the board of directors or other
body, a plan of merger or consolidation shall be deemed adopted
by the corporation when it has been adopted by the board of
directors or other body pursuant to section 5922 (relating to
plan of merger or consolidation).
(c) Termination of plan.--[Any plan of merger or
20090SB0351PN0755 - 113 -
consolidation may contain a provision that at any time prior to
the filing of articles of merger or consolidation in the
Department of State the plan may be terminated by the board of
directors or other body of any corporation which is a party to
the plan notwithstanding adoption of the plan by all or any of
the corporations which are parties to the plan.] Prior to the
time when a merger or consolidation becomes effective, the
merger or consolidation may be terminated pursuant to provisions
for termination, if any, set forth in the plan. If articles of
merger or consolidation have been filed in the Department of
State prior to the termination, a statement under section 5902
(relating to statement of termination) shall be filed in the
department.
§ 5925. Authorization by foreign corporations.
The plan of merger or consolidation shall be authorized,
adopted or approved by each foreign nonprofit corporation
[which] that desires to merge or consolidate[,] in accordance
with the laws of the jurisdiction in which it is incorporated[.]
and, in the case of a foreign domiciliary corporation, in
accordance with the provisions of this subpart to the extent
provided by section 6145 (relating to applicability of certain
safeguards to foreign domiciliary corporations).
§ 5926. Articles of merger or consolidation.
Upon the adoption of the plan of merger or consolidation by
the corporations desiring to merge or consolidate, as provided
in this subchapter, articles of merger or articles of
consolidation, as the case may be, shall be executed by each
corporation and shall, subject to section 109 (relating to name
of commercial registered office provider in lieu of registered
address), set forth:
20090SB0351PN0755 - 114 -
* * *
(2) The name and address, including street and number,
if any, of the registered office of each other domestic
nonprofit corporation and qualified foreign nonprofit
corporation that is a party to the [plan] merger or
consolidation.
* * *
(4) The manner in which the plan was adopted by each
domestic corporation and, if one or more foreign corporations
are parties to the [plan] merger or consolidation, the fact
that the plan was authorized, adopted or approved, as the
case may be, by each of the foreign corporations in
accordance with the laws of the jurisdiction in which it is
incorporated.
* * *
§ 5928. Effective date of merger or consolidation.
Upon the filing of the articles of merger or the articles of
consolidation in the Department of State[,] or upon the
effective date specified in the plan of merger or consolidation,
whichever is later, the merger or consolidation shall be
effective. The merger or consolidation of one or more domestic
nonprofit corporations into a foreign nonprofit corporation
shall be effective according to the provisions of law of the
jurisdiction in which [such] the foreign corporation is
incorporated, but not until articles of merger or articles of
consolidation have been adopted and filed, as provided in this
subchapter.
§ 5930. Voluntary transfer of corporate assets.
(a) General rule.--[A nonprofit corporation shall not sell,
lease away or exchange all, or substantially all, its property
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and assets, with or without good will, unless and until a plan
of sale, lease or exchange of assets with respect thereto shall
have been adopted by the corporation in the manner provided in
this subchapter with respect to the adoption of a plan of
merger.] A sale, lease, exchange or other disposition of all, or
substantially all, of the property and assets, with or without
goodwill, of a nonprofit corporation, if not made pursuant to
Subchapter D of Chapter 19 (relating to division), may be made
only pursuant to a plan of asset transfer. The property or
assets of a direct or indirect subsidiary corporation that is
controlled by a parent corporation shall also be deemed the
property or assets of the parent corporation for purposes of
this subsection. The plan of asset transfer shall set forth the
terms and consideration of the sale, lease, exchange or other
disposition or may authorize the board of directors or other
body to fix any or all of the terms and conditions, including
the consideration to be received by the corporation. Any of the
terms of the plan may be made dependent upon facts ascertainable
outside of the plan if the manner in which the facts will
operate upon the terms of the plan is set forth in the plan. The
plan of asset transfer shall be proposed and adopted, and may be
amended after its adoption and terminated, by a nonprofit
corporation in the manner provided in this subchapter for the
proposal, adoption, amendment and termination of a plan of
merger. A copy or summary of the plan shall be included in, or
enclosed with, the notice of the meeting at which members will
act on the plan. In order to make effective any plan [of sale,
lease or exchange of assets] so adopted, it shall not be
necessary to file any articles or other document in the
Department of State, but the corporation shall comply with the
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requirements of section 5547(b) (relating to nondiversion of
certain property).
(b) Exceptions.--Subsection (a) [of this section] shall not
apply to a sale, lease [away or], exchange or other disposition
of all, or substantially all, the property and assets of a
nonprofit corporation [when made in connection with the
dissolution or liquidation of the corporation. Such a
transaction shall be governed by the provisions of Subchapter F
(relating to voluntary dissolution and winding up) or Subchapter
G (relating to involuntary liquidation and dissolution), as the
case may be.]:
(1) that directly or indirectly owns all of the
outstanding shares or other ownership interest of another
corporation to the other corporation;
(2) if made in connection with the dissolution or
liquidation of the corporation, which transaction shall be
governed by the provisions of Subchapter F (relating to
voluntary dissolution and winding up) or G of Chapter 19
(relating to involuntary liquidation and dissolution), as
appropriate; or
(3) if made in connection with a transaction pursuant to
which all the assets sold, leased, exchanged or otherwise
disposed of are simultaneously leased back to the
corporation.
(c) Mortgage.--A mortgage [or pledge], pledge or grant of a
security interest or dedication of property to the repayment of
indebtedness, with or without recourse, shall not be deemed a
sale, lease [or exchange], exchange or other disposition for the
purposes of this section.
(d) Restrictions.--[Nothing in this] This section shall not
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be construed to authorize the conversion or exchange of property
or assets in fraud of corporate creditors or in violation of
law.
§ 5951. Division authorized.
(a) Division of domestic corporation.--Any domestic
nonprofit corporation may, in the manner provided in this
subchapter, be divided into two or more domestic nonprofit
corporations incorporated or to be incorporated under this
article, or into one or more [such] domestic nonprofit
corporations and one or more foreign nonprofit corporations
[not-for-profit] to be incorporated under the laws of another
jurisdiction or jurisdictions, or into two or more [of such]
foreign nonprofit corporations [not-for-profit], if the [law or]
laws of [such] the other jurisdictions [authorized such]
authorize the division.
(b) Division of foreign corporation.--Any foreign nonprofit
corporation [not-for-profit] may, in the manner provided in this
subchapter, be divided into one or more domestic nonprofit
corporations to be incorporated under this [article] subpart and
one or more foreign nonprofit corporations [not-for-profit]
incorporated or to be incorporated under the laws of another
jurisdiction or jurisdictions, or into two or more [of such]
domestic nonprofit corporations, if [such foreign] the foreign
nonprofit corporation [not-for-profit] is authorized under the
laws of the jurisdiction under which it is incorporated to
effect [such] a division.
(c) Surviving and new corporations.--The corporation
effecting a division, if it [shall survive] survives the
division, is [hereinafter] designated in this subchapter as the
surviving corporation. All corporations originally incorporated
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by a division are [hereinafter] designated in this subchapter as
new corporations. The surviving corporation, if any, and the new
corporation or corporations are [hereinafter] collectively
designated in this subchapter as the resulting corporations.
§ 5956. Effective date of division.
Upon the filing of articles of division in the Department of
State[,] or upon the effective date specified in the plan of
division, whichever is later, the division shall become
effective. The division of a domestic nonprofit corporation into
one or more foreign nonprofit corporations [not-for-profit] or
the division of a foreign nonprofit corporation [not-for-profit]
shall be effective according to the laws of the jurisdictions
where [such] the foreign corporations are or are to be
incorporated and, in the case of a foreign domiciliary
corporation, the provisions of this subpart to the extent
provided by section 6145 (relating to applicability of certain
safeguards to foreign domiciliary corporations), but not until
articles of division have been adopted and filed[,] as provided
in this subchapter.
§ 5957. Effect of division.
* * *
(b) Property rights; allocations of assets and
liabilities.--
(1) Except as otherwise provided by order, if any,
obtained pursuant to section 5547(b) (relating to
nondiversion of certain property):
* * *
(ii) Upon the division becoming effective, the
resulting corporations shall each thenceforth be
responsible as separate and distinct corporations only
20090SB0351PN0755 - 119 -
for such liabilities as each corporation may undertake or
incur in its own name, but shall be liable for the
liabilities of the dividing corporation in the manner and
on the basis provided in [paragraphs (4) and (5)]
subparagraphs (iv) and (v).
* * *
(iv) [To] Except as provided in section 5952(f)
(relating to proposal and adoption of plan of division),
to the extent allocations of liabilities are contemplated
by the plan of division, the liabilities of the dividing
corporation shall be deemed without further action to be
allocated to and become the liabilities of the resulting
corporations on such a manner and basis and with such
effect as is specified in the plan; and one or more, but
less than all, of the resulting corporations shall be
free of the liabilities of the dividing corporation to
the extent, if any, specified in the plan, if in either
case:
(A) no fraud on members without voting rights or
violation of law shall be effected thereby; and
(B) the plan does not constitute a fraudulent
transfer under 12 Pa.C.S. Ch. 51 (relating to
fraudulent transfers).
* * *
(h) Conflict of laws.--It is the intent of the General
Assembly that:
(1) The effect of a division of a domestic [business]
nonprofit corporation shall be governed solely by the laws of
this Commonwealth and any other jurisdiction under the laws
of which any of the resulting corporations is incorporated.
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* * *
(3) The validity of any allocations of assets or
liabilities by a plan of division of a domestic [business]
nonprofit corporation, regardless of whether [or not] any of
the new corporations is a foreign [business] nonprofit
corporation, shall be governed solely by the laws of this
Commonwealth.
* * *
§ 5972. Proposal of voluntary dissolution.
* * *
(b) Submission to members.--The board of directors or other
body or the petitioning members shall direct that the [question
of] resolution recommending dissolution be submitted to a vote
of the members of the corporation entitled to vote thereon at a
regular or special meeting of the members.
* * *
§ 5973. Notice of meeting of members.
(a) General rule.--[Written notice] Notice in record form of
the meeting of members that will consider the [advisability of
voluntarily dissolving a] resolution recommending dissolution of
the nonprofit corporation shall be given to each member of
record entitled to vote thereon [and the purpose shall be
included]. The purpose of the meeting shall be stated in the
notice [of the meeting].
* * *
§ 5975. Predissolution provision for liabilities.
* * *
(c) Winding up and distribution.--The corporation shall, as
speedily as possible, proceed to collect all sums due it,
convert into cash all corporate assets the conversion of which
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into cash is required to discharge its liabilities and, out of
the assets of the corporation, discharge or make adequate
provision for the discharge of all liabilities of the
corporation, according to their respective priorities. Except as
otherwise provided in a bylaw adopted by the members or in this
subpart or by any other provision of law, any surplus remaining
after paying or providing for all liabilities of the corporation
shall be distributed to the shareholders, if any, pro rata, or
if there be no shareholders, among the members per capita. See
section [1972(a)] 5972(a) (relating to proposal of voluntary
dissolution).
§ 5976. Judicial supervision of proceedings.
(a) General rule.--A nonprofit corporation that has elected
to proceed under section [1975] 5975 (relating to predissolution
provision for liabilities), at any time during the winding up
proceedings, may apply to the court to have the proceedings
continued under the supervision of the court and thereafter the
proceedings shall continue under the supervision of the court as
provided in Subchapter G (relating to involuntary liquidation
and dissolution).
* * *
§ 5977. Articles of dissolution.
(a) General rule.--Articles of dissolution and the
certificates or statement required by section 139 (relating to
tax clearance of certain fundamental transactions) shall be
filed in the Department of State when:
(1) all liabilities of the nonprofit corporation have
been discharged, or adequate provision has been made
therefor, in accordance with section 5975 (relating to
predissolution provision for liabilities), and all of the
20090SB0351PN0755 - 122 -
remaining assets of the corporation have been distributed as
provided in section 5975 or in case its assets are not
sufficient to discharge its liabilities, when all the assets
have been fairly and equitably applied, as far as they will
go, to the payment of such liabilities; or
(2) an election to proceed under Subchapter H (relating
to postdissolution provision for liabilities) has been made.
[See section 134 (relating to docketing statement).]
* * *
§ 5978. Winding up of corporation after dissolution.
* * *
(b) Standard of care of directors, members of an other body
and officers.--The dissolution of the corporation shall not
subject its directors, members of an other body or officers to
standards of conduct different from those prescribed by or
pursuant to Chapter 57 (relating to officers, directors and
members). Directors and members of an other body of a dissolved
corporation who have complied with section 5975 (relating to
predissolution provision for liabilities) or Subchapter H
(relating to postdissolution provision for liabilities) and
governing persons of a successor entity who have complied with
Subchapter H shall not be personally liable to the creditors or
claimants of the dissolved corporation.
Section 38. Section 5979(a) of Title 15 is amended and the
section is amended by adding a subsection to read:
§ 5979. Survival of remedies and rights after dissolution.
(a) General rule.--The dissolution of a nonprofit
corporation, either under this subchapter or under Subchapter G
(relating to involuntary liquidation and dissolution) or by
expiration of its period of duration or otherwise, shall not
20090SB0351PN0755 - 123 -
eliminate nor impair any remedy available to or against the
corporation or its directors, members of an other body, officers
or members for any right or claim existing, or liability
incurred, prior to the dissolution, if an action thereon is
brought on behalf of:
(1) the corporation within the time otherwise limited by
law; or
(2) any other person before or within two years after
the date of the dissolution or within the time otherwise
limited by this subpart or other provision of law, whichever
is less. See sections 5987 (relating to proofs of claims),
5993 (relating to acceptance or rejection of matured claims)
and 5994 (relating to disposition of unmatured claims).
[The actions or proceedings may be prosecuted against and
defended by the corporation in its corporate name.]
* * *
(e) Conduct of actions.--An action or proceeding may be
prosecuted against and defended by a dissolved corporation in
its corporate name.
Section 39. Title 15 is amended by adding a section to read:
§ 5980. Dissolution by domestication.
Whenever a domestic nonprofit corporation has domesticated
itself under the laws of another jurisdiction by action similar
to that provided under section 6161 (relating to domestication)
and has authorized that action by the vote required by this
subchapter for the approval of a proposal that the corporation
dissolve voluntarily, the corporation may surrender its charter
under the laws of this Commonwealth by filing in the Department
of State articles of dissolution under this subchapter
containing the statements specified under section 5977(b)(1)
20090SB0351PN0755 - 124 -
through (4) (relating to articles of dissolution). If the
corporation as domesticated in the other jurisdiction qualifies
to do business in this Commonwealth either prior to or
simultaneously with the filing of the articles of dissolution
under this section, the corporation shall not be required to
file with the articles of dissolution the tax clearance
certificates that would otherwise be required under section 139
(relating to tax clearance of certain fundamental transactions).
Section 40. Sections 5981, 5982, 5983, 5984, 5986, 5987,
5988, 5992(c)(2), 5997(d) and 6101(c) of Title 15 are amended to
read:
§ 5981. Proceedings upon [petition] application of member[,
etc.] or director.
[The court may, upon petition] Upon application filed by a
member or director of a nonprofit corporation, the court may
entertain proceedings for the involuntary winding up and
dissolution of the corporation[,] when any of the following [are
made to appear] occur:
(1) [That the] The objects of the corporation have
wholly failed[;], or are entirely abandoned, or [that] their
accomplishment is impracticable.
(2) [That the] The acts of the directors, or those in
control of the corporation, are illegal, oppressive[,] or
fraudulent[, and that] and it is beneficial to the interests
of the members that the corporation be wound up and
dissolved.
(3) [That the] The corporate assets are being misapplied
or wasted[, and that] and it is beneficial to the interests
of the members that the corporation be wound up and
dissolved.
20090SB0351PN0755 - 125 -
(4) [That the] The directors or other body are
deadlocked in the direction of the management of the
[corporate] business and affairs of the corporation and the
members are unable to break the deadlock[, and that] and
irreparable injury to the corporation is being suffered or is
threatened by reason thereof. The court shall not appoint a
receiver or grant other similar relief under this paragraph
if the members by agreement or otherwise have provided for
appointment of a provisional director or member of an other
body or other means for the resolution of a deadlock, but the
court shall enforce the remedy provided by the members, if
appropriate.
§ 5982. Proceedings upon [petition] application of creditor.
[The court may, upon petition] Upon application filed by a
creditor of a nonprofit corporation whose claim has either been
reduced to judgment and an execution thereon returned
unsatisfied[,] or whose claim is admitted by the corporation,
the court may entertain proceedings for the involuntary winding
up and dissolution of the corporation when, in either case, it
is made to appear that the corporation is unable to [pay its
debts and obligations] discharge its liabilities in the regular
course of business, as they mature, or is unable to afford
reasonable security to those who may deal with it.
§ 5983. Proceedings upon petition of superior religious
organization.
The court may, in the case of any nonprofit corporation
organized for the support of public worship, upon [petition
filed by] application of the diocesan convention, presbytery,
synod, conference, council, or other supervising or controlling
organization of which the corporation is a member or with which
20090SB0351PN0755 - 126 -
it is in allegiance and to which it is subordinate, entertain
proceedings for the involuntary winding up and dissolution of
the corporation when it is made to appear that by reason of
shifting population, withdrawal of membership[,] or any other
cause whatsoever, the corporation has ceased to support public
worship within the intent and meaning of its articles[,] and the
dissolution of the corporation may be effected without prejudice
to the public welfare and the interests of the members of the
corporation.
§ 5984. Appointment of receiver pendente lite and other interim
powers.
Upon the filing of [a petition] an application under this
subchapter, the court [shall have all the ordinary powers of a
court of equity to] may issue injunctions, [to] appoint a
receiver [or receivers,] pendente lite[,] with such powers and
duties as the court from time to time may direct[, to take such
other proceedings] and proceed as may be requisite to preserve
the corporate assets wherever situated and carry on the business
of the corporation until a full hearing can be had.
§ 5986. Qualifications of receivers.
A receiver shall in all cases be a [resident of this
Commonwealth,] natural person of full age or a corporation
authorized to act as receiver, which corporation, if so
authorized, may be a domestic corporation for profit or not-for-
profit or a foreign corporation for profit or not-for-profit
authorized to do business in this Commonwealth, and shall give
such bond, if any, as the court may direct, with such sureties,
if any, as the court may require.
§ 5987. Proofs of claims.
(a) General rule.--In a proceeding under this subchapter,
20090SB0351PN0755 - 127 -
the court may require all creditors of the nonprofit corporation
to file with the [prothonotary] office of the clerk of the court
of common pleas, or with the receiver, in such form as the court
may prescribe, verified proofs[, under oath,] of their
respective claims. If the court requires the filing of claims,
it shall fix a date, which shall not be less than [four months]
120 days from the date of the order, as the last day for filing
of claims[,] and shall prescribe the notice that shall be given
to creditors and claimants of the date so fixed. Prior to or
after the date so fixed, the court may extend the time for the
filing of claims. Creditors and claimants [failing to] who do
not file proofs of claim on or before the date so fixed may be
barred, by order of court, from participating in the
distribution of the assets of the corporation.
(b) Cross reference.--See section 5979 (relating to survival
of remedies and rights after dissolution).
§ 5988. Discontinuance of proceedings; reorganization.
[The proceedings under this subchapter may be discontinued at
any time during the winding up proceedings, in the following
manner:
(1) If the proceedings shall have been instituted by a
member or director and it is made to appear to the court that
the deadlock in the corporate affairs has been broken or the
management or control of the corporation has been changed,
the court, in its discretion, may dismiss the proceeding and
direct the receiver to redeliver to the corporation all its
remaining assets.
(2) If the proceedings shall have been instituted by a
creditor and it is made to appear that the debts of the
corporation have been paid or provided for, and that there
20090SB0351PN0755 - 128 -
remain or can be obtained sufficient funds to enable the
corporation to resume its business, the court, in its
discretion, may dismiss the proceeding and direct the
receiver to redeliver to the corporation all its remaining
assets.
(3) When a compromise or reorganization of the
corporation is proposed, whether the proceedings shall have
been instituted by a member or director or by a creditor, the
court, upon the summary application of any member, director,
creditor, or receiver, may order a meeting of the creditors,
or members to be summoned in such manner as the court may
direct. If a majority in number, representing 75% in value of
the creditors or if 75% of the members present in person, or
if a majority in number, representing 75% in value of any
class of creditors, or if 75% of the members of any class
present in person, as the case may be, agree to any
compromise or reorganization of the corporation, such
compromise or reorganization, if approved by the court as
fair and feasible, shall be binding on all creditors or on
all members, or both, or on the class of creditors or class
of members, or both, as the case may be, and also on the
corporation and its receiver, if any.
(4) If the proceedings shall have been instituted by a
superior religious organization and it is made to appear that
appropriate arrangements for the conduct of the affairs of
the corporation have been made, the court, in its discretion,
may dismiss the proceedings and direct the receiver to
redeliver to the corporation its remaining assets.]
The proceedings under this subchapter may be discontinued at
any time if it is established that cause for liquidation no
20090SB0351PN0755 - 129 -
longer exists, in which event the court shall dismiss the
proceedings and direct the receiver to redeliver to the
nonprofit corporation all its remaining property and assets.
§ 5992. Notice to claimants.
* * *
(c) Publication and service of notices.--
* * *
(2) Concurrently with or preceding the publication, the
corporation or successor entity shall send a copy of the
notice by certified or registered mail, return receipt
requested, to each:
(i) known creditor or claimant;
(ii) holder of a claim described in subsection (b);
and
(iii) municipal corporation in which [the registered
office or principal] a place of business of the
corporation in this Commonwealth was located at the time
of filing the articles of dissolution in the department.
* * *
§ 5997. Payments and distributions.
* * *
[(d) Liability of directors.--Directors or members of an
other body of a dissolved corporation or governing persons of a
successor entity that has complied with this section shall not
be personally liable to the claimants of the dissolved
corporation.]
§ 6101. Application of article.
* * *
(c) Admitted foreign fraternal benefit society exclusion.--
This article shall not apply to any foreign corporation not-for-
20090SB0351PN0755 - 130 -
profit qualified to do business in this Commonwealth under
section [603 of the act of July 29, 1977 (P.L.105, No.38) known
as the Fraternal Benefit Society Code.] 2455 of the act of May
17, 1921 (P.L.682, No.284), known as The Insurance Company Law
of 1921.
Section 41. Title 15 is amended by adding sections to read:
§ 6102. Foreign domiciliary corporations.
A foreign nonprofit corporation is a foreign domiciliary
corporation if it is a corporation:
(1) which derived more than one-half of its revenues for
the preceding three fiscal years, or such portion thereof as
the corporation was in existence, from sources in this
Commonwealth and was at any time during that period doing
business in this Commonwealth on the basis of the most
minimal contacts with this Commonwealth permitted under the
Constitution of the United States; or
(2) at least a majority of the bona fide members of
which are residents of this Commonwealth.
§ 6103. Acquisition of foreign domiciliary corporation status.
(a) General rule.--A foreign nonprofit corporation shall
become a foreign domiciliary corporation under section 6102
(relating to foreign domiciliary corporations) on the first day
of the month following the month in which the corporation first
has knowledge that either test has been met or upon entry of an
order by any court of competent jurisdiction declaring that
either test has been met.
(b) Newly incorporated corporations.--Where the test or
tests under section 6102 are met at the time of the admission of
the first members of the corporation and continuously
thereafter, foreign domiciliary corporation status when
20090SB0351PN0755 - 131 -
established shall be retroactive to the incorporation of the
corporation.
§ 6104. Termination of foreign domiciliary corporation status.
A foreign domiciliary corporation shall cease to have that
status on the first day of the month following the month in
which the corporation first has knowledge that it no longer
meets either test under section 6102 (relating to foreign
domiciliary corporations) or upon entry of an order of any court
of competent jurisdiction declaring that the corporation no
longer meets either test.
Section 42. Sections 6122(b)(3), 6123(b), 6141, 6142, 6143,
6145, 8102(b)(2) and 8105 of Title 15 are amended to read:
§ 6122. Excluded activities.
* * *
(b) Exceptions.--The specification of activities in
subsection (a) does not establish a standard for activities that
may subject a foreign corporation to:
* * *
(3) The provisions of section 6145 (relating to
applicability of certain safeguards to foreign domiciliary
corporations).
§ 6123. Requirements for foreign corporation names.
* * *
(b) Exceptions.--
(1) The provisions of section 5303(b) (relating to
duplicate use of names) shall not prevent the issuance of a
certificate of authority to a foreign nonprofit corporation
setting forth a name that is [confusingly similar to] not
distinguishable upon the records of the department from the
name of any other domestic or foreign corporation for profit
20090SB0351PN0755 - 132 -
or [corporation] not-for-profit, [or of any domestic or
foreign limited partnership that has filed a certificate or
qualified under Chapter 85 (relating to limited partnerships)
or corresponding provisions of prior law,] or of any
corporation or other association then registered under 54
Pa.C.S. Ch. 5 (relating to corporate and other association
names) or to any name reserved or registered as provided in
this part, if the foreign nonprofit corporation applying for
a certificate of authority files in the department [one of
the following:
(i) A] a resolution of its board of directors or
other body adopting a fictitious name for use in
transacting business in this Commonwealth, which
fictitious name is [not confusingly similar to]
distinguishable upon the records of the department from
the name of the other corporation or other association
[or to] and from any name reserved or registered as
provided in this part [and] that is otherwise available
for use by a domestic nonprofit corporation.
[(ii) The written consent of the other corporation
or other association or holder of a reserved or
registered name to use the same or confusingly similar
name and one or more words are added to make the name
applied for distinguishable from the other name.]
(2) The provisions of section 5303(c) (relating to
required approvals or conditions) shall not prevent the
issuance of a certificate of authority to a foreign nonprofit
corporation setting forth a name that is prohibited by that
subsection if the foreign nonprofit corporation applying for
a certificate of authority files in the department a
20090SB0351PN0755 - 133 -
resolution of its board of directors or other body adopting a
fictitious name for use in transacting business in this
Commonwealth that is available for use by a domestic
nonprofit corporation.
§ 6141. Penalty for doing business without certificate of
authority.
(a) Right to bring actions suspended.--[No] A nonqualified
foreign nonprofit corporation doing business in this
Commonwealth within the meaning of Subchapter B [of this
chapter] (relating to qualification) shall not be permitted to
maintain any action or proceeding in any court of this
Commonwealth until [such] the corporation [shall have] has
obtained a certificate of authority. [Nor, except] Except as
provided in subsection (b) [of this section, shall any action],
an action or proceeding may not be maintained in any court of
this Commonwealth by any successor or assignee of [such] the
corporation on any right, claim or demand arising out of the
doing of business by [such] the corporation in this Commonwealth
until a certificate of authority [shall have] has been obtained
by [such] the corporation or by a corporation [which] that has
acquired all or substantially all of its assets.
(a.1) Contracts, property and defense against actions
unaffected.--The failure of a foreign nonprofit corporation to
obtain a certificate of authority to transact business in this
Commonwealth shall not impair the validity of any contract or
act of [such] the corporation [and], shall not prevent [such]
the corporation from defending any action in any court of this
Commonwealth and shall not render escheatable any of its real or
personal property.
[(b) Title to real property.--The title to any real estate
20090SB0351PN0755 - 134 -
situate in this Commonwealth which is derived through any
nonqualified foreign corporation not authorized under the laws
of this Commonwealth to hold the same, and which has vested or
vests in any foreign corporation for profit or not-for-profit
authorized to hold such real estate or in any citizen or
citizens of the United States or domestic corporation for profit
or not-for-profit shall be good and valid and free and clear of
any right of escheat by the Commonwealth; and the holder thereof
may convey an estate indefeasible as to any right of escheat
which the Commonwealth might otherwise have by reason of the
unauthorized holding and conveyance by such nonqualified foreign
corporation.]
§ 6142. General powers and duties of qualified foreign
corporations.
(a) General rule.--A qualified foreign nonprofit
corporation, so long as its certificate of authority [shall] is
not [be] revoked, shall enjoy the same rights and privileges as
a domestic nonprofit corporation, but no more, and, except as in
this [part] subpart otherwise provided, shall be subject to the
same liabilities, restrictions, duties and penalties now in
force or hereafter imposed upon domestic nonprofit corporations,
to the same extent as if it had been incorporated under this
[part to transact the business set forth in its certificate of
authority] subpart.
(b) Agricultural lands.--Interests in agricultural land
shall be subject to the restrictions of, and escheatable as
provided by, the act of April 6, 1980 (P.L.102, No.39), referred
to as the Agricultural Land Acquisition by Aliens Law.
§ 6143. General powers and duties of nonqualified foreign
corporations.
20090SB0351PN0755 - 135 -
(a) Acquisition of real and personal property.--Every
nonqualified foreign nonprofit corporation[, the activities of
which in this Commonwealth do not constitute doing business in
this Commonwealth for the purposes of Subchapter B of this
chapter (relating to qualification),] may acquire, hold,
mortgage, lease and transfer real and personal property in this
Commonwealth, in the same manner and subject to the same
limitations as [domestic] a qualified foreign nonprofit
[corporations] corporation.
(b) Duties.--[A] Except as provided in section 6141(a)
(relating to penalty for doing business without certificate of
authority), a nonqualified foreign nonprofit corporation doing
business in this Commonwealth within the meaning of Subchapter B
[of this chapter] (relating to qualification) shall be subject
to the same liabilities, restrictions, duties and penalties now
or hereafter imposed upon a qualified foreign nonprofit
corporation.
§ 6145. Applicability of certain safeguards to foreign
domiciliary corporations.
[(a) Application.--This section shall be applicable to any
qualified or nonqualified foreign corporation:
(1) which derived more than one-half of its revenues for
the preceding three fiscal years, or such portion thereof as
the corporation was in existence, from sources within this
Commonwealth and was at any time during such period doing
business within this Commonwealth on the basis of the most
minimal contacts with this Commonwealth permitted under the
Constitution of the United States; or
(2) at least a majority of the bona fide members of
which are residents of this Commonwealth.]
20090SB0351PN0755 - 136 -
(b) Internal affairs doctrine not applicable.--The General
Assembly hereby finds and determines that [the] foreign
domiciliary corporations [to which this section applies]
substantially affect this Commonwealth. [No court] The courts of
this Commonwealth shall [hereafter] not dismiss or stay any
action or proceeding brought by a member[, director, officer or
agent of such a] or representative of a foreign domiciliary
corporation, as such, against [such] the corporation or any one
or more of the members[, directors, officers or agents] or
representatives thereof, as such, on the ground that [such] the
corporation is a foreign corporation not-for-profit or that the
cause of action relates to the internal affairs thereof, but
every such action shall proceed with like effect as if [such]
the corporation were a domestic corporation. Except as provided
in subsection (c) [of this section], the court having
jurisdiction of the action or proceeding shall apply the law of
the jurisdiction under which the foreign domiciliary corporation
was incorporated.
(c) Minimum safeguards.--The following provisions of this
subpart shall be applicable to foreign domiciliary corporations
[to which this section applies], except that nothing in this
subsection shall require the filing of any document in the
Department of State as a prerequisite to the validity of any
corporate action or the doing of any corporate action by the
foreign domiciliary corporation which is impossible under the
laws of its domiciliary jurisdiction:
[(1)] Section 5504(b) (relating to adoption and contents
of bylaws).
[(2)] Section 5508 (relating to corporate records;
inspection by members).
20090SB0351PN0755 - 137 -
[(3)] Section [5553] 5554 (relating to annual report of
directors or other body).
[(4)] Section 5743 (relating to mandatory
indemnification).
[(5)] Section 5755 (relating to time of holding meetings
of members).
[(6)] Section 5758(e) (relating to [voting lists] voting
rights of members).
[(7)] Section [5759(b) (relating to minimum
requirements)] 5759(c) (relating to voting and other action
by proxy).
[(8)] Section [5762] 5765 (relating to judges of
election).
[(9)] Section [5764] 5767 (relating to appointment of
custodian of corporation on deadlock or other cause).
[(10)] Section [5766(b)] 5769(b) (relating to
[expulsion] termination and transfer of membership).
[(11) Subchapter G of Chapter 57 (relating to judicial
supervision of corporate action).]
[(12)] Chapter 59 (relating to fundamental changes).
For the purposes of this subsection, corporate action shall not
be deemed to be impossible under the laws of the domiciliary
jurisdiction of a foreign corporation merely because prohibited
or restricted by the terms of the articles, certificate of
incorporation, bylaws or other organic law of the corporation,
but the court may require the corporation to amend such organic
law so as to be consistent with the minimum safeguards
prescribed by this subsection.
(d) Section exclusive.--[No provision of this article] The
provisions of this subpart, other than the provisions of this
20090SB0351PN0755 - 138 -
section, shall not be construed to regulate the incorporation or
internal affairs of a foreign corporation not-for-profit.
§ 8102. Interchangeability of partnership, limited liability
company and corporate forms of organization.
* * *
(b) Exceptions.--Subsection (a) shall not:
* * *
(2) [Apply to a] Authorize the conduct of the business
of banking [institution, credit union,] or insurance
[corporation or savings association,] unless the laws
relating thereto or this part expressly [contemplate] permit
the conduct of [the regulated] that business in partnership
or limited liability company form. See section 8911 (relating
to purposes).
* * *
§ 8105. Ownership of certain professional partnerships.
Except as otherwise provided by statute, rule or regulation
applicable to a particular profession, all of the ultimate
beneficial owners of the partnership interests in a partnership
that renders one or more restricted professional services shall
be licensed persons. As used in this section, the term
"restricted professional services" shall have the meaning
specified in section 8903 (relating to definitions [and index of
definitions]).
Section 42.1. Section 8201(e) of Title 15 is amended and
subsection (a) is amended by adding a paragraph to read:
§ 8201. Scope.
(a) Application of subchapter.--This subchapter applies to a
general or limited partnership formed under the laws of this
Commonwealth that registers under this section. Any partnership
20090SB0351PN0755 - 139 -
that desires to register under this subchapter or to amend or
terminate its registration shall file in the Department of State
a statement of registration, amendment or termination, as the
case may be, which shall be signed by a general partner and
shall set forth:
* * *
(5) If the partnership is a restricted professional
partnership, a statement that it renders one or more
restricted professional services.
* * *
(e) Prohibited termination.--A registration under this
subchapter may not be terminated while the partnership is a
bankrupt [as that term is defined in section 8903 (relating to
definitions and index of definitions)]. See section 8221(f)
(relating to annual registration).
* * *
Section 42.2. Section 8202 of Title 15 is amended by adding
definitions to read:
§ 8202. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Restricted professional partnership." A domestic or foreign
registered limited liability partnership that renders one or
more restricted professional services. The restrictions in
section 8996 (relating to restrictions) do not apply to a
restricted professional partnership.
"Restricted professional services." The following
professional services: chiropractic, dentistry, law, medicine
20090SB0351PN0755 - 140 -
and surgery, optometry, osteopathic medicine and surgery,
podiatric medicine, public accounting, psychology or veterinary
medicine.
Section 42.3. Section 8204 of Title 15 is amended to read:
§ 8204. Limitation on liability of partners.
(a) General rule.--Except as provided in subsection (b)[,
a]:
(1) A partner in a registered limited liability
partnership that is not a restricted professional partnership
shall not be [individually] liable directly or indirectly,
whether by way of indemnification, contribution, assessment
or otherwise, [for debts and obligations] under an order of
court or in any other manner for a debt, obligation or
liability of, or chargeable to, the partnership, whether
sounding in contract or tort or otherwise, that [arise]
arises from any negligent or wrongful acts or misconduct
committed by another partner or other representative of the
partnership while the registration of the partnership under
this subchapter is in effect.
(2) A partner in a restricted professional partnership
shall not be liable directly or indirectly, whether by way of
indemnification, contribution, assessment or otherwise, under
an order of court or in any other manner for a debt,
obligation or liability of any kind of, or chargeable to, the
partnership that arises while the partnership has the status
of a restricted professional partnership or for acts of
another partner or other representative of the partnership
committed while the partnership has the status of a
restricted professional partnership.
(b) Exceptions.--
20090SB0351PN0755 - 141 -
(2) Subsection (a) shall not affect the liability of a
partner:
(i) Individually for any negligent or wrongful acts
or misconduct committed by him or by any person under his
direct supervision and control.
(ii) For any debts [or], obligations or liabilities
of the partnership[:
(A) arising from any cause other than those
specified in subsection (a); or
(B)] as to which the partner has agreed in
[writing] record form to be liable.
(iii) To the extent expressly undertaken in the
partnership agreement or the certificate of limited
partnership.
(3) Subsection (a) shall not affect in any way:
(i) the liability of the partnership itself for all
its debts [and], obligations and liabilities;
(ii) the availability of the entire assets of the
partnership to satisfy its debts [and obligations],
obligations and liabilities; or
(iii) any obligation undertaken by a partner in
[writing] record form to individually indemnify another
partner of the partnership or to individually contribute
toward a liability of another partner.
(4) Subsection (a)(1) shall not affect the liability of
a partner for any debts, obligations or liabilities of the
partnership arising from any cause other than those specified
in subsection (a)(1).
(5) Subsection (a)(2) shall not apply to debts,
obligations or liabilities arising, or acts committed, before
20090SB0351PN0755 - 142 -
(the Legislative Reference Bureau shall insert here the
effective date of subsection (a)(2)). This paragraph shall
not adversely affect a limitation on liability under this
section available to a partner in a restricted professional
partnership before (the Legislative Reference Bureau shall
insert here the effective date of subsection (a)(2)).
(c) Continuation of limited liability.--Neither the
termination of the registration of a partnership under this
subchapter nor the dissolution of the partnership shall affect
the limitation on the liability of a partner in the partnership
under this section [with respect to negligent or wrongful acts
or misconduct occurring] for debts, obligations or liabilities
that arose while the registration under this subchapter was in
effect.
(c.1) Proper parties.--A partner in a registered limited
liability partnership is not a proper party to an action or
proceeding by or against the partnership, the object of which is
to recover damages or enforce debts, obligations or liabilities
for which the partner is not liable under this section.
(d) Cross reference.--See section 103 (relating to
subordination of title to regulatory laws).
Section 42.4. Section 8205(a) and (b)(2), (5) and (7) of
Title 15 are amended and the section is amended by adding a
subsection to read:
§ 8205. Liability of withdrawing partner.
(a) General rule.--Except as provided in subsection (b), if
the business of a registered limited liability partnership is
continued without liquidation of the partnership affairs
following the dissolution of the partnership as a result of the
withdrawal for any reason of a partner, the withdrawing partner
20090SB0351PN0755 - 143 -
shall not be [individually] liable directly or indirectly,
whether by way of indemnification, contribution, assessment or
otherwise, under an order of court or in any other manner for
any of the debts [and], obligations or liabilities of any kind
of either the dissolved partnership or any partnership
continuing the business if a statement of withdrawal is filed as
provided in this section.
(b) Exceptions.--Subsection (a) shall not affect the
liability of a partner:
* * *
(2) For any debts [or], obligations or liabilities of
the partnership as to which the withdrawing partner has
agreed in [writing] record form to be liable.
* * *
(5) To the extent a debt [or], obligation or liability
of the partnership has been expressly undertaken by the
partner in the partnership agreement or the certificate of
limited partnership.
* * *
(7) For any obligation undertaken by a partner in
[writing] record form to individually indemnify another
partner of the partnership or to individually contribute
toward a liability of another partner.
* * *
(h.1) Proper parties.--A partner in a registered limited
liability partnership is not a proper party to an action or
proceeding by or against the partnership, the object of which is
to recover damages or enforce debts, obligations or liabilities
for which the partner is not liable under this section.
* * *
20090SB0351PN0755 - 144 -
Section 42.5. Section 8211(b)(1) and (c) of Title 15 are
amended to read:
§ 8211. Foreign registered limited liability partnerships.
* * *
(b) Registration to do business.--A foreign registered
limited liability partnership, regardless of whether or not it
is also a foreign limited partnership, shall be subject to
Subchapter K of Chapter 85 (relating to foreign limited
partnerships) as if it were a foreign limited partnership,
except that:
(1) Its application for registration shall state that it
is a registered limited liability partnership[.] and, if the
partnership is a restricted professional partnership, shall
also include a statement that it renders one or more
restricted professional services.
* * *
(c) Exception.--The liability of the partners in a foreign
registered limited liability partnership shall be governed by
the laws of the jurisdiction under which it is organized, except
that the partners in a foreign registered limited liability
partnership that is not a restricted professional partnership
shall not be entitled to greater protection from liability than
is available to the partners in a domestic registered limited
liability partnership that is not a restricted professional
partnership.
Section 42.6. Section 8221(f) of Title 15 is amended to
read:
§ 8221. Annual registration.
* * *
(f) Exception for bankrupt partnerships.--A partnership that
20090SB0351PN0755 - 145 -
would otherwise be required to pay the annual registration fee
set forth in subsection (b) shall not be required to pay that
fee with respect to any year during any part of which the
partnership is a bankrupt [as defined in section 8903 (relating
to definitions and index of definitions)]. The partnership
shall, instead, indicate on its certificate of annual
registration for that year that it is exempt from payment of the
annual registration fee pursuant to this subsection. If the
partnership fails to file timely a certificate of annual
registration, a lien shall be entered on the records of the
department pursuant to subsection (e) which shall not be removed
until the partnership files a certificate of annual registration
indicating its entitlement to an exemption from payment of the
annual registration fee as provided in this subsection. See
section 8201(e) (relating to scope).
Section 42.7. The definition of "bankrupt" in section 8302
of Title 15 is amended to read:
§ 8302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
["Bankrupt." Includes bankrupt under the Bankruptcy Code (11
U.S.C. § 101 et seq.) or insolvent under any State insolvency
act.]
* * *
Section 42.8. Section 8304 of Title 15 is amended by adding
a subsection to read:
§ 8304. Rules of construction.
* * *
(c) Validation of prohibition of assignments.--
20090SB0351PN0755 - 146 -
(1) The provisions of 13 Pa.C.S. §§ 9406 (relating to
discharge of account debtor; notification of assignment;
identification and proof of assignment; restrictions on
assignment of accounts, chattel paper, payment intangibles
and promissory notes ineffective) and 9408 (relating to
restrictions on assignment of promissory notes, health-care-
insurance receivables and certain general intangibles
ineffective) shall not apply to any interest in a domestic
partnership, including any right, power and interest arising
under a partnership agreement or this part.
(2) This subsection shall be construed to prevail over
13 Pa.C.S. §§ 9406 and 9408.
Section 42.9. Section 8503(b) of Title 15 is amended by
adding a definition to read:
§ 8503. Definitions and index of definitions.
* * *
(b) Index of definitions.--Other definitions applying to
this chapter and the sections in which they appear are:
* * *
"Bankrupt." Section 102.
* * *
Section 42.10. Title 15 is amended by adding a section to
read:
§ 8511.1. Advertisement.
(a) Requirement.--The prospective partners or the limited
partnership must officially publish a notice of intent to file
or of filing a certificate of limited partnership.
(b) Time.--The notice may appear prior to or after the
certificate is filed with the department.
(c) Content.--The notice shall set forth briefly:
20090SB0351PN0755 - 147 -
(1) The name of the limited partnership.
(2) The fact that the limited partnership is formed
under Chapter 85 (relating to limited partnerships).
(d) Transitional rule.--This section does not apply to a
limited partnership whose certificate of limited partnership was
filed on or before (the Legislative Reference Bureau shall
insert here the effective date of this section).
Section 42.11. Section 8562(a) of Title 15 is amended and
the section is amended by adding subsections to read:
§ 8562. Assignment of partnership interest.
(a) General rule.--Except as otherwise provided in the
partnership agreement:
(1) a partnership interest is assignable in whole or in
part;
(2) an assignment of a partnership interest does not
dissolve a limited partnership or entitle the assignee to
become or to exercise any rights of a partner;
(3) an assignment entitles the assignee to share in such
profits and losses, to receive such distributions, and to
receive such allocations of income, gain, loss, deduction, or
credit or similar item to which the assignor was entitled, to
the extent assigned; [and]
(4) a partner ceases to be a partner and to have the
power to exercise any rights or powers of a partner upon
assignment of all of his partnership interest[.]; and
(5) the pledge of, or granting of a security interest,
lien or other encumbrance in or against, any or all of the
partnership interest of a partner shall not cause the partner
to cease to be a partner or to have the power to exercise any
rights or powers of a partner.
20090SB0351PN0755 - 148 -
* * *
(d) Validation of prohibition of assignments.--
(1) The provisions of 13 Pa.C.S. §§ 9406 (relating to
discharge of account debtor; notification of assignment;
identification and proof of assignment; restrictions on
assignment of accounts, chattel paper, payment intangibles
and promissory notes ineffective) and 9408 (relating to
restrictions on assignment of promissory notes, health-care-
insurance receivables and certain general intangibles
ineffective) shall not apply to any interest in a domestic
limited partnership, including any right, power and interest
arising under a partnership agreement or this part.
(2) This subsection shall be construed to prevail over
13 Pa.C.S. §§ 9406 and 9408.
(e) Bearer certificates prohibited.--A limited partnership
may not issue certificates of partnership interest in bearer
form. This subsection may not be varied by the certificate of
limited partnership or partnership agreement.
Section 42.12. Title 15 is amended by adding a section to
read:
§ 8573.1. Advertisement.
(a) Requirement.--The limited partnership must promptly
cause notice of the winding up proceedings to be officially
published.
(b) Content.--The notice shall set forth briefly:
(1) The name of the limited partnership.
(2) The fact that winding up of the limited partnership
has commenced.
(c) Transitional rule.--This section does not apply to
winding up of a limited partnership that iswas commenced on or <--
20090SB0351PN0755 - 149 -
before (the Legislative Reference Bureau shall insert here the
effective date of this section).
Section 42.13. Section 8585 of Title 15 is amended by adding
a subsection to read:
§ 8585. Changes and amendments.
* * *
(b.1) Registered office.--A qualified foreign limited
partnership may, from time to time, change the address of its
registered office in the manner provided by section 8506(b)
(relating to registered office).
* * *
Section 42.14. Title 15 is amended by adding a section to
read:
§ 8590.1. Advertisement.
(a) Registration.--
(1) A foreign limited partnership must officially
publish notice of its intention to apply or its application
for registration as a foreign limited partnership.
(2) The notice may appear prior to or after the
application for registration has been filed with the
department.
(3) The notice shall set forth briefly:
(i) The name of the foreign limited partnership and
the jurisdiction under the laws of which it is formed.
(ii) The fact that the foreign limited partnership
will apply or has applied for registration under
Subchapter K of Chapter 85 (relating to foreign limited
partnerships).
(iii) The address, including street and number, if
any, of its principal office under the laws of the
20090SB0351PN0755 - 150 -
jurisdiction in which it is formed.
(iv) Subject to section 109 (relating to name of
commercial registered office provider in lieu of
registered address), the address, including street and
number, if any, of its proposed registered office in this
Commonwealth.
(4) This subsection does not apply to an application for
registration that was filed on or before (the Legislative
Reference Bureau shall insert here the effective date of this
section).
(b) Withdrawal.--
(1) A qualified foreign limited partnership must
officially publish notice of its intention to withdraw from
doing business in this Commonwealth.
(2) The notice shall set forth briefly:
(i) The name of the foreign limited partnership and
the jurisdiction under the laws of which it is formed.
(ii) The address, including street and number, if
any, of its principal office under the laws of the
jurisdiction in which it is formed.
(iii) Subject to section 109, the address, including
street and number, if any, of its last registered office
in this Commonwealth.
(3) This subsection does not apply to a qualified
foreign limited partnership that withdrew from doing business
in this Commonwealth on or before (the Legislative Reference
Bureau shall insert here the effective date of this section).
Section 42.15. Section 8903 heading and the definitions of
"bankrupt," "event of dissociation" and "obligation" in
subsection (a) and subsection (b) are amended to read:
20090SB0351PN0755 - 151 -
§ 8903. Definitions [and index of definitions].
(a) [Definitions] General definitions.--The following words
and phrases when used in this chapter shall have the meanings
given to them in this section unless the context clearly
indicates otherwise:
["Bankrupt." A person who is the subject of:
(1) an order for relief or a voluntary case under 11
U.S.C. (relating to bankruptcy);
(2) a comparable order or case under a successor statute
of general application; or
(3) a comparable order or case under a State insolvency
act.]
* * *
"Event of dissociation." An event that causes a person to
cease to be a member of a limited liability company. [See
section 8971(a)(4) (relating to dissolution).]
* * *
["Obligation." Includes a note or other form of
indebtedness, whether secured or unsecured.]
* * *
(b) Index of other definitions.--Other definitions applying
to this chapter and the sections in which they appear are:
"Act" or "action." Section 102.
"Bankrupt." Section 102.
"Department." Section 102.
"Licensed person." Section 102.
"Obligation." Section 102.
"Professional services." Section 102.
Section 42.16. Title 15 is amended by adding a section to
read:
20090SB0351PN0755 - 152 -
§ 8909. Validation of prohibitions of assignments.
(a) General rule.--The provisions of 13 Pa.C.S. §§ 9406
(relating to discharge of account debtor; notification of
assignment; identification and proof of assignment; restrictions
on assignment of accounts, chattel paper, payment intangibles
and promissory notes ineffective) and 9408 (relating to
restrictions on assignment of promissory notes, health-care-
insurance receivables and certain general intangibles
ineffective) shall not apply to any interest in a domestic
limited liability company, including any right, power and
interest arising under an operating agreement or this part.
(b) Construction.--This section shall be construed to
prevail over 13 Pa.C.S. §§ 9406 and 9408.
Section 42.16a. Section 8911(a) of Title 15 is amended by
adding a paragraph and the section is amended by adding a
subsection to read:
§ 8911. Purposes.
(a) General rule.--Limited liability companies may be
organized under this chapter for any lawful purpose, except for
the purpose of banking or insurance. Unless otherwise restricted
in its certificate of organization, every limited liability
company has as its purpose the engaging in all lawful business
for which limited liability companies may be organized under
this chapter. Nothing in this section shall prohibit the
following:
* * *
(3) A limited liability company managed by one or more
managers exercising any of the fiduciary or other
representative powers described in Chapter 4 of the act of
November 30, 1965 (P.L.847, No.356), known as the Banking
20090SB0351PN0755 - 153 -
Code of 1965.
(a.1) Serving as trust company.--A limited liability company
that exercises fiduciary or other representative powers as
authorized by subsection (a)(3) shall be subject to regulation
under the Banking Code of 1965 as if it were an "institution" as
defined in section 102(r) of the Banking Code of 1965. For
purposes of applying the provisions of the Banking Code of 1965,
the managers, members, certificate of organization, operating
agreement and membership interests of the limited liability
company shall be deemed to be directors, shareholders, articles
of incorporation, bylaws and shares of an institution,
respectively. If the limited liability company does not have
officers, the managers shall also be deemed to be officers.
* * *
Section 42.16b. Title 15 is amended by adding a section to
read:
§ 8912.1. Advertisement.
(a) Requirement.--The organizers or the limited liability
company must officially publish a notice of intent to file or of
filing a certificate of organization.
(b) Time.--The notice may appear prior to or after the
certificate is filed with the department.
(c) Content.--The notice shall set forth briefly:
(1) The name of the company.
(2) The fact that the company is organized under the act
of December 7, 1994 (P.L.703, No.106), known as the Limited
Liability Company Act.
(d) Transitional rule.--This section does not apply to a
limited liability company whose certificate of organization was
filed on or before (the Legislative Reference Bureau shall
20090SB0351PN0755 - 154 -
insert here the effective date of this section).
Section 42.17. Sections 8916(a) and (b) of Title 15 are
amended to read:
§ 8916. Operating agreement.
(a) General rule.--The operating agreement of a limited
liability company need not be in [writing] record form except
where this chapter refers to a [written] provision of the
operating agreement in writing or record form. If a [written]
provision in record form of an operating agreement provides that
[it] the operating agreement cannot be amended or modified
except in writing or record form, an oral agreement, amendment
or modification shall not be enforceable. The certificate of
organization or operating agreement may not authorize an oral
agreement on any subject that this chapter requires to be dealt
with in writing or record form. See section 107(b) (relating to
form of records).
(b) Freedom of contract.--An operating agreement may contain
any provision adopted by the members for the regulation of the
internal affairs of a limited liability company [adopted by the
members], whether or not specifically authorized by or in
contravention of this chapter, except where this chapter:
(1) refers only to a rule as set forth in the
certificate of organization; or
(2) expressly provides that the operating agreement
shall not relax or contravene any provision on a specified
subject.
* * *
Section 42.17a. Section 8924 of Title 15 is amended by
adding a subsection to read:
§ 8924. Limited transferability of membership interest.
20090SB0351PN0755 - 155 -
* * *
(c) Bearer certificates prohibited.--A limited liability
company may not issue a certificate of membership interest in
bearer form. This subsection may not be varied by the
certificate of organization or operating agreement.
Section 42.17b. Sections 8941(b), 8948 and 8971 of Title 15
are amended to read:
§ 8941. Management.
* * *
(b) Managers.--The certificate of organization may provide
that management of a company shall be vested, to the extent
provided in, or pursuant to, the certificate of organization, in
one or more managers.
* * *
§ 8948. Limitation on dissociation [or assignment of membership
interest].
[Notwithstanding anything to the contrary set forth in this
part, an operating agreement may provide that a member may not]
(a) General rule.--A member may voluntarily dissociate from
[the] a limited liability company [or assign his membership
interest] prior to the dissolution and winding-up of the
company[, and an attempt by a member to dissociate voluntarily
from the company or to assign his membership interest in
violation of the operating agreement shall be ineffective.] only
at the time or upon the happening of events specified in record
form in the operating agreement.
(b) Transitional rule.--This section applies to all limited
liability companies formed after December 31, 2010. If the
operating agreement of a company formed before January 1, 2011,
did not on December 31, 2010, specify in record form the time or
20090SB0351PN0755 - 156 -
the events upon the happening of which a member could dissociate
or a definite time for the dissolution and winding up of the
company, the provisions of this section that were in effect
prior to January 1, 2011, shall apply until such time, if any,
as the operating agreement is amended in record form after
January 1, 2011, to specify:
(1) a time or the events upon the happening of which a
member may dissociate;
(2) a definite time for the dissolution and winding up
of the company; or
(3) that this section as effective January 1, 2011,
shall apply to the company.
§ 8971. Dissolution.
(a) General rule.--A limited liability company is dissolved
and its affairs shall be wound up upon the happening of the
first to occur of the following events:
(1) At the time or upon the happening of events
specified in the certificate of organization.
(2) At the time or upon the happening of events
specified in [writing] record form in the operating
agreement.
(3) Except as otherwise provided in the operating
agreement, by the [unanimous written agreement] vote or
consent of [all] the members.
[(4) Except as otherwise provided in writing in the
operating agreement, upon a member becoming a bankrupt or
executing an assignment for the benefit of creditors or the
death, retirement, insanity, resignation, expulsion or
dissolution of a member or the occurrence of any other event
that terminates the continued membership of a member in the
20090SB0351PN0755 - 157 -
company unless the business of the company is continued by
the vote or consent of a majority in interest, or such
greater number as shall be provided in writing in the
operating agreement, of the remaining members given within
180 days following such event.]
(5) Entry of an order of judicial dissolution under
section 8972 (relating to judicial dissolution).
(b) Perpetual existence.--[The certificate of organization
may provide that the company shall have perpetual existence, in
which case subsection (a)(4) shall not be applicable to the
company.] Except as otherwise provided in record form in the
operating agreement, a limited liability company has perpetual
existence, subject to the power of the General Assembly under
the Constitution of Pennsylvania.
Section 42.18. Title 15 is amended by adding a section to
read:
§ 8973.1. Advertisement.
(a) Requirement.--The limited liability company must
promptly cause notice of the winding up proceedings to be
officially published.
(b) Content.--The notice shall set forth briefly:
(1) The name of the limited liability company.
(2) The fact that winding up of the company has
commenced.
(c) Transitional rule.--This section does not apply to
winding up of a limited liability company that was commenced on
or before (the Legislative Reference Bureau shall insert here
the effective date of this section).
Section 42.19. Sections 8974 and 8975(a) of Title 15 are
amended to read:
20090SB0351PN0755 - 158 -
§ 8974. Distribution of assets upon dissolution.
(a) General rule.--In settling accounts after dissolution,
the liabilities of the limited liability company shall be
entitled to payment in the following order:
(1) Those to creditors, including members or managers
who are creditors, in the order of priority as provided by
law, in satisfaction of the liabilities of the company,
whether by payment or the making of [reasonable] adequate
provision for payment thereof, other than liabilities for
distributions to members under section 8932 (relating to
distributions and allocation of profits and losses) or 8933
(relating to distributions upon an event of dissociation).
(2) Unless otherwise provided in the operating
agreement, to members and former members in satisfaction of
liabilities for distributions under section 8932 or 8933.
(3) Unless otherwise provided in the operating
agreement, to members in respect of:
(i) Their contributions to capital.
(ii) Their share of the profits and other
compensation by way of income on their contributions.
(b) Provision for claims.--A company that has dissolved
shall pay or make [reasonable] adequate provision to pay all
claims and obligations, including all contingent, conditional or
unmatured claims and obligations, known to the company and all
claims and obligations that are known to the company but for
which the identity of the claimant is unknown. If there are
sufficient assets, such claims and obligations shall be paid in
full, and any such provision for payment made shall be made in
full. If there are insufficient assets, such claims and
obligations shall be paid or provided for according to their
20090SB0351PN0755 - 159 -
priority and, among claims and obligations of equal priority,
ratably to the extent of assets available therefor. Unless
otherwise provided in the operating agreement, any remaining
assets shall be distributed as provided in this chapter. Any
liquidating trustee or other person winding up the affairs of a
company who has complied with this section shall not be
personally liable to the claimants of the dissolved company by
reason of his actions in winding up the company.
§ 8975. Certificate of dissolution.
(a) General rule.--When all debts, liabilities and
obligations of the limited liability company have been paid and
discharged or adequate provision has been made therefor and all
of the remaining property and assets of the company have been
distributed to the members, or in case its assets are not
sufficient to discharge its debts, liabilities and obligations,
when all the assets have been fairly and equitably applied, as
far as they will go, to the payment of such debts, liabilities
and obligations, a certificate of dissolution shall be executed
by the company. The certificate of dissolution shall set forth:
(1) The name of the company.
(2) [That] A statement that:
(i) all debts, obligations and liabilities of the
company have been paid and discharged or that adequate
provision has been made therefor[.]; or
(ii) the assets of the company are not sufficient to
discharge its debts, liabilities and obligations, and
that all the assets of the company have been fairly and
equitably applied, as far as they will go, to the payment
of such debts, liabilities and obligations.
(3) That all the remaining property and assets of the
20090SB0351PN0755 - 160 -
company have been distributed among its members in accordance
with their respective rights and interests.
(4) That there are no actions pending against the
company in any court or that adequate provision has been made
for the satisfaction of any judgment that may be entered
against it in any pending action.
* * *
Section 42.20. Title 15 is amended by adding a section to
read:
§ 8983. Advertisement.
(a) Registration.--
(1) A foreign limited liability company must officially
publish notice of its intention to apply or its application
for registration as a foreign limited liability company.
(2) The notice may appear prior to or after the
application for registration has been filed with the
department.
(3) The notice shall set forth briefly:
(i) The name of the company and the jurisdiction
under the laws of which it is organized.
(ii) The fact that the company will apply or has
applied for registration under Subchapter J of Chapter 89
(relating to foreign companies).
(iii) The address, including street and number, if
any, of its principal office under the laws of the
jurisdiction in which it is organized.
(iv) Subject to section 109 (relating to name of
commercial registered office provider in lieu of
registered address), the address, including street and
number, if any, of its proposed registered office in this
20090SB0351PN0755 - 161 -
Commonwealth.
(4) This subsection does not apply to an application for
registration that was filed on or before (the Legislative
Reference Bureau shall insert here the effective date of this
section).
(b) Withdrawal.--
(1) A qualified foreign limited liability company must
officially publish notice of its intention to withdraw from
doing business in this Commonwealth.
(2) The notice shall set forth briefly:
(i) The name of the foreign limited liability
company and the jurisdiction under the laws of which it
is organized.
(ii) The address, including street and number, if
any, of its principal office under the laws of the
jurisdiction in which it is organized.
(iii) Subject to section 109, the address, including
street and number, if any, of its last registered office
in this Commonwealth.
(3) This subsection does not apply to a qualified
foreign limited liability company that withdrew from doing
business in this Commonwealth on or before (the Legislative
Reference Bureau shall insert here the effective date of this
section).
Section 43. Section 9503(e) of Title 15 is amended and the
section is amended by adding a subsection to read:
§ 9503. Documentation of trust.
* * *
(d.1) Bearer certificates prohibited.--A business trust may
not issue a certificate of beneficial interest in bearer form.
20090SB0351PN0755 - 162 -
This subsection may not be varied by the instrument or other
documentation of the business trust.
(e) Cross [reference] references.--See [section] sections
134 (relating to docketing statement) and 135 (relating to
requirements to be met by filed documents).
Section 43.1. Section 9506(f) of Title 15 is amended to
read:
§ 9506. Liability of trustees and beneficiaries.
* * *
(f) Permissible beneficiaries.--Except as otherwise provided
by a statute, rule or regulation applicable to a particular
profession, all of the ultimate beneficial owners of interests
in a business trust that renders one or more restricted
professional services shall be licensed persons. As used in this
subsection, the term "restricted professional services" shall
have the meaning specified in section 8903 (relating to
definitions [and index of definitions]).
* * *
Section 43.2. The definition of "domestic corporation not-
for-profit" in section 101 of Title 54 is amended to read:
§ 101. Definitions.
Subject to additional definitions contained in subsequent
provisions of this title which are applicable to specific
provisions of this title, the following words and phrases when
used in this title shall have, unless the context clearly
indicates otherwise, the meanings given to them in this section:
* * *
"Domestic corporation not-for-profit." A domestic
corporation [not-for-profit as defined in 15 Pa.C.S. § 1103
(relating to definitions).] not incorporated for a purpose or
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purposes involving pecuniary profit, incidental or otherwise.
* * *
Section 43.3. Section 501(a)(5) and (7) of Title 54 are
amended to read:
§ 501. Register established.
(a) General rule.--A register is established by this chapter
which shall consist of such of the following names as are not
deleted therefrom by operation of section 504 (relating to
effect of failure to make filings) or 506 (relating to voluntary
termination of registration by corporations and other
associations):
* * *
(5) In the case of a business trust which exists subject
to 15 Pa.C.S. Ch. 95 (relating to business trusts), the name
of the trust as set forth in the:
(i) instrument filed in the department under 15
Pa.C.S. § 9503 (relating to documentation of trust); or
(ii) application for registration filed under 15
Pa.C.S. § 9507 (relating to foreign business trusts).
* * *
[(7) In the case of a business trust which exists
subject to 15 Pa.C.S. Ch. 95 (relating to business trusts),
the name of the trust as set forth in the instrument filed in
the department under 15 Pa.C.S. § 9503 (relating to
documentation of trust), or in the application for
registration filed pursuant to 15 Pa.C.S. § 9507 (relating to
foreign business trusts).]
* * *
Section 44. Repeals are as follows:
(1) The General Assembly declares as follows:
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(i) The repeal under paragraph (2)(i) is necessary
because the material is supplied by 15 Pa.C.S. § 1511.
(ii) The repeal under paragraph (2)(ii) is necessary
to effectuate the amendment of 15 Pa.C.S. §§ 153(a) and
155(a).
(iii) The repeal under paragraph (2)(iii) is
necessary because the material is supplied by 40 Pa.C.S.
§ 6322(f).
(iv) The repeal under paragraph (2)(iv) is necessary
because the material is supplied by 40 Pa.C.S. § 6301.
(v) The repeal under paragraph (2)(v) is necessary
because the material is supplied by 15 Pa.C.S. § 1106(b)
(2).
(vi) The repeal under paragraph (2)(vi) is necessary
because the material is supplied by 40 Pa.C.S. § 6322(f).
(vii) The repeal under paragraph (2)(vii) is
necessary because the material is supplied by 1 Pa.C.S. §
1978.
(2) The following acts and parts of acts are repealed:
(i) Act of April 27, 1855 (P.L.365, No.383),
entitled "An act extending the right of Trial by Jury to
certain cases."
(ii) Sections 618-A(2) and 814 of the act of April
9, 1929 (P.L.177, No.175), known as The Administrative
Code of 1929.
(iii) Act of April 18, 1949 (P.L.583, No.123),
entitled "An act to further amend the act, approved the
fifth day of May, one thousand nine hundred thirty-three
(Pamphlet Laws 289), entitled 'An act relating to
nonprofit corporations; defining and providing for the
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organization, merger, consolidation, and dissolution of
such corporations; conferring certain rights, powers,
duties, and immunities upon them and their officers and
members; prescribing the conditions on which such
corporations may exercise their powers; providing for the
inclusion of certain existing corporations of the first
class within the provisions of this act; prescribing the
terms and conditions upon which foreign nonprofit
corporations may be admitted or may continue to do
business within the Commonwealth; conferring powers and
imposing duties on the courts of common pleas,
prothonotaries of such courts, recorders of deeds, and
certain State departments, commissions, and officers;
authorizing certain local public officers and State
departments to collect fees for services required to be
rendered by this act; imposing penalties; and repealing
certain acts and parts of acts relating to corporations,'
by making further provisions relating to nonprofit
medical service corporations; by extending the provisions
of said act relating to the furnishing of medical
services by nonprofit medical service corporations so as
to include the furnishing of osteopathic services by
doctors of osteopathy to subscribers and their
dependents, and by providing that the articles of
incorporation of existing nonprofit medical service
corporations are amended by the provisions of this act so
as to authorize the furnishing of such osteopathic
services by doctors of osteopathy."
(iv) Act of December 9, 1955 (P.L.818, No.238),
entitled "An act amending the act of May five, one
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thousand nine hundred thirty-three (Pamphlet Laws 289),
entitled 'An act relating to nonprofit corporations;
defining and providing for the organization, merger,
consolidation, and dissolution of such corporations;
conferring certain rights, powers, duties, and immunities
upon them and their officers and members; prescribing the
conditions on which such corporations may exercise their
powers; providing for the inclusion of certain existing
corporations of the first class within the provisions of
this act; prescribing the terms and conditions upon which
foreign nonprofit corporations may be admitted or may
continue to do business within the Commonwealth;
conferring powers and imposing duties on the courts of
common pleas, prothonotaries of such courts, recorders of
deeds, and certain State departments, commissions, and
officers; authorizing certain local public officers and
State departments to collect fees for services required
to be rendered by this act; imposing penalties; and
repealing certain acts and parts of acts relating to
corporations,' providing for the incorporation and
regulation of nonprofit dental service corporations
furnishing dental services only to certain subscribers
and their dependents."
(v) Act of September 30, 1965 (P.L.570, No.294),
entitled "An act amending the act of May 5, 1933 (P.L.
289), entitled 'An act relating to nonprofit
corporations; defining and providing for the
organization, merger, consolidation, and dissolution of
such corporations; conferring certain rights, powers,
duties, and immunities upon them and their officers and
20090SB0351PN0755 - 167 -
members; prescribing the conditions on which such
corporations may exercise their powers; providing for the
inclusion of certain existing corporations of the first
class within the provisions of this act; prescribing the
terms and conditions upon which foreign nonprofit
corporations may be admitted or may continue to do
business within the Commonwealth; conferring powers and
imposing duties on the courts of common pleas,
prothonotaries of such courts, recorders of deeds, and
certain State departments, commissions, and officers;
authorizing certain local public officers and State
departments to collect fees for services required to be
rendered by this act; imposing penalties; and repealing
certain acts and parts of acts relating to corporations,'
requiring approval by the State Registration Board for
Professional Engineers prior to the use of certain words
in corporate names."
(vi) Act of December 27, 1965 (P.L.1250, No.507),
entitled "An act amending the act of May 5, 1933 (P.L.
289), entitled 'An act relating to nonprofit
corporations; defining and providing for the
organization, merger, consolidation, and dissolution of
such corporations; conferring certain rights, powers,
duties, and immunities upon them and their officers and
members; prescribing the conditions on which such
corporations may exercise their powers; providing for the
inclusion of certain existing corporations of the first
class within the provisions of this act; prescribing the
terms and conditions upon which foreign nonprofit
corporations may be admitted or may continue to do
20090SB0351PN0755 - 168 -
business within the Commonwealth; conferring powers and
imposing duties on the courts of common pleas,
prothonotaries of such courts, recorders of deeds, and
certain State departments, commissions, and officers;
authorizing certain local public officers and State
departments to collect fees for services required to be
rendered by this act; imposing penalties; and repealing
certain acts and parts of acts relating to corporations,'
making further provisions relating to nonprofit medical,
dental and osteopathic service corporations; extending
the provisions of said act relating to the furnishing of
medical, dental and osteopathic services by nonprofit
medical, dental and osteopathic service corporations so
as to include the furnishing of optometric services to
subscribers and their dependents, and providing that the
articles of incorporation of existing nonprofit medical,
dental and osteopathic service corporations are amended
by the provisions of this act so as to authorize the
furnishing of optometric services by doctors of
optometry."
(vii) Section 2 of the act of November 15, 1972
(P.L.1063, No.271), entitled "An act amending the act of
November 25, 1970 (No.230), entitled 'An act codifying
and compiling a part of the law of the Commonwealth,'
adding provisions relating to burial grounds,
corporations, including corporations not-for-profit,
educational institutions, private police, certain
charitable or eleemosynary institutions, certain
nonprofit insurers, service of process on certain
nonresident persons, names, prescribing penalties and
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making repeals."
(3) The act of November 30, 1965 (P.L.847, No.356),
known as the Banking Code of 1965, is repealed to the extent
that it is inconsistent with 15 Pa.C.S. § 8911.
Section 45. When the Department of State is ready to provide
expedited services under the addition of 15 Pa.C.S. § 153(a)
(15), it shall transmit notice of that fact to the Legislative
Reference Bureau for publication as a notice in the Pennsylvania
Bulletin.
Section 46. Notwithstanding 1 Pa.C.S. § 1957, it is declared
to be the intent of the former act of December 21, 1988 (P.L.
1444, No.177), known as the General Association Act of 1988, the
act of December 19, 1990 (P.L.834, No.198), known as the GAA
Amendments Act of 1990, the act of December 18, 1992 (P.L.1333,
No.169), known as the GAA Amendments Act of 1992, the act of
June 22, 2001 (P.L.418, No.34), known as the GAA Amendments Act
of 2001, and this act cumulatively to restore all provisions of
15 Pa.C.S. added by the act of November 15, 1972 (P.L.1063, No.
271), entitled "An act amending the act of November 25, 1970
(No.230), entitled 'An act codifying and compiling a part of the
law of the Commonwealth,' adding provisions relating to burial
grounds, corporations, including corporations not-for-profit,
educational institutions, private police, certain charitable or
eleemosynary institutions, certain nonprofit insurers, service
of process on certain nonresident persons, names, prescribing
penalties and making repeals," to their status prior to the
partial repeal effected by section 905 of the former act of July
29, 1977 (P.L.105, No.38), known as the Fraternal Benefit
Society Code, except as otherwise expressly provided by such
provisions as reenacted and amended by the former General
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Association Act of 1988, the GAA Amendments Act of 1990, the GAA
Amendments Act of 1992, the GAA Amendments Act of 2001, and this
act.
Section 47. Section 46 of this act shall apply retroactively
to January 30, 1978.
Section 48. This act shall take effect as follows:
(1) The following provisions shall take effect
immediately:
(i) Section 45 of this act.
(ii) This section.
(2) The addition of 15 Pa.C.S. § 153(a)(15) shall take
effect upon publication of the notice under section 45 of
this act.
(3) The remainder of this act shall take effect in 60
days.
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