META Committee Comments - Pennsylvania Bar … · to the Committee Comments to existing provisions of Title 15 have not been marked. 4 ... 99 Banking Code of 1965. ... 202 records

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AMENDMENTS TO THE PENNSYLVANIA CONSOLIDATED STATUTES

WITH COMMITTEE COMMENTS

AMENDING PART I OF TITLE 15

BY ADOPTING

NEW SUBCHAPTER 2A OF TITLE 15 RELATING TO NAMES OF ASSOCIATIONS

MODEL ENTITY TRANSACTIONS ACT AS NEW CHAPTER 3 OF TITLE 15

NEW CHAPTER 4 OF TITLE 15 RELATING TO REGISTRATION OF FOREIGN ASSOCIATIONS

AND MAKING CONFORMING AND RELATED AMENDMENTS AND REPEALS TO TITLES 15 AND 54

PREPARED BY THE TITLE 15 / BUSINESS ASSOCIATIONS COMMITTEE

OF THE SECTION ON BUSINESS LAW

OF THE PENNSYLVANIA BAR ASSOCIATION

To Accompany the Association Transactions Act House Bill 2234 (P.N. 3746)

June 17, 2014

Adoption of the statutory changes proposed in this document has been approved in concept by the Pennsylvania Bar Association, but the specific statutory language and Committee Comments have not been passed upon by the Pennsylvania Bar Association or its Section on Business Law.

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PENNSYLVANIA BAR ASSOCIATION SECTION ON BUSINESS LAW

TITLE 15 / BUSINESS ASSOCIATIONS COMMITTEE Chair and Reporter William H. Clark, Jr. Philadelphia Special Advisor from the The Hon. Michael Patterson Harrisburg PA Department of State Director of the Bureau of Corporations and Charitable Organizations Members E. Carolan Berkley Philadelphia Eric L. Brossman Harrisburg Martha H. Brown Harrisburg Kimberly Ward Burns Pittsburgh Justin Chairman Philadelphia Francis E. Dehel Philadelphia Elizabeth Stevens Duane Allentown David L. Harnish Pittsburgh Lisa R. Jacobs Philadelphia John W. Kauffman Philadelphia Larry P. Laubach Philadelphia Daniel J. Malpezzi Harrisburg Alan H. Molod Philadelphia Perry S. Patterson Pittsburgh Raymond P. Pepe Harrisburg Lee S. Piatt Wilkes-Barre Richard D. Rose Pittsburgh W. Henry Snyder Pittsburgh Thomas M. Thompson Pittsburgh

All of the persons involved in the preparation of this volume have waived any copyright interest they might have in it, and the entire text of this volume is in the public domain.

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Introductory Note

The Title 15 / Business Associations Committee is proposing legislation to amend Title 15 that will:

(i) Add a set of provisions on names as new 15 Pa.C.S. Subch. 2A that will

apply to (A) all domestic entities formed under Title 15 by a filing with the Department of State, (B) domestic general partnerships registering as limited liability partnerships, and (C) all foreign associations registering to do business in Pennsylvania under Title 15.

(ii) Enact the Model Entity Transactions Act as new 15 Pa.C.S. Ch. 3. (iii) Add a set of provisions as new 15 Pa.C.S. Ch. 4 that will apply to all foreign

associations registering to do business in Pennsylvania under Title 15. (iv) Make conforming and related amendments and repeals to various provisions

of Titles 15 and 54.

This document sets forth the text of new Chapters 2A, 3, and 4 that the Committee is proposing, along with conforming amendments to other provisions of the Pennsylvania Consolidated Statutes. Amendments to the Pennsylvania Consolidated Statutes are shown in this document by underlining text to be added and [bracketing text to be deleted]. Changes to the Committee Comments to existing provisions of Title 15 have not been marked.

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Title 15 1 Corporations and Unincorporated Associations 2

3 Part I 4

Preliminary Provisions 5 6

Chapter 1 7 General Provisions 8

9 Subchapter A 10

Preliminary Provisions 11 12 § 102. Definitions. 13 14

(a) Defined terms. – Subject to additional or inconsistent definitions contained in 15 subsequent provisions of this title that are applicable to specific provisions of this title, the 16 following words and phrases when used in this title shall have, unless the context clearly 17 indicates otherwise, the meanings given to them in this section: 18 19

"Act" or "action." Includes failure to act. 20 21

"Association." A corporation for profit or not-for-profit, a partnership, a limited liability 22 company, a business or statutory trust, an entity or two or more persons associated in a 23 common enterprise or undertaking. The term does not include: 24

25 (1) a testamentary trust or an inter vivos trust as defined in 20 Pa.C.S. § 711(3) 26

(relating to mandatory exercise of jurisdiction through orphans' court division in 27 general); 28

29 (2) an association or relationship that: 30 31

(i) is not a person that has: 32 33

(A) a legal existence separate from any interest holder of the person; 34 or 35

36 (B) the power to acquire an interest in real property in its own name; 37

and 38 39 (ii) is not a partnership under the rules stated in section 8312 (relating to 40

rules for determining the existence of a partnership) or a similar provision of the 41 law of another jurisdiction; 42 43

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(3) a decedent’s estate; or 44 45 (4) a government or a governmental subdivision, agency or instrumentality. 46

47 "Banking institution." An institution as defined in section 102(r) of the act of November 48

30, 1965 (P.L.847, No.356), known as the Banking Code of 1965. 49 50

“Bureau.” The Bureau of Corporations and Charitable Organizations of the department. 51 52 “Business corporation.” A domestic or foreign business corporation as defined in 53

section 1103 (relating to definitions), whether or not it is a cooperative corporation. 54 55 “Business trust.” A trust subject to Chapter 95 (relating to business trusts). 56 57 “Cooperative corporation.” A domestic corporation that is subject to Subpart D of Part 58

II (relating to cooperative corporations), or a foreign corporation that is subject to a similar 59 law of a foreign jurisdiction. 60

61 “Corporation for profit.” A domestic or foreign corporation incorporated for a purpose 62

or purposes involving pecuniary profit, incidental or otherwise, to its shareholders or 63 members, whether or not it is a cooperative corporation. 64

65 “Corporation not-for-profit.” A domestic or foreign corporation not incorporated for a 66

purpose or purposes involving pecuniary profit, incidental or otherwise, whether or not it is a 67 cooperative corporation. 68

69 "Court." Subject to any inconsistent general rule prescribed by the Supreme Court of 70

Pennsylvania: 71 72

(1) the court of common pleas of the judicial district embracing the county 73 where the registered office of the corporation or other association is or is to be located; 74 or 75 76

(2) where an association results from a merger, [consolidation,] division or 77 other transaction without establishing a registered office in this Commonwealth or 78 withdraws as a foreign corporation or association, the court of common pleas in which 79 venue would have been laid immediately prior to the transaction or withdrawal. 80 81 "Credit union." A credit union as defined in 17 Pa.C.S. § 102 (relating to application of 82

title). 83 84 "Department." The Department of State of the Commonwealth. 85 86 “Dissenters rights.” The rights and remedies provided by Subchapter D of Chapter 15 87

(relating to dissenters rights). 88 89

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“Distributional interest.” The right under the organic law of an entity that is not a 90 corporation for profit or not-for-profit, or under the organic rules of such an entity, to receive 91 distributions from the entity. 92

93 “Domestic association.” An association, the internal affairs or which are governed by 94

the law of this Commonwealth. 95 96 "Domestic banking institution." A domestic association which is an institution as 97

defined in section 102(r) of the act of November 30, 1965 (P.L.847, No.356), known as the 98 Banking Code of 1965. 99

100 “Domestic corporation.” A corporation for profit or not-for-profit incorporated under 101

the laws of this Commonwealth. 102 103 “Domestic corporation for profit.” A corporation for profit incorporated under the laws 104

of this Commonwealth. 105 106 “Domestic corporation not-for-profit.” A corporation not-for-profit incorporated under 107

the laws of this Commonwealth. 108 109 “Domestic entity.” An entity, the internal affairs of which are governed by the law of 110

this Commonwealth. 111 112 “Domestic filing association.” A domestic association, the formation of which requires 113

the filing of a public organic record. The term does not include a general partnership that is 114 also: 115

116 (1) a limited liability partnership; or 117 118 (2) an electing partnership. 119

120 “Domestic filing entity.” A domestic entity, the formation of which requires the filing 121

of a public organic record. The term does not include a general partnership that is also: 122 123

(1) a limited liability partnership; or 124 125 (2) an electing partnership. 126

127 "Domestic insurance corporation." An insurance corporation as defined in section 3102 128

(relating to definitions). 129 130 ["Domestic savings association." A domestic corporation for profit which is an 131

association as defined in section 102(3) of the former act of December 14, 1967 (P.L.746, 132 No.345), known as the Savings Association Code of 1967.] 133

134

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“Electing partnership.” An electing partnership as defined in section 8701(c) (relating 135 to scope and definition). 136

137 “Electronic.” Relating to technology having electrical, digital, magnetic, wireless, 138

optical, electromagnetic or similar capabilities. 139 140 “Entity.” A domestic or foreign: 141

142 (1) business corporation; 143 144 (2) nonprofit corporation; 145 146 (3) general partnership; 147 148 (4) limited partnership; 149 150 (5) limited liability company; 151 152 (6) unincorporated nonprofit association; 153 154 (7) professional association; or 155 156 (8) business trust, common law business trust or statutory trust. 157

158 "Execute." When used with respect to authenticating or adopting a filing, document or 159

other record, means "sign." 160 161 “Filing association.” A domestic or foreign association, the formation of which requires 162

the filing of a public organic record. The term does not include a general partnership that is 163 also: 164

165 (1) a limited liability partnership; or 166 167 (2) an electing partnership. 168

169 “Filing entity.” A domestic or foreign entity, the formation of which requires the filing 170

of a public organic record. The term does not include a general partnership that is also: 171 172

(1) a limited liability partnership; or 173 174 (2) an electing partnership. 175

176 “Foreign association.” An association that is not a domestic association. 177

178 “Foreign corporation for profit.” A corporation for profit incorporated under any laws 179

other than those of this Commonwealth. 180

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181 “Foreign corporation not-for-profit.” A corporation not-for-profit incorporated under 182

any laws other than those of this Commonwealth. 183 184 “Foreign entity.” An entity that is not a domestic entity. 185 186 “Foreign filing association.” A foreign association, the formation of which requires the 187

filing of a public organic record. 188 189 “Fraternal benefit society.” A fraternal benefit society as defined in section 2403 of the 190

act of May 17, 1921 (P.L. 682, No. 284), known as The Insurance Company Law of 1921. 191 192 “General partnership.” A domestic or foreign partnership as defined in section 8311 193

(relating to partnership defined), whether or not it is a limited liability partnership or electing 194 partnership. 195

196 “Governance interest.” A right of a person under the organic law or organic rules of an 197

association that is not a corporation for profit or not-for-profit, other than as a governor, 198 agent, assignee or proxy, to: 199 200

(1) receive or demand access to information concerning, or the books and 201 records of, the association; 202

203 (2) vote for the election of the governors of the association; or 204 205 (3) receive notice of or vote on an issue involving the internal affairs of the 206

association. 207 208

“Governor.” A person by or under whose authority the powers of an association are 209 exercised and under whose direction the activities and affairs of the association are managed 210 pursuant to the organic law and organic rules of the association. The term includes: 211

212 (1) A director of a corporation for profit or a shareholder of a statutory close 213

corporation that is deemed to be a director under section 2332(a) (relating to 214 management by shareholders). 215

216 (2) A director or member of an other body of a corporation not-for-profit. 217 218 (3) A partner of a general partnership. 219 220 (4) A general partner of a limited partnership. 221 222 (5) A general partner of an electing partnership. 223 224 (6) A manager of a manager-managed limited liability company or a member 225

that has the right to participate materially in the management of a member-managed 226

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limited liability company. 227 228 (7) A manager of an unincorporated nonprofit association. 229 230 (8) A member of the board of governors of a professional association. 231

232 (9) A trustee of a business trust, common law business trust or statutory trust. 233

234 “Health maintenance organization.” An entity that is subject to the act of December 29, 235

1972 (P.L. 1701, No. 364), known as the Health Maintenance Organization Act. 236 237 Hospital plan corporation.” A hospital plan corporation as defined in 40 Pa.C.S. § 6101 238

(relating to definitions). 239 240

"Insurance corporation." An insurance corporation as defined in section 3102 (relating 241 to definitions). 242

243 “Interest.” A share in a corporation for profit, a membership or share in a corporation 244

not-for-profit, a governance interest or a distributional interest. The term includes the 245 following: 246 247

(1) A governance interest or transferable interest in a general partnership. 248 249 (2) A governance interest or transferable interest in a limited partnership. 250 251 (3) A governance interest or transferable interest in a limited liability company. 252 253 (4) A membership in an unincorporated nonprofit association. 254 255 (5) An ownership interest in a professional association. 256 257 (6) A beneficial interest in a business trust, common-law business trust or 258

statutory trust. 259 260

“Interest holder.” A direct or record holder of an interest. The term includes the 261 following: 262

263 (1) A shareholder of a corporation for profit. 264 265 (2) A member or shareholder of a corporation not-for-profit. 266 267 (3) A partner or transferee in a general partnership. 268 269 (4) A general or limited partner or transferee in a limited partnership. 270 271 (5) A member or transferee in a limited liability company. 272

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273 (6) A member of an unincorporated nonprofit association. 274 275 (7) An associate in a professional association. 276 277 (8) A beneficiary or beneficial owner of record of a business trust, common-law 278

business trust or statutory trust. 279 280

"Internal Revenue Code of 1986." The Internal Revenue Code of 1986 (Public Law 99-281 514, 26 U.S.C. § 1 et seq.). 282

283 “Jurisdiction.” When used to refer to a political entity, the United States, a state, a 284

foreign country or a political subdivision of a foreign country. 285 286 “Jurisdiction of formation.” The jurisdiction whose law includes the organic law of an 287

association. 288 289

"Licensed person." A natural person who is duly licensed or admitted to practice his 290 profession by a court, department, board, commission or other agency of the Commonwealth 291 or another jurisdiction to render a professional service that is or will be rendered by the 292 association of which he is, or intends to become, a shareholder, partner, owner, director, 293 officer, manager, member, employee or agent. 294 295

"Limited liability company." A domestic or foreign limited liability company as defined 296 in section 8903 (relating to definitions and index of definitions). 297 298

“Limited liability limited partnership.” A domestic or foreign limited partnership for 299 which there is in effect: 300

301 (1) a statement of registration under Chapter 82 (relating to registered limited 302

liability partnerships); 303 304 (2) a provision of its certificate of limited partnership electing to be subject to 305

Chapter 82; or 306 307 (3) a similar filing or provision under the organic law of a foreign partnership. 308

309 “Limited liability partnership.” A domestic or foreign general partnership for which 310

there is in effect: 311 312

(1) a statement of registration under Chapter 82 (relating to registered limited 313 liability partnerships); or 314

315 (2) a similar filing under the organic law of a foreign general partnership. 316

317

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“Limited partnership.” A domestic or foreign limited partnership as defined in section 318 8503 (relating to definitions and index of definitions), whether or not it is a limited liability 319 limited partnership or electing partnership. 320

321 “Nonfiling association.” An association that is not a filing association. 322 323 “Nonprofit corporation.” A domestic or foreign nonprofit corporation as defined in 324

section 5103 (relating to definitions), whether or not it is a cooperative corporation. 325 326 “Nonregistered foreign association.” A foreign association that is not registered to do 327

business in this Commonwealth pursuant to a filing with the department. 328 329 “Obligation.” Includes a note or other form of indebtedness, whether secured or 330

unsecured. 331 332

"Officially publish." Publish in two newspapers of general circulation in the English 333 language in the county in which the registered office of the association is located or, in the 334 case of a proposed association, will be located, one of which must be the legal newspaper, if 335 any, designated by the rules of court for the publication of legal notices. If there is only one 336 newspaper of general circulation in the county, advertisement in that newspaper is sufficient. 337 If no other frequency is specified, the notice must be published one time. See section 338 109(a)(2) (relating to name of commercial registered office provider in lieu of registered 339 address). 340

341 “Organic law.” The law of the jurisdiction of formation of an association governing its 342

internal affairs. 343 344 “Organic rules.” The public organic record and private organic rules of an association. 345

346 “Principal office.” The principal executive office of an association, whether or not the 347

office is located in this Commonwealth. 348 349 “Private organic rules.” The rules that govern the internal affairs of an association, are 350

binding on all its interest holders and are not part of its public organic record, if any. The 351 term includes the following: 352

353 (1) The bylaws of a corporation for profit. 354 355 (2) The bylaws of a corporation not-for-profit. 356 357 (3) The partnership agreement of a general partnership. 358 359 (4) The partnership agreement of a limited partnership. 360 361 (5) The operating agreement of a limited liability company. 362 363

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(6) The governing principles of an unincorporated nonprofit association. 364 365 (7) The bylaws of a professional association. 366 367 (8) The bylaws or similar rules, by whatever name they may be referred to, of a 368

business trust, common-law business trust or statutory trust. 369 370

"Profession." Includes the performance of any type of personal service to the public that 371 requires as a condition precedent to the performance of the service the obtaining of a license 372 or admission to practice or other legal authorization from the Supreme Court of Pennsylvania 373 or a licensing board or commission under the Bureau of Professional and Occupational 374 Affairs in the Department of State. Except as otherwise expressly provided by law, this 375 definition shall be applicable to this title only and shall not affect the interpretation of any 376 other statute or any local zoning ordinance or other official document heretofore or hereafter 377 enacted or promulgated. 378 379

“Professional association.” An association as defined in section 9302 (relating to 380 application of chapter). 381

382 “Professional health service corporation.” A professional health service corporation as 383

defined in 40 Pa.C.S. § 6302 (relating to definitions). 384 385

"Professional services." Any type of services that may be rendered by a member of a 386 profession within the purview of his profession. 387 388

“Property.” All property, whether real, personal or mixed, or tangible or intangible, or 389 any right or interest therein, including rights under contracts and other binding agreements. 390 391

“Public organic record.” The document the public filing of which by the department or 392 a similar agency in another jurisdiction is required to form an association. The term includes 393 any amendment or restatement of the document and includes the following: 394

395 (1) The articles of incorporation of a corporation for profit. 396 397 (2) The articles of incorporation of a corporation not-for-profit. 398 399 (3) The certificate of limited partnership of a limited partnership. 400 401 (4) The certificate of organization of a limited liability company. 402 403 (5) The articles of association of a professional association;. 404 405 (6) The declaration of trust or other instrument of a business trust or statutory 406

trust which has been filed by the department or a similar agency in another jurisdiction. 407 408

“Receipt.” Actual coming into possession. 409

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410 “Receive.” To actually come into possession. 411 412 "Record form." Inscribed on a tangible medium or stored in an electronic or other 413

medium and retrievable in perceivable form. 414 415 "Registered corporation." A corporation defined in section 2502 (relating to registered 416

corporation status). 417 418 “Registered foreign association.” A foreign association that is registered to do business 419

in this Commonwealth pursuant to a filing in the department. 420 421

"Representative." When used with respect to an association, joint venture, trust or other 422 enterprise, a person occupying the position or discharging the functions of a director, officer, 423 partner, manager, trustee, fiduciary, employee or agent, regardless of the name or title by 424 which the person may be designated. The term does not imply that a director, as such, is an 425 agent of a corporation. 426

427 ["Savings association." An association as defined in section 102(3) of the former 428

act of December 14, 1967 (P.L.746, No.345), known as the Savings Association Code of 429 1967.] 430

431 "Sign." With present intent to authenticate or adopt information in record form: 432 433

(1) to sign manually or adopt a tangible symbol; or 434 435 (2) to attach to, or logically associate with, information in record form, an 436

electronic sound, symbol or process. 437 438 “Transfer.” Includes: 439 440

(1) an assignment; 441 442 (2) a conveyance; 443 444 (3) a sale; 445 446 (4) a lease; 447 448 (5) an encumbrance, including a mortgage or security interest; 449 450 (6) a gift; and 451 452 (7) a transfer by operation of law. 453

454 “Type.” When used with respect to an association, a generic form: 455

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456 (1) recognized at common law; or 457 458 (2) organized under an organic law, whether or not some associations organized 459

under that organic law are subject to provisions of that law which create different 460 categories of the form of association. 461

462 “Unincorporated nonprofit association.” A nonprofit association as defined in section 463

9112 (relating to definitions). 464 465 "Verified." Includes an unsworn document containing a statement by the signatory that 466

is made subject to the penalties of 18 Pa.C.S. § 4904 (relating to unsworn falsification to 467 authorities). 468 469

(b) Application of definitions. – The words and phrases defined in subsection (a) shall 470 have the same meanings when used in Title 54 (relating to names) except to the extent those 471 meanings are inconsistent with the provisions of that title. 472 473 Amended Committee Comment (2014): 474 475

The definitions in this section apply to all of Title 15. As the introductory paragraph to 476 this section states, it is necessary to consider the context in which a defined term is used in 477 Title 15. 478 479

“Association.” This is the generic term that encompasses all of the various types of 480 organizations subject to Title 15. It includes the following types of organizations formed 481 under Pennsylvania law whose internal affairs are largely governed by statutes outside of Title 482 15 because those organization are subject to this chapter and, in some instances portions of 483 Chapters 2, 3, and 4: 484

banks (see the Banking Code of 1965, 7 P.S. § 101, et seq.); 485 credit unions (see Title 17); and 486 fraternal benefit societies (see 40 P.S. § 991.2401, et seq.). 487

488 Subparagraph (2)(i) was added by the GAA Amendments Act of 1990 and makes clear 489

that trusts subject to the jurisdiction of the orphans' court are not subject to the provisions of 490 Title 15. Thus, such trusts are not authorized to be a party to a transaction under Chapter 3. 491 A related provision is found in 20 Pa.C.S. § 711(3), as amended by the General Association 492 Act of 1988, which excludes from the definition of an inter vivos trust subject to the 493 jurisdiction of the orphans' court “a business trust, including a trust subject to 15 Pa.C.S. Ch. 494 95 (relating to business trusts); and … similar trusts or fiduciary relationships.” The Uniform 495 Business Organizations Code (2011) § 1-102(10)(B)(ii) excludes from the definition of an 496 entity “a trust with a predominately donative purpose or a charitable trust.” Those types of 497 trusts are included within the types of trusts excluded from the definition of “association,” but 498 the definition also excludes other types of trusts that are within the jurisdiction of the 499 Orphan’s Court. Paragraphs (2) through (4) were added in 2014 by the Assocation 500

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Transactions Act and were patterned after Uniform Business Organizations Code (2011) § 1-501 102(10)(B). 502 503

The definition of “association” in this section was made generally applicable to all of 504 Pennsylvania's statutory law by an amendment to the general definitional section of the 505 Statutory Construction Act of 1972, 1 Pa.C.S. § 1991, which was made by the Limited 506 Liability Company Act, act of December 7, 1994 (P.L. 703, No. 106). However, because the 507 prior definition excluded from the concept of an association “a partnership or limited 508 partnership,” the prior definition was continued with respect to statutes finally enacted before 509 the date of enactment of the Limited Liability Company Act in order to avoid an unintended 510 change in the law. For example, section 1633 of the Pennsylvania Election Code, 25 P.S. 511 § 3253, prohibits political contributions by corporations or unincorporated associations; but 512 since the prior definition of “association” in 1 Pa.C.S. § 1991 excluded partnerships, 513 contributions from partnership funds were not prohibited. By continuing the prior definition 514 of “association” in effect with respect to preexisting statutes, no change in the law was made; 515 and, in the example given, political contributions from partnership funds continue to be 516 permissible, although section 1633 was subsequently amended to prohibit contributions from 517 partnership funds made from funds of a partner that is a corporation. 518

519 “Business trust.” Pennsylvania business trusts are included within the scope of Title 15 520

by Chapter 95, but 15 Pa.C.S. § 9501(c) provides that a Pennsylvania business trust will not 521 be viewed as organized or incorporated by or under any statutory laws of this Commonwealth 522 so as to subject it to any tax imposed on associations so organized or incorporated. The 523 purpose of 15 Pa.C.S. § 9501(c) was to preserve the tax-exempt status of business trusts at the 524 time that provision was first enacted in 1988. However, 15 Pa.C.S. § 9501(c) was 525 subsequently repealed by Section 42(c) of Act 1994-48 to the extent that 15 Pa.C.S. § 9501(c) 526 would affect any tax imposed under Articles III, IV and VI of the Tax Reform Code of 1971 527 for any taxable year beginning on or after January 1, 1995. 528

529 “Court.” This definition provides a rule on venue in actions under Title 15, but the rule 530

is subject to any applicable rule of court. A merely permissive rule of court will not control 531 over the rule in this definition. 532 533

“Electronic.” This definition is patterned after the definition of the same term in 534 Uniform Electronic Transactions Act § 2(5). While not all of the technologies listed are 535 technically “electronic” in nature (e.g., optical fiber technology), the term was chosen in the 536 Uniform Electronic Transactions Act as the most descriptive term available to describe current 537 technologies. The term should be construed broadly to include developing technologies 538 arguably within any aspect of the definition. But the use of electronic technology will not 539 always be in “record form” as defined in this section. An unrecorded telephone conversation 540 between two people will involve electronic technology, but will not be in “record form” 541 because the conversation will not later be “retrievable” as required by the definition of 542 “record form.” A message on voicemail, however, will be in record form if the voicemail 543 message is retrievable and capable of reproduction in perceivable form. 544

545

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“Entity.” The term is limited to those forms of associations whose organic laws appear 546 in Title 15. Thus, “entity” has a narrower scope than “association” as defined in this section. 547 It is important to observe the distinction between the terms “association” and “entity” because 548 they affect the scope of Chapters 2, 3, and 4. The provisions of Chapters 5 and following 549 apply only to domestic entities, but Chapters 2, 3, and 4 apply more broadly to foreign 550 associations and in some instances to domestic entities. 551

552 The Model Entity Transactions Act (2007) (Last Amended 2013) includes in its 553

definition of “entity” a broad catch-all provision that the term: 554 555

(A) includes: 556 * * * 557 (x) any other person that has: 558 (I) a legal existence separate from any interest holder of 559 that person; or 560 (II) the power to acquire an interest in real property in its 561 own name; and 562 (B) does not include: 563

(i) an individual; 564 (ii) a trust with a predominantly donative purpose or a charitable 565

trust; 566 (iii) an association or relationship that is not listed in paragraph 567

(A) and is not a partnership under the rules stated in [Section 202(c) of 568 the Uniform Partnership Act (1997) (Last Amended 2011)] [Section 7 569 of the Uniform Partnership Act (1914)] or a similar provision of the 570 law of any other jurisdiction; 571

(iv) a decedent’s estate; or 572 (v) a government or a governmental subdivision, agency, or 573

instrumentality. 574 575

Consistent with the limited scope of the term “entity” in Title 15, that clarification of the 576 scope of the category of “entities” has been omitted from the definition of “entity” in this 577 section. But a similar provision has been included in the definition of “association.” 578

579 Inter vivos and testamentary trusts are excluded from the definition of “association” in 580

this section and are not included in the definition of “entity.” Those types of trusts are thus 581 not able to engage in transactions under Chapter 3. Trusts that carry on a business, however, 582 such as a Massachusetts trust, real estate investment trust, Illinois land trust, Delaware 583 statutory trust organized under 12 Del. Code Ch. 38, or other common law or statutory 584 business trusts are “entities” and eligible to be parties to transactions under Chapter 3. 585 586

Limited liability partnerships and limited liability limited partnerships are “entities” 587 because they are general partnerships and limited partnerships, respectively, that have made 588 the additional required election claiming LLP or LLLP status. A limited liability partnership 589 is not, therefore, a separate type of entity from the underlying general or limited partnership 590 that has elected limited liability partnership status. Thus, for example, the election of a 591

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general partnership to become a limited liability partnership is not a conversion subject to 15 592 Pa.C.S. Subch. 3E. Similarly, electing partnerships are also “entities” because they are also 593 general or limited partnerships, and the election of electing partnership status is not a 594 conversion. 595 596

“Filing entity.” Whether an entity is a filing entity is determined by reference to 597 whether its legal existence requires the filing of a document with the Department of State or a 598 similar office in another jurisdiction. While the definition refers to the “formation” of an 599 entity, it is intended to encompass corporations which are “incorporated” and limited liability 600 companies which are “organized.” 601 602

The term does not include a limited liability partnership because an election filed by a 603 general partnership claiming that status is not required to form the entity. A limited liability 604 limited partnership, on the other hand, is a filing entity because the formation of the 605 underlying limited partnership requires the filing of a certificate of limited partnership. 606

607 “Foreign entity.” The term “foreign entity” includes any non-domestic entity of any 608

type. Where a foreign entity is a filing entity, the internal affairs of the entity will be 609 governed by the laws of the jurisdiction of filing. The jurisdiction whose laws will govern the 610 internal affairs of a nonfiling foreign entity will be determined by other factors. It is a factual 611 question whether a general partnership whose internal affairs are governed by the Uniform 612 Partnership Act (1914) (“UPA”) is a domestic or foreign partnership. A UPA partnership will 613 likely be deemed to be a domestic entity where the greatest nexus of contacts are found. The 614 domestic or foreign characterization of a partnership under the Uniform Partnership Act 615 (1997) (Last Amended 2013) (“RUPA”) that has not registered as a limited liability 616 partnership will be governed by RUPA § 106(a) (“the law of the jurisdiction in which a 617 partnership has its chief executive office”). 618 619

“Governance interest.” A governance interest is typically only part of the interest that 620 a person will hold in an unincorporated association and is usually coupled with a transferable 621 interest (or economic rights). However, memberships in some unincorporated nonprofit 622 associations consist solely of governance interests and in others may not include either 623 governance interests or distributional interests. In some unincorporated business associations, 624 there is a more limited right to transfer governance interests than there is to transfer 625 distributional interests. An interest holder in such an unincorporated business association who 626 transfers only a distributional interest and retains the governance interest will also retain the 627 status of an interest holder. 628 629

Governors of an association have the kinds of rights listed in the definition of 630 “governance interest” by reason of their position with the association. For a governor to have 631 a “governance interest” requires that the governor also have those rights for a reason other 632 than the governor’s status as such. A manager who is not a member in a limited liability 633 company, for example, will not have a governance interest, but a manager who is a member 634 will have a governance interest arising from the ownership of a membership interest. 635

636

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“Governor.” This term has been chosen to provide a way of referring to a person who 637 has the authority under an association’s organic law to make management decisions regarding 638 the association that is different from any of the existing terms used in connection with 639 particular types of associations. Depending on the type of association or its organic rules, the 640 governors of an association may have the power to act on their own authority, or they may be 641 organized as a board or similar group and only have the power to act collectively, and then 642 only through a designated agent. A person having only the power to bind the association 643 pursuant to the instruction of the governors is not a governor. Under the organic rules, 644 particularly those of unincorporated associations, most or all of the management decisions 645 may be reserved to the members or partners. 646

647 Cooperative corporations are treated as either corporations for profit or corporations not-648

for-profit. See 15 Pa.C.S. § 7102. Thus paragraphs (1) and (2) of the definition of “governor” 649 include directors of cooperative corporations. 650

651 “Interest.” In the usual case, the interest held by an interest holder in an 652

unincorporated entity will include both a governance interest and a distributional interest (or 653 economic rights). Members in unincorporated nonprofit associations generally do not have 654 any transferable interest because they do not receive distributions, but they nonetheless may 655 hold a governance interest in which case they would have the status of interest holders. 656 657

“Interest holder.” This chapter does not refer to “equity” interests or “equity” owners 658 or holders because the term “equity” could be confusing in the case of a nonprofit entity 659 whose members do not have an interest in the assets or results of operations of the entity but 660 only have a right to vote on its internal affairs. 661

662 “Licensed person.” This definition was added by the Limited Liability Company Act 663

which patterned it after the definition of the same term formerly found in 15 Pa.C.S. § 2902. 664 In general, a person who is licensed to practice a profession in a jurisdiction other than 665 Pennsylvania is permitted to own an equity interest in a Pennsylvania professional practice. 666 See, e.g., the use of the term “licensed person” in 15 Pa.C.S. §§ 2923, 8105 and 9506(f). 667 Being such an equity owner, however, does not exempt the person from the requirement of 668 being licensed in Pennsylvania if he or she practices in Pennsylvania. 669

670 “Obligation.” This definition is an example of the breadth involved in the use of the 671

term “includes” in Title 15 definitions. In addition to a secured or unsecured note or other 672 form of indebtedness, the term also includes, for example, a secured or unsecured 673 undertaking, guarantee, lease obligation, or duty to pay or perform. 674 675

“Officially publish.” To qualify as a newspaper for publishing corporate and other 676 association notices, general circulation in a county is sufficient, whether or not the place of 677 publication is in the county. 678 679

“Private organic rules.” The term private “organic rules” is intended to include all 680 governing rules of an association that are binding on all of the holders of an interest in the 681 association, whether or not those rules are in record form, except for the provisions of the 682

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association’s public organic document, if any. Thus the term includes oral partnership 683 agreements and oral operating agreements among LLC members. Because the term includes 684 all of the governing rules that are binding on the interest holders, it includes any amendment 685 or restatement of those rules. 686

687 “Profession.” This definition was added by the GAA Amendments Act of 2001 which 688

patterned it generally after the definition of the same term formerly found in 15 Pa.C.S. § 689 2902. Instead of defining professions with reference to the need to obtain authorization from 690 the Supreme Court of Pennsylvania or the Department of State as this definition does, 691 professions were described in the source provision as: 692

693 “... all personal services that prior to the enactment of the act of July 9, 1970 (P.L. 461, 694 No. 160), known as the Professional Corporation Law, could not lawfully be rendered 695 by means of a corporation. By way of example, and without limiting the generality of 696 the foregoing, the term includes for the purposes of [Chapter 29] personal services 697 rendered as an architect, chiropractor, dentist, funeral director, osteopath, podiatrist, 698 physician, professional engineer, veterinarian, certified public accountant or surgeon 699 and, except as otherwise prescribed by general rules, an attorney at law.” 700 701

The Committee decided that the quoted language was too indefinite and that the new 702 definition would provide greater certainty. 703

704 “Property.” The term “property” is intended to have as broad a meaning as possible. 705

The last clause of the definition confirms that it includes, among other things, contract rights 706 and choses in action. 707

708 “Public organic record.” A “public organic record” is a document the filing of which 709

as a public record is required to form, organize, incorporate, or otherwise create an 710 association. The term does not include a statement of registration as a limited liability 711 partnership filed under 15 Pa.C.S. § 8201 beause that statement does not create a new 712 association. Similarly, the term does not include a statement of authority filed under 713 Subchapter 91B by an unincorporated nonprofit association or a statement appointing an 714 agent filed under that subchapter. 715

716 “Receipt.” This definition was added in 2014 by the Association Transactions Act 717

which patterned it after Uniform Business Organizations Code (2011) (Last Amended 2013) § 718 1-102(40). See 15 Pa.C.S. § 112 with respect to what actual receipt means in the case of an 719 electronic transmission. See 15 Pa.C.S. § 113 with respect to what constitutes delivery of a 720 notice or other communication. 721

722 “Record form.” This definition was patterned after the definition of “record” in the 723

Electronic Transactions Act, 73 P.S. § 2260.103. It was added by the GAA Amendments Act 724 of 2013 to provide a way of referring generally to records of an association and other 725 documents that includes both paper documents and also documents that are created or 726 maintained in electronic form. In addition to paper documents, which are included in the 727 reference to “inscribed on a tangible medium,” any other form of record or document is 728

ACTIVE/ 6744855.14 20

acceptable so long as it is in a form that permits its retrieval in a tangible and reasonably 729 legible form. One important effect of the use of the term is to validate records and documents 730 that are kept in a form other than on paper. Although a number of sections of Title 15 refer 731 expressly to “written” documents or “written” provisions of agreements or other documents, 732 15 Pa.C.S. § 107(b) provides that those references will be satisfied by a document or 733 provision in record form. 734

735 Title 15 does not include a separate definition of what constitutes a “record.” It is 736

intended that the concept of a “record” will be applied expansively. 15 Pa.C.S. § 107(a) 737 makes clear that “shareholder or membership records, books of account and minute books” 738 are part of an association's records. The term “record” also includes, without limitation, 739 contracts, leases, proxies, and certifications. 740

741 “Sign.” This definition was added by the GAA Amendments Act of 2013 and is the 742

standard definition developed by the National Conference of Commissioners on Uniform 743 State Laws for this concept. The definition is also intended to apply to other forms of the 744 verb, such as “signed,” and noun forms, such as “signature.” 745

746 Title 15 has historically used the term “execute” to refer to the authentication of 747

documents being filed with the Department of State. As opportunities arise, the Committee 748 intends to propose substituting “sign” for “execute.” In the meantime, this section defines 749 “execute” to be synonymous with “sign.” 750

751 “Type.” The term “type” is used to distinguish different legal forms of associations. It 752

is sometimes difficult to decide whether one is dealing with a different form of association or 753 a variation of the same form. For example, a limited partnership, although it has been defined 754 as a partnership, is a different type of association from a general partnership, while a limited 755 liability partnership is not a different type of association from a general partnership nor is a 756 limited liability limited partnership a different type of association from a limited partnership. 757 Similarly, nonstock corporations, statutory close corporations, registered corporations, 758 management corporations, professional corporations, and insurance corporations are all forms 759 of business corporations and are not a separate “type” of association from a business 760 corporation. 761

762 “Unincorporated nonprofit association.” The definition of this term in 15 Pa.C.S. § 763

9112 includes both domestic and foreign unincorporated nonprofit associations. 764 765 766 § 109. Name of commercial registered office provider in lieu of registered 767

address. 768 769 (a) General rule. – Where any provision of this title authorizes or requires the 770

inclusion of a registered office address in any document filed in the Department of State, the 771 person filing the document may substitute in lieu thereof the term "c/o" followed by: 772

773 (1) The name of an association or a division thereof that has filed in the 774

ACTIVE/ 6744855.14 21

department, and not withdrawn, a statement of address of commercial registered office. 775 776 (2) The name of any county of this Commonwealth and a statement that the 777

registered office of the association represented shall be deemed for venue and official 778 publication purposes to be located in the county so named. For venue and official 779 publication purposes, the county so named shall control over the address contained in 780 the currently applicable statement filed under subsection (b). 781

782 (b) Statement of address of commercial registered office. – A domestic [business 783

corporation] or [qualified] registered foreign [business corporation, partnership or other] 784 association engaged in the business of maintaining registered offices in this Commonwealth 785 for corporations or other associations may file in the department a statement of address of 786 commercial registered office executed by the representing association or a division thereof 787 and setting forth: 788

789 (1) The name of the representing association. 790 791 (2) The form of organization of the representing association. 792 793 (3) A statement that it is in the business of maintaining registered offices in this 794

Commonwealth for corporations or other associations. 795 796 (4) The address, including street and number, if any, of a place of business of the 797

representing association in this Commonwealth to which communications and other 798 matters directed to each person represented by it may be delivered. 799

800 (c) Change or withdrawal. – A representing association that has effected a filing in the 801

department under subsection (b) may: 802 803

(1) Amend the filing by filing in the department a superseding statement of 804 address of commercial registered office. 805

806 (2) Withdraw its filing under subsection (b) and cease to provide registered 807

office service by filing in the department a statement of termination of commercial 808 registered office setting forth: 809

810 (i) The name of the representing association. 811 812 (ii) A statement that it has ceased to be in the business of maintaining 813

registered offices in this Commonwealth for corporations and other associations. 814 815

(d) Action by and notice to association. – It is not necessary for an association 816 represented to take any action in connection with a change or withdrawal effected under 817 subsection (c), but a representing association that has effected a filing under subsection (c) 818 (other than to reflect a change in the information required by subsection (b)(2)) shall promptly 819 file a statement of change of registered office by agent under section 108 (relating to change 820 in location or status of registered office provided by agent) with respect to each association 821 represented. 822

ACTIVE/ 6744855.14 22

823 Amended Committee Comment (2014): 824

825 This section gives a corporation or other association the option of listing the name 826

(but not the address) of a corporation service company, followed by the name of a county 827 (for venue and official publication purposes), in lieu of the usual registered office address. 828 Persons desiring to learn the actual address of the corporation service company (and hence 829 the registered office address of the represented corporation or other association) will be 830 able to do so by reference to a register in the Department of State, but presumably will 831 seldom have occasion to do so since, under the Judicial Code and Pa.R.C.P. Nos. 423 and 832 424, process is now mailed to or served at any actual business office of a corporation or 833 other association. 834

835 15 Pa.C.S. § 135(c)(1) requires that any address set forth in a filed document be an 836

actual street address or rural route box number. 837 838 The following terms used in this section are defined in 15 Pa.C.S. § 102: 839 840 “association” 841 “department” 842 “registered foreign association” 843

844 845 § 112. Receipt of electronic communications. 846 847

(a) Requirements.—Unless otherwise provided in the organic rules of an entity or 848 otherwise agreed between the sender and the recipient, an electronic communication is 849 received when it: 850 851

(1) enters an information processing system that the recipient has designated or 852 uses for the purpose of receiving electronic records or information of the type sent and 853 from which the recipient is able to retrieve the electronic record; and 854

855 (2) is in a form capable of being processed by that system. 856

857 (b) Awareness not required.—An electronic communication is received under 858

subsection (a) even if no individual is aware of its receipt. 859 860

(c) Presumption.—Receipt of an electronic acknowledgement from an information 861 processing system described in subsection (a) establishes that a communication was received 862 but, by itself, does not establish that the content sent corresponds to the content received. 863 864 Committee Comment (2014): 865 866

This section was added in 2014 by the Association Transactions Act and was patterned 867 after Uniform Electronic Transactions Act § 15(b), (e), and (f). The section makes clear that 868

ACTIVE/ 6744855.14 23

receipt of an electronic communication is not dependent on a person having notice that the 869 communication is in the person’s system. Receipt occurs when the communication reaches 870 the designated system whether or not the recipient ever retrieves the communication. The 871 paper analog is the recipient who never reads a mail notice. Subsection (c) provides legal 872 certainty regarding the effect of an electronic acknowledgement. It only addresses the fact of 873 receipt, not the quality of the content, nor whether the electronic communication was read or 874 “opened.” This section applies not only to email and similar messages, but also to other 875 electronic communications such as those resulting in voice mail messages. 876 877

The following terms used in this section are defined in 15 Pa.C.S. § 102: 878 879 “electronic” 880 “entity” 881 “organic rules” 882 “receipt” 883

884 885 § 113. Delivery of document. 886

887 (a) Permissible means. – Permissible means of delivery of a document in record form 888

include: 889 890

(1) personal delivery; 891 892 (2) mail; 893 894 (3) conventional commercial practice; and 895 896 (4) electronic transmission. 897

898 (b) Delivery to department. – Delivery to the department of a document in record form 899

is effective only on receipt by the department. 900 901 (c) Delivery by department. – Except as provided by law other than this title, the 902

department may deliver a document in record form to a person by delivering it: 903 904

(1) in person to the person that submitted it for filing; 905 906 (2) to the address of the person’s registered office; 907 908 (3) to the principal office address of the person; or 909 910 (4) to another address the person provides to the department for delivery. 911

912 Committee Comment (2014): 913 914

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Subsections (a) and (b) are patterned after Uniform Business Organizations Code (2011) 915 (Last Amended 2013) § 1-104. Subsection (c) is patterned after Uniform Business 916 Organizations Code (2011) (Last Amended 2013) § 1-212. 917

918 Delivery to the department is effective only on actual receipt. The effectiveness of 919

records delivered other than to the department will be controlled by provisions in other 920 chapters of this title, if any, and may vary depending on the type of entity to which the records 921 relate and manner in which the records are delivered. 922 923

If a person provides an email address to the department or delivers by email a document 924 to the department for filing, the department will use that email address to deliver confirmation 925 of the filing to the person. 926 927

The following terms used in this section are defined in 15 Pa.C.S. § 102: 928 929 “department” 930 “electronic” 931 “principal office” 932 “receipt” 933 “record form” 934

935 936

Subchapter B 937 Functions and Powers of Department of State 938

939 § 133. Powers of Department of State. 940 941

(a) General rule. – The department has the power and authority reasonably necessary to 942 enable it to administer this subchapter efficiently and to perform the functions specified in 943 section 132 (relating to functions of Department of State), in 13 Pa.C.S. (relating to 944 commercial code) and in 17 Pa.C.S. (relating to credit unions). The following shall not be 945 agency regulations for the purposes of section 612 of the act of April 9, 1929 (P.L. 177, No. 946 175), known as The Administrative Code of 1929, the act of October 15, 1980 (P.L. 950, No. 947 164), known as the Commonwealth Attorneys Act, the act of June 25, 1982 (P.L. 633, No. 948 181), known as the Regulatory Review Act, or any similar provision of law, but shall be 949 subject to the opportunity of public comment requirement under section 201 of the act of July 950 31, 1968 (P.L. 769, No. 240), referred to as the Commonwealth Documents Law: 951

952 (1) Sample filing forms promulgated by the department. 953 954 (2) Instructions accompanying sample filing forms and other explanatory 955

material published in the Pennsylvania Code that is intended to substantially track 956 applicable statutory provisions relating to the particular filing or to any of the functions 957 of the department covered by this subsection, if a regulation of the department expressly 958 states that those instructions or explanatory materials shall not have the force of law. 959

960

ACTIVE/ 6744855.14 25

(3) Regulations, which the department is hereby authorized to promulgate, that: 961 962

(i) Authorize payment of fees and other remittances through or by a credit 963 or debit card issuer or other financial intermediary. 964

965 (ii) Authorize contracts with credit or debit card issuers and other financial 966

intermediaries relating to the collection, transmission and payment of fees and 967 other remittances. 968

969 (iii) (Deleted by 2013, July 9, P.L. 476, No. 67, § 5.) 970 971 (iv) Adjust, not more than once per year, the fees set forth in section 153(a) 972

(relating to fee schedule) and 13 Pa.C.S. § 9525 (relating to fees) for filings 973 transmitted to the department electronically. 974

975 (v) Relate to the format or means of delivering documents to the 976

department for filing. 977 978

(vi) Specify the symbols or characters which: 979 980

(A) do not make a name distinguishable on the records of the 981 department; or 982

983 (B) may be used in the name of an entity. 984

985 (b) Language and content of documents. – Except to the extent required in order to 986

determine whether a document complies with section 135 (relating to requirements to be met 987 by filed documents), the department shall not examine articles and other documents 988 authorized or required to be filed in the department under this title to determine whether the 989 language or content thereof conforms to the provisions of this title. 990 991

(c) Meaning of term “conform to law”. – A document delivered to the department for 992 the purpose of filing in the department shall be deemed to be in accordance with law and to 993 conform to law, as those terms are used in statutes relating to the powers and duties of the 994 department, if the document conforms to section 135. 995

996 (d) (Reserved). 997

998 (e) Engrossed certificate. – Whenever the department has taken any action under this 999

title, the Secretary of the Commonwealth shall, upon request and payment of the fee or 1000 additional fee therefor fixed by regulation of the department, issue to any person entitled 1001 thereto an engrossed certificate evidencing the action, executed by the Secretary of the 1002 Commonwealth under the seal of the Commonwealth. 1003

1004 Amended Committee Comment (2014): 1005 1006

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It is the intention of subsection (a)(1) that the department will continue its practice of 1007 promulgating sample filing forms in 19 Pa. Code. There is no requirement, however, that 1008 filings be prepared on the sample forms promulgated by the department. Cf. 15 Pa.C.S. § 1009 134(a)(4). Because the use of forms promulgated by the department is not mandated under 1010 Title 15, subsection (a) provides that the sample forms do not have to go through the full 1011 rulemaking process. 1012 1013

Prior to its repeal by the GAA Amendments Act of 2013, subsection (a)(3)(iii) 1014 authorized the department to increase its filing fees as necessary so that fees paid by credit 1015 card or through a financial intermediary would result in the same net revenue to the 1016 department as fees paid directly to the department. The intent was to allow the department to 1017 recoup any fees or discounts imposed by the credit card issuer or other financial intermediary. 1018 At the time subsection (a)(3)(iii) was enacted, it was thought that the ability to make such an 1019 adjustment would encourage the department to allow such means of payment. As a matter of 1020 policy, the department is now committed to accepting payments by credit card without an 1021 additional fee, and the repeal of subsection (a)(3)(iii) reflects that policy. 1022

1023 Subsection (a)(3)(vi) was added in 2014 by the Association Transactions Act. It permits 1024

the department to adopt regulations specifying what symbols or characters (i) will not make a 1025 name distinguishable, and (ii) which symbols or characters may be used in a name. The 1026 department may permit the use of a symbol or character in a name even though the symbol or 1027 character will not make the name distinguishable from other names. See 15 Pa.C.S. § 1028 135(e)(1). 1029

1030 The fee for preparation of an engrossed certificate is set forth in 15 Pa.C.S. § 1031

153(a)(11)(iv). 1032 1033 The term “department” used in this section is defined in 15 Pa.C.S. § 102. 1034

1035 The term “this title” used in this section is defined in 15 Pa.C.S. § 131 to include Titles 1036

17 and 54. 1037 1038 1039 § 135. Requirements to be met by filed documents. 1040 1041

(a) General rule. – A document shall be accepted for filing by the department if it 1042 satisfies the following requirements: 1043

1044 (1) The document purports on its face to relate to matters authorized or required 1045

to be filed under this title or contains a caption indicating that relationship and, if no 1046 applicable statement has been prescribed under section 134 (relating to docketing 1047 statement), contains sufficient information to permit the department to prepare a docket 1048 record entry: 1049

1050 (i) Identifying the name of the association or other person to which the 1051

document relates. 1052

ACTIVE/ 6744855.14 27

1053 (ii) Identifying the association or associations, if any, the existence of 1054

which is to be created, extended, limited or terminated by reason of the filing and 1055 the duration of existence of any such association. 1056

1057 (iii) Specifying the date upon which the creation or termination of 1058

existence, if any, of the association or associations effected by the filing will take 1059 effect. 1060

1061 (2) The document complies with any regulations promulgated by the department 1062

and is accompanied by any applicable statement prescribed under section 134. 1063 1064 (3) In the case of a document that creates a new association or effects or reflects 1065

a change in name: 1066 1067

(i) the document is accompanied by evidence that the proposed name has 1068 been reserved by or on behalf of the applicant; or 1069

1070 (ii) the proposed name is available for use under the applicable standard 1071

established by this title and any other applicable provision of law. 1072 1073

(4) In the case of any other document that sets forth a name or mark, the 1074 proposed name or mark is available for use under the applicable standard established by 1075 law. 1076

1077 (5) All fees, taxes and certificates or statements relating thereto required by 1078

section 139 (relating to tax clearance of certain fundamental transactions) or otherwise 1079 have been tendered therewith. 1080

1081 (6) All certificates and other instruments required by statute evidencing the 1082

consent or approval of any department, board, commission or other agency of this 1083 Commonwealth as a prerequisite to the filing of the document in the Department of 1084 State have been incorporated into, attached to or otherwise tendered with the document. 1085

1086 (7) It is in record form and executed. The department shall not examine a 1087

document to determine whether the document has been signed by an authorized person 1088 or by sufficient authorized persons or otherwise is duly signed. 1089

1090 (b) Attorney-in-fact. – Any person, other than an incorporator or officer of a 1091

corporation, as such, may sign a document by an attorney-in-fact or fiduciary. It shall not be 1092 necessary to present to or file in the department the original or a copy of any document 1093 evidencing the authority of an attorney-in-fact or fiduciary. 1094

1095 (c) Addresses. – 1096 1097

(1) Whenever any provision of this title requires that any person set forth an 1098

ACTIVE/ 6744855.14 28

address in any document, such provision shall be construed to require the submission of 1099 an actual street address or rural route box number, and the department shall refuse to 1100 receive or file any document that sets forth only a post office box address. 1101

1102 (2) Whenever any provision of this title requires the statement of a registered 1103

office address in any document filed in the department, such provision shall be 1104 construed to require the statement also of the county in which the registered office 1105 address is located. 1106

1107 (d) (Reserved). 1108 1109 (e) Distinguishable names. – A name shall not be considered distinguishable upon the 1110

records of the department from another name for purposes of this title and 54 Pa.C.S. (relating 1111 to names) solely because the names differ from each other in any or all of the following 1112 respects: 1113

1114 (1) Use of punctuation marks and of symbols or characters specified by 1115

regulation of the department under section 133(a)(3)(vi) (relating to powers of 1116 department of state). 1117

1118 (2) Use of a definite or indefinite article. 1119 1120 (3) Use of any of the following terms to designate the status of an association: 1121

corporation, company, incorporated, limited, association, fund, syndicate, limited 1122 partnership, limited liability company, trust or business trust. This paragraph includes 1123 abbreviations, in any language, of the terms listed in this paragraph. 1124

1125 Amended Committee Comment (2014): 1126 1127

Because of the regulatory role that was once implicit in the functions of the department 1128 under the corporation laws, the personnel of the department acting under that authority 1129 exercised a sometimes heavy-handed prerogative to reject or reword corporate documents. 1130 The statutory revisions of the 1960's were intended to eliminate this responsibility and 1131 consequently to introduce a desirable degree of predictability in the corporate filing process. 1132 Thus by Opinion of December 14, 1967 (see 40 Pa.B.A.Q. 298-99 (1969)) the Attorney 1133 General ruled: 1134

1135 (1) The Act of January 18, 1966, P.L. 1305 (Act No. 591), amending the Act of May 1136

5, 1933, P.L. 364, removed certain review powers of the Department with respect to 1137 documents filed with it. It limited the reasons for which the Bureau may reject articles of 1138 incorporation and other documents presented to it for filing under the BCL to the 1139 following items: 1140

(a) improper execution, i.e., the omission of the required signature or signatures 1141 and, if required, the proper corporate seal; 1142

(b) the required fees and taxes or certificates relating thereto have not been 1143 tendered; 1144

ACTIVE/ 6744855.14 29

(c) the proposed corporate name is not proper or available; 1145 (d) the absence or failure to complete a required document; or 1146 (e) absence of relation to matters authorized or required to be filed. For example, 1147

the proposed formation of corporations which are required to be made under other 1148 specific statutes. 1149 * * * 1150 (4) The Bureau should not review the substantive provisions of articles of merger, 1151

consolidation or dissolution, and other documents specifying the relative rights and 1152 preferences of shareholders, including their rights to dividends, or suggest changes in 1153 the language used in documents filed with it. 1154

(5) In all cases of doubt, the Department should resolve that doubt in favor of the 1155 prompt filing of the questioned document subject to later correction, if necessary. Due 1156 to the change in the law, there is no longer any implication from the acceptance of a 1157 filing that the Department has ruled that the documents conform to law except in the 1158 limited instances noted above. In the usual case, the filing of a questionable document 1159 will not adversely affect any public rights, and, if unlawful, cannot permanently affect 1160 any private rights in view of the remedies currently available to private parties. 1161

1162 This section continues and reinforces the concept that the department is a filing office 1163

and not a reviewer of the contents of filed documents except in the limited case of examining 1164 the availability of names and marks against possible prior appropriation. 1165

1166 The rule in subsection (b) is limited to the context of this section and only relates to 1167

signing documents filed in the department. Whether other documents may be signed by an 1168 attorney-in-fact or fiduciary will be determined by other law. 1169

1170 Subsection (c)(1) applies to all addresses required to be set forth in filings in the 1171

department, and not just to the address of the registered office of a domestic or qualified 1172 foreign association. See, e.g., 15 Pa.C.S. §§ 1926(1)(ii) and 1954(1)(ii). 1173

1174 The department has adopted regulations pursuant to subsection (d) which provide that 1175

the department will accept filings by fax without additional charge, but that there will be an 1176 additional charge if the department is asked to respond by fax to a filing. See 19 Pa. Code §§ 1177 3.26 and 13.3(d). 1178

1179 Prior to the amendment of this section in 2000, the general test under Title 15 for name 1180

availability was that the Department of State would not accept a filing creating or registering 1181 an association if the name of the association was “the same as or confusingly similar to” a 1182 name already on file. The new requirement that a name be distinguishable upon the records 1183 of the department from other names is patterned after the test for name availability that is used 1184 under the Delaware General Corporation Law. See, e.g., 8 Del. Code § 102(a)(1)(ii). The 1185 purpose of the new test is to reduce the circumstances in which an existing name will conflict 1186 with a new name and, thus, to make more names available. 1187

1188 Subsection (e) sets forth certain rules for determining whether a name is distinguishable 1189

from another name. Under subsection (e)(1), the names “The Party! Store, Inc.” and “The 1190

ACTIVE/ 6744855.14 30

Party Store, Inc.” will not be distinguishable. Under subsection (e)(2), the names “The Party 1191 Store, Inc.” and “Party Store, Inc.” will not be distinguishable. Under subsection (e)(3), the 1192 names “The Party Store, Inc.” and “The Party Store Co.” will not be distinguishable; however, 1193 the names “The Company Party Store, Inc.” and “The Party Store, Inc.” will be 1194 distinguishable because “Company” in the first name is not being used to designate the status 1195 of the association as a corporation. 1196

1197 The new test that a name must simply be distinguishable upon the records of the 1198

department is intended to abrogate the former regulation of the department at 19 Pa. Code § 1199 17.3(c)(1)(iv) that a geographic designator is not sufficient to make a name not confusingly 1200 similar to another name. It is intended that the names “The Party Store, Inc.” and “The Party 1201 Store of Pittsburgh, Inc.” will be considered distinguishable and may be used by different 1202 associations. 1203

1204 Regulations adopted by the department under subsection (e)(1) do not have to go 1205

through the full rule-making process. See 15 Pa.C.S. § 133(a)(3)(vi). 1206 1207 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1208 1209 “association” 1210 “department” 1211 “executed” 1212 “record form” 1213 1214 The term “this title” used in this section is defined in 15 Pa.C.S. § 131 to include Titles 1215

17 (relating to credit unions) and 54 (relating to names). 1216 1217 1218 § 136. Processing of documents by Department of State. 1219 1220

(a) Filing of documents. – If a document conforms to section 135 (relating to 1221 requirements to be met by filed documents) the Department of State shall forthwith file the 1222 document, certify that the document has been filed by endorsing upon the document the fact 1223 and date of filing, make and retain a copy thereof and return the document or a copy thereof 1224 so endorsed to or upon the order of the person who delivered the document to the department. 1225

1226 (b) Duplicate copy. – 1227 1228

(1) If a duplicate copy, which may be either a signed or conformed copy, of any 1229 articles or other document authorized or required by this title to be filed in the 1230 department is delivered to the department with the original signed document, the 1231 department shall stamp the duplicate copy with the date received by the department and 1232 return the duplicate copy to the person who delivered it to the department. 1233

1234 (2) (Reserved). 1235 1236

ACTIVE/ 6744855.14 31

(3) In lieu of date stamping the duplicate copy of the original signed document 1237 as provided in paragraph (1), the department may make a copy of the original signed 1238 document at the cost of the person who delivered it to the department. 1239

1240 (c) Effective date and time. – Except as otherwise provided in this title and subject to 1241

sections 138 (relating to statement of correction) and 141 (relating to abandonment of filing 1242 before effectiveness), a document [shall become] filed by the department under a provision of 1243 this title is effective [upon the filing thereof in the department.]: 1244 1245

(1) on the date and at the time of its delivery to the department; 1246 1247

(2) on the date of delivery and at the time specified in the document as its 1248 effective time, if the time specified is later than the time under paragraph (1); or 1249

1250 (3) at a specified delayed effective date and: 1251 1252

(i) at a specified time; or 1253 1254

(ii) if no time is specified, at 12:01 a.m. on the date specified. 1255 1256 (d) Copies. – The department may make a copy, on microfilm or otherwise, of any 1257

document filed in, with or by it pursuant to this title, or any statute hereby supplied or 1258 repealed, and thereafter destroy the document or return it to or upon the order of the person 1259 who delivered the document to the department. 1260 1261

(e) Redaction of information. – If law other than this title prohibits the disclosure by 1262 the department of information contained in a document in record form delivered to the 1263 department for filing, the department shall accept the document if it otherwise complies with 1264 this title but may redact the information. 1265 1266 Amended Committee Comment (2014): 1267 1268

The system in this section of delivering duplicate copies of papers to the department, 1269 with one copy immediately stamped and returned, has been applicable since 1973 to filings 1270 under the Nonprofit Corporation Law. It was extended to the rest of Title 15 in 1988. The 1271 prior practice under which the department routinely issued certificates of incorporation, 1272 merger, consolidation, amendment, etc. was eliminated in 1988. 1273 1274

Prior to its repeal by the GAA Amendments Act of 2013, former subsection (b)(2) 1275 provided for expedited processing of filings on request and payment of an additional fee. 1276 Expedited processing of filings is now available under 15 Pa.C.S. § 153(a)(15). 1277

1278 Subsection (c) was amended in 2014 by the Association Transactions Act and is 1279

patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-203. 1280 Prior to the 2014 amendment, subsection (c) provided that documents were effective upon 1281 filing unless a specific document was authorized to include a delayed effective date or time by 1282

ACTIVE/ 6744855.14 32

another provision of Title 15. A provision authorizing a delayed effective date or time for a 1283 specific document is no longer necessary, and any document delivered to the department for 1284 filing may contain a delayed effective date or time. Provisions stating that a document may 1285 include a delayed effective date or time nonetheless have been retained in a number of 1286 sections of Title 15 as a reminder that a delayed effective date or time is permitted, but the 1287 absence of such a provision with respect to a specific document no longer means that the 1288 document may not include a delayed effective date or time. 1289 1290

Subsection (e) was added in 2014 by the Association Transactions Act and is patterned 1291 after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-201(b). 1292

1293 Rules on what constitutes delivery of documents to and by the Department of State are 1294

set forth in 15 Pa.C.S. § 113(b) and (c). 1295 1296 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1297 1298 “department” 1299 “record form” 1300

1301 The term “this title” used in this section is defined in 15 Pa.C.S. § 131 to include Titles 1302

17 and 54. 1303 1304 1305 § 138. Statement of correction. 1306 1307

(a) Filing of statement. – Whenever any document authorized or required to be [filed 1308 in the Department of State] delivered to the department for filing by any provision of this 1309 title has been so filed and is an inaccurate record of the [corporate or other] action therein 1310 referred to or was defectively or erroneously executed, the document may be corrected by 1311 [filing in] delivering to the department for filing a statement of correction [of the document]. 1312 The statement of correction, except as provided in subsection (c), shall be [executed] signed 1313 by the association or other person that [effected] delivered the inaccurate, defective or 1314 erroneous document for filing and shall set forth: 1315

1316 (1) The name of the association or other person and, subject to section 109 1317

(relating to name of commercial registered office provider in lieu of registered address), 1318 the location, including street and number, if any, of its registered or other office. 1319

1320 (2) The statute by or under which the [corporation was incorporated] 1321

association was formed, or the preceding filing was made, in the case of a filing that 1322 does not constitute a part of the [articles of incorporation of a corporation] public 1323 organic record of an association. 1324

1325 (3) The inaccuracy or defect to be corrected. 1326 1327 (4) The portion of the document requiring correction in corrected form or, if the 1328

ACTIVE/ 6744855.14 33

document was erroneously executed, a statement that the original document shall be 1329 deemed reexecuted or stricken from the records of the department, as the case may be. 1330

1331 (b) Effect of filing. – 1332 1333

(1) The corrected document shall be effective: 1334 1335

(i) Upon filing in the department, as to those persons who are substantially 1336 and adversely affected by the correction. 1337

1338 (ii) As of the date the original document was effective, as to all other 1339

persons. 1340 1341 (2) A filing under this section shall not have the effect of causing [original 1342

articles of incorporation of a corporation or a similar type of document creating 1343 any other form of association] the original public organic record of an association to 1344 be stricken from the records of the department but the [articles or other document] 1345 public organic record may be corrected under this section. 1346 1347 (c) Filing pursuant to court order. – If the association or other person refuses to [file] 1348

deliver to the department for filing an appropriate statement of correction under this section 1349 within ten business days after any person adversely affected has made a [written] demand in 1350 record form [therefor] for the correction, the affected person may apply to the court for an 1351 order to compel the filing. If the court finds that a document on file in the department is 1352 inaccurate [or], defective or erroneous, it may direct the association or other person who 1353 effected the inaccurate, defective or erroneous filing to [file] deliver to the department for 1354 filing an appropriate statement of correction [in the department], or it may order the clerk to 1355 execute the statement under the seal of the court and cause the statement to be [filed in] 1356 delivered to the department for filing. In the absence of fraud, an application may not be 1357 made to a court under this subsection with respect to a document more than one year after the 1358 date on which it was originally filed in the department. 1359

1360 (d) Cross reference. – See section 135 (relating to requirements to be met by filed 1361

documents). 1362 1363

Amended Committee Comment (2001): 1364 1365

A statement with respect to continuation of procedure filed under Section 107(e) of the 1366 General Association Act of 1988 (15 P.S. § 20107(e)) is subject to correction under this 1367 section. 1368

1369 The purpose of subsection (b)(2) is to keep the procedure of this section from being used 1370

as an alternative to the dissolution process. 1371 1372 The cross reference to 15 Pa.C.S. § 135 in subsection (d) reflects a change in style by 1373

the Committee. Similar cross references will be added throughout Title 15 as the opportunity 1374

ACTIVE/ 6744855.14 34

arises. In the meantime, no contrary implication is intended with respect to sections lacking 1375 that cross reference and 15 Pa.C.S. § 135 will continue to be applicable to all filings under 1376 Title 15. 1377

1378 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1379 1380 “association” 1381 “court” 1382 “department” 1383 1384 The term “this title” used in this section is defined in 15 Pa.C.S. § 131 to include Titles 1385

17 (relating to credit unions) and 54 (relating to names). 1386 1387 1388 § 139. Tax clearance of certain fundamental transactions. 1389 1390

(a) [General rule. – Except as provided in subsection (c), a domestic association 1391 shall not file articles or a certificate of merger or consolidation effecting a merger or 1392 consolidation into a nonqualified foreign association or articles or a certificate of 1393 dissolution or a statement of revival, a qualified foreign association shall not file an 1394 application for termination of authority or similar document in the Department of State 1395 and a domestic association shall not file articles or a certificate of division dividing solely 1396 into nonqualified foreign associations unless the articles, certificate, application or other 1397 document are accompanied by clearance certificates from the Department of Revenue 1398 and the Office of Employment Security of the Department of Labor and Industry, 1399 evidencing the payment by the association of all taxes and charges due the 1400 Commonwealth required by law.] Requirement. – Except as provided in subsection (c) or 1401 (d), clearance certificates from the Department of Revenue and the Department of Labor and 1402 Industry, evidencing the payment by the association of all taxes and charges due the 1403 Commonwealth required by law must be delivered to the department for filing when any of 1404 the following is delivered to the department for filing: 1405

1406 (1) Articles or a statement or certificate of merger merging a domestic 1407

association into a nonregistered foreign association. 1408 1409 (2) Articles or a statement or certificate of conversion or domestication effecting 1410

a conversion or domestication of a domestic association into a nonregistered foreign 1411 association. 1412

1413 (3) Articles or a certificate of dissolution or a statement of revival of a domestic 1414

association. 1415 1416 (4) An application for termination of registration, statement of withdrawal or 1417

similar document by a registered foreign association. 1418 1419

ACTIVE/ 6744855.14 35

(5) Articles or a statement or certificate of division dividing a domestic 1420 association solely into foreign associations. 1421

1422 (b) Tax clearance in judicial proceedings. – Until the clearance certificates described 1423

in subsection (a) have been filed with the court: 1424 1425

(1) The court shall not order the dissolution of a domestic business corporation, 1426 nonprofit corporation or business trust. 1427

1428 (2) The court shall not approve a final distribution of the assets of a domestic 1429

general partnership, limited partnership, electing partnership or limited liability 1430 company if the court is supervising the winding up of the association. 1431

1432 (c) Alternative provisions. – If clearance certificates are filed with the court as 1433

required under subsection (b), it shall not be necessary to file the clearance certificates with 1434 the Department of State. 1435

1436 (d) Registration of foreign associations. – It shall not be necessary to deliver clearance 1437

certificates under subsection (a) if, simultaneously with the delivery of the articles, statement 1438 or certificate of merger, conversion, division or domestication: 1439

1440 (1) the foreign association that is the surviving, converted or domesticated 1441

association registers to do business in this Commonwealth; or 1442 1443 (2) at least one of the new foreign associations resulting from the division 1444

registers to do business in this Commonwealth. 1445 1446 Amended Committee Comment (2014): 1447 1448

Subsections (b) and (c) were added by the GAA Amendments Act of 2001 for the 1449 purpose of calling attention to the tax clearance procedure in judicial dissolution proceedings 1450 that was already the law. Subsection (b) is patterned after section 32 of the act of June 1, 1889 1451 (P.L. 420, No. 332) (72 P.S. § 3323), which provides that: 1452 1453

No corporation, company, joint-stock association, association or 1454 limited partnership made taxable by this act, shall hereafter be dissolved by 1455 the decree of any court of common pleas, nor shall any judicial sale be valid 1456 or a distribution of the proceeds thereof be made, until all taxes due the 1457 commonwealth have been fully paid into the state treasury, and the 1458 certificate of the auditor general, state treasurer and attorney general to this 1459 effect filed in the proper court, with the proceedings for dissolution or sale. 1460

1461 Prior to the enactment of subsections (b) and (c), there was confusion about the 1462

requirements for tax clearance certificates in connection with judicial dissolutions because of 1463 the express statements in 15 Pa.C.S. §§ 1989(b) and 5989(b) that tax clearance certificates 1464 were not required when articles of dissolution were filed by the clerk of a court of common 1465

ACTIVE/ 6744855.14 36

pleas after an order was entered dissolving a business corporation or a nonprofit corporation. 1466 Because the requirement of section 32 of the 1889 Act that tax clearance certificates were to 1467 be filed with the court was not widely known, many people assumed that tax clearance 1468 certificates were not required at all in connection with judicial dissolutions. To call attention 1469 to the need to file tax clearance certificates with the court in connection with a judicial 1470 dissolution, the GAA Amendments Act of 2001 enacted subsections (b) and (c), repealed the 1471 statements in 15 Pa.C.S. §§ 1989(b) and 5989(b) that tax clearance certificates were not 1472 required to be filed in the Department of State, and added cross references to subsection (b) in 1473 15 Pa.C.S. §§ 1989 and 5989. 1474 1475

In the case of general partnerships, limited partnerships and limited liability companies, 1476 15 Pa.C.S. §§ 8354, 8572 and 8972, respectively, provide that a court may order dissolution of 1477 the association on application of a partner or a member under certain circumstances. 1478 However, unlike a judicial dissolution of a corporation or business trust, where the order 1479 dissolving the association comes at the end of the dissolution and winding up process, a 1480 judicial decree dissolving a limited partnership or limited liability company only commences 1481 the winding up process. Following an order dissolving a general partnership, limited 1482 partnership or limited liability company, the winding up process may or may not be conducted 1483 under judicial supervision pursuant to 15 Pa.C.S. §§ 8359, 8573 and 8973. Subsection (b)(2) 1484 provides that if a court supervises the winding up proceedings, the required tax clearance 1485 certificates are to be filed with the court. By implication, if the winding up is not supervised 1486 by the court, the general rule in subsection (a) will continue to apply to the dissolution of a 1487 limited partnership or a limited liability company and tax clearance certificates must be filed 1488 with the Department of State along with the filing formally terminating the existence of the 1489 association. 1490 1491

Subsection (b)(2) expands on the rule in section 32 of the 1889 Act to the extent that 1492 subsection (b)(2) requires the submission of tax clearance certificates in connection with the 1493 judicial supervision of the distribution of the assets of a general partnership. Tax clearance 1494 certificates are not required, however, where the partners of a general partnership wind up its 1495 affairs without judicial supervision. 1496 1497

Rules on what constitutes delivery of documents to and by the Department of State are 1498 set forth in 15 Pa.C.S. § 113. 1499

1500 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1501

1502 “association” 1503 “court” 1504 “nonregistered foreign association” 1505 “registered foreign association” 1506

1507 1508 § 141. Abandonment of filing before effectiveness. 1509 1510

(a) General rule. – A document in record form delivered to the department for filing 1511

ACTIVE/ 6744855.14 37

may be abandoned before it takes effect by delivering to the department for filing a statement 1512 of abandonment. 1513

1514 (b) Requirements for statement of abandonment. – A statement of abandonment must: 1515

1516 (1) be signed by a person with the authority to sign the statement; 1517 1518 (2) identify the document to be abandoned; and 1519 1520 (3) state that abandonment of the document has been validly approved. 1521

1522 (c) Effect of statement of abandonment. – Upon filing by the department of a 1523

statement of abandonment, the action or transaction evidenced by the original document shall 1524 not take effect. 1525

1526 Committee Comment (2014): 1527 1528

This section was added in 2014 by the Association Transactions Act and is patterned 1529 after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-204. 1530

1531 Only documents that have not yet taken effect may be withdrawn under this section. If a 1532

document has taken effect, it may be corrected under 15 Pa.C.S. § 138 if the requirements of 1533 that section are satisfied. Otherwise, the document must be amended in accordance with the 1534 applicable provisions of this title or, if the document relates to the formation of an entity, the 1535 existence of the entity may be terminated in accordance with the applicable provisions of this 1536 title. 1537 1538

Where a document being withdrawn has been signed by an entity, an individual who is 1539 different from the individual who signed the original document on behalf of the entity may 1540 sign the statement of withdrawl on behalf of the entity. 1541

1542 Rules on what constitutes delivery of documents to and by the Department of State are 1543

set forth in 15 Pa.C.S. § 113. 1544 1545 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1546 1547 “department” 1548 “record form” 1549

1550 1551 § 142. Effect of signing filings. 1552 1553

(a) Affirmation of truth. – Signing a document delivered to the department for filing is 1554 an affirmation under the penalties provided in 18 Pa.C.S. § 4904 (relating to unsworn 1555 falsification to authorities) that the facts stated in the document are true in all material 1556 respects. 1557

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1558 (b) Signature by agent or legal representative. – A document filed under this title may 1559

be signed by an agent. If this title requires a particular individual to sign a document and the 1560 individual is deceased or incompetent, the document may be signed by a legal representative 1561 of the individual on behalf of the individual. 1562

1563 (c) Affirmation of authority. – A person that signs a document delivered to the 1564

department for filing affirms as a fact that the person is authorized to sign the document. 1565 1566 Committee Comment (2014): 1567 1568

This section was added in 2014 by the Association Transactions Act and is patterned 1569 after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-209(a) and (c). 1570 1571

Subsection (a) makes it a criminal offense for any person to sign a document delivered 1572 to the department for filing that the person knows is false in any material respect. Under 1573 subsection (c), one of the facts to which the person signing the document is attesting is the 1574 authority of the person to sign the document. The organic law of an association often includes 1575 a provision on who has, or may be given, authority to sign a document on behalf of the 1576 association. 1577 1578

The term “this title” used in this section is defined in 15 Pa.C.S. § 131. 1579 1580

The following terms used in this section are defined in 15 Pa.C.S. § 102: 1581 1582

“department” 1583 “sign” 1584

1585 1586 § 143. Liability for inaccurate information in filing. 1587 1588

If a document that is delivered to the department for filing under this title and filed by 1589 the department contains inaccurate information at the time of delivery to the department, a 1590 person that suffers a loss by reliance on the information may recover damages for the loss 1591 from a person that signed the document or caused another to sign it on behalf of the person 1592 and knew at the time the document was delivered that the information was inaccurate. 1593 1594 Committee Comment (2014): 1595 1596

This section was added in 2014 by the Association Transactions Act and is patterned 1597 after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-211. 1598 1599

This section relates to liability to third parties for inaccurate information in a filed 1600 record. 15 Pa.C.S. § 142 provides for criminal liability where the facts in a filed record are 1601 not true in all material respects. 1602 1603

ACTIVE/ 6744855.14 39

Rules on what constitutes delivery of documents to and by the Department of State are 1604 set forth in 15 Pa.C.S. § 113. 1605 1606

The term “this title” used in this section is defined in 15 Pa.C.S. § 131. 1607 1608

The following terms used in this section are defined in 15 Pa.C.S. § 102: 1609 1610

“department” 1611 “sign” 1612

1613 1614 § 144. Signing and filing pursuant to judicial order. 1615 1616

(a) Petition. – If a person required by this title to sign a document or deliver a 1617 document to the department for filing under this title does not do so, any other person that is 1618 aggrieved may petition the court to order: 1619 1620

(1) the person to sign the document; 1621 1622

(2) the person to deliver the document to the department for filing; or 1623 1624

(3) the department to file the document unsigned. 1625 1626

(b) Association. – If a petitioner under subsection (a) is not the association to which 1627 the document pertains, the petitioner shall make the association a party to the action. 1628 1629

(c) Effect. – A record filed under subsection (a)(3) is effective without being signed. 1630 1631 Committee Comment (2014): 1632 1633

This section was added in 2014 by the Association Transactions Act and is patterned 1634 after Uniform Limited Liability Company Act (2006) (Last Amended 2013) § 204. 1635 1636

This section gives the court the flexibility to order either that a document be signed or 1637 that the document be filed by the department unsigned. The later circumstance may arise, for 1638 example, in a situation where the person who should sign the document is not subject to the 1639 jurisdiction of the court. This section also makes clear that the court may order a person with 1640 control over a document that has been signed to deliver the document to the department for 1641 filing. 1642 1643

Rules on what constitutes delivery of documents to and by the Department of State are 1644 set forth in 15 Pa.C.S. § 113. 1645

1646 The term “this title” used in this section is defined in 15 Pa.C.S. § 131. 1647

1648 The following terms used in this section are defined in 15 Pa.C.S. § 102: 1649

ACTIVE/ 6744855.14 40

1650 “association” 1651 “court” 1652 “department” 1653 “sign” 1654

1655 1656 § 145. Subsistence certificate. 1657 1658

(a) General rule. – On request of a person, the department shall issue: 1659 1660

(1) a subsistence certificate for a domestic filing entity or domestic limited 1661 liability partnership; or 1662

1663 (2) a certificate of registration for a registered foreign association. 1664

1665 (b) Contents of certificate. – A certificate under subsection (a) must state: 1666

1667 (1) the name of the domestic filing entity or domestic limited liability 1668

partnership or the name under which the registered foreign association is registered in 1669 this Commonwealth; 1670

1671 (2) in the case of a domestic filing entity or domestic limited liability 1672

partnership, that the entity is currently subsisting on the records of the department; and 1673 1674 (3) in the case of a registered foreign association, that it is registered to do 1675

business in this Commonwealth. 1676 1677

(c) Effect of certificate. – Subject to any qualification stated in the certificate, a 1678 certificate issued by the department under subsection (a) may be relied on as conclusive 1679 evidence of the facts stated in the certificate. 1680 1681 Committee Comment (2014): 1682 1683

This section was added in 2014 by the Association Transactions Act and is patterned in 1684 part after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-208. 1685

1686 A certificate issued under this section only relates to matters that can be determined 1687

from the records on file with the department and does not constitute a certificate of good 1688 standing as that term is used under the law of other states. 1689 1690

The following terms used in this section are defined in 15 Pa.C.S. § 102: 1691 1692 “department” 1693 “domestic filing entity” 1694 “limited liability partnership” 1695

ACTIVE/ 6744855.14 41

“registered foreign association” 1696 1697 1698

Subchapter C 1699 Corporation Bureau and UCC Fees 1700

1701 § 152. Definitions. 1702 1703

The following words and phrases when used in this subchapter shall have the meanings 1704 given to them in this section unless the context clearly indicates otherwise: 1705

1706 “Ancillary transaction.” Includes: 1707 1708

(1) preclearance of document; 1709 1710 (2) amendment of articles, charter, certificate or other organic document, 1711

restatement of articles, charter, certificate or other organic document; 1712 1713 (3) dissolution, cancellation or termination of an association; 1714 1715 (4) withdrawal by foreign association; 1716 1717 (5) withdrawal by a partner; 1718 1719 (6) any transaction similar to any item listed in paragraphs (1) through (5); [or] 1720 1721 (6.1) withdrawal, abandonment or termination of a document which has been 1722

delivered to the department for filing but has not yet become effective; or 1723 1724 (7) delivery to the department for filing in, by or with the department or the 1725

Secretary of the Commonwealth of any articles, statements, proceedings, agreements or 1726 any similar papers affecting associations under the statutes of this Commonwealth for 1727 which a specific fee is not set forth in section 153 (relating to fee schedule) or other 1728 applicable statute. 1729

1730 [There is no Committee Comment to 15 Pa.C.S. § 152.] 1731

1732 1733 § 153. Fee schedule. 1734 1735

(a) General rule.—The nonrefundable fees of the bureau, including fees for the public 1736 acts and transactions of the Secretary of the Commonwealth administered through the bureau, 1737 shall be as follows: 1738

1739 (1) Domestic corporations: 1740 1741

ACTIVE/ 6744855.14 42

(i) Articles of incorporation, letters patent or similar 1742 instruments incorporating a corporation [or association] $125 1743

1744 (ii) [articles or agreement or similar instrument of 1745

merger, consolidation or division 70 1746 1747 (iii) Additional fee for each association which is a 1748

party to a merger or consolidation 40 1749 1750 (iv) Additional fee for each new association resulting 1751

from a division 125 1752 1753 (v) Articles of conversion or a similar instrument 70 1754 1755 (vi)] Each ancillary transaction 70 1756 1757

(2) Foreign [corporations] associations: 1758 1759

(i) [Certificates of authority] Registration statement 1760 or similar qualifications to do business 250 1761

1762 (ii) [Amended certificate of authority] Amendment of 1763

registration statement or similar change in qualification to do 1764 business 250 1765

1766 (iii) Domestication of alien association under section 1767

161 (relating to domestication of certain alien associations) [125] 250 1768 1769

(iv) Statement of merger [or consolidation], division or 1770 conversion or similar instrument reporting occurrence of 1771 merger [or consolidation], division or conversion not effected 1772 by a filing in the department 70 1773

1774 (v) Additional fee for each qualified foreign 1775

[corporation] association which is named in a statement of 1776 merger [or consolidation] or similar instrument 40 1777

1778 (vi) Each ancillary transaction 70 1779

1780 (3) Partnerships and limited liability companies: 1781 1782

(i) Certificate of limited partnership or certificate of 1783 organization of a limited liability company [or similar 1784 instrument forming a limited partnership or organizing a 1785 limited liability company] 125 1786 1787

ACTIVE/ 6744855.14 43

[(ii) Certificate of merger, consolidation or division 70 1788 1789 (iii) Additional fee for each association which is a 1790

party to a merger or consolidation 40 1791 1792

(iv) Additional fee for each association resulting from 1793 a division 125 1794 1795

(v) Application for registration of foreign limited 1796 partnership or limited liability company 250 1797 1798

(vi) Certificate of amendment of registration of 1799 foreign limited partnership or limited liability company 250] 1800 1801

[(vii)] (ii) Statement of registration of registered limited 1802 liability partnership or statement of election as an electing 1803 partnership 125 1804 1805

[(viii) Domestication of foreign limited liability 1806 company 125] 1807

1808 [(ix)] (iii) Each ancillary transaction 70 1809

1810 (4) Unincorporated nonprofit associations: 1811 1812

(i) Statement appointing an agent to receive service of 1813 process 70 1814

1815 (ii) Resignation of appointed agent 40 1816 1817 (iii) Amendment or cancellation of statement appointing 1818

an agent 70 1819 1820 (5) Business trusts: 1821 1822

(i) [Deed] Declaration of trust or other initial 1823 instrument for a business trust 125 1824

1825 (ii) Each ancillary transaction 70 1826 1827

(6) Fictitious names: 1828 1829

(i) Registration 70 1830 1831 (ii) Each ancillary transaction 70 1832 1833

ACTIVE/ 6744855.14 44

(7) Service of process: 1834 1835

(i) Each defendant named or served 70 1836 1837 (ii) (Reserved). 1838 1839

(8) Trademarks, emblems, union labels, description of bottles 1840 and similar matters: 1841

1842 (i) Trademark registration 50 1843 1844 (ii) Each ancillary trademark transaction 50 1845 1846 (iii) Any other registration under this paragraph 70 1847 1848 (iv) [Any other] Another ancillary transaction under 1849

this paragraph 70 1850 1851

(9) Uniform Commercial Code: 1852 1853

(i) As provided in 13 Pa.C.S. § 9525 (relating to fees). 1854 1855 (ii) (Reserved). 1856

1857 (10) Copy fees, including copies furnished under the Uniform 1858

Commercial Code: 1859 1860

(i) Each page [of photocopy] furnished 3 1861 1862 (ii) (Reserved). 1863 1864

(11) Certification fees: 1865 1866

(i) For certifying copies of [any] a document or paper 1867 on file, the fee specified [in] under paragraph (10), if the 1868 department furnished the copy, plus 40 1869

1870 (ii) (Reserved). 1871 1872 (iii) For issuing any other certificate of the Secretary of 1873

the Commonwealth or the department [(],other than an 1874 engrossed certificate[)] 40 1875

1876 (iv) For preparing and issuing an engrossed certificate 125 1877 1878

(12) Report of record search other than a search under 1879

ACTIVE/ 6744855.14 45

paragraph (9): 1880 1881

(i) For preparing and providing a report of a record 1882 search, the fee specified in paragraph (10), if any, plus 15 1883

1884 (ii) (Reserved). 1885 1886

(13) Reservation and registration of names: 1887 1888

(i) Reservation of association name 70 1889 1890 (ii) Registration of foreign [or other corporation] 1891

association name 70 1892 1893

(14) Change of registered office or address: 1894 1895

(i) Each statement of change of registered office by 1896 agent 5 1897

1898 (ii) Each statement or certificate of change of registered 1899

office 5 1900 1901 (iii) Each statement of change of address 5 1902 1903

[(15) Contingent domestication: 1904 1905

[(i) Statement of contingent domestication 125 1906 1907 (ii) Each year, or portion of a year, during which a 1908

contingent domestication or temporary domiciliary status is 1909 in effect 1,500] 1910

1911 [(16)] (15) Expedited service: 1912 1913

(i) For the processing of [any] a filing under this title 1914 or 13 Pa.C.S. (relating to commercial code) which is received 1915 by the bureau before 4 p.m. and is requested to be completed 1916 within one hour, an additional fee of 1,000 1917

1918 (ii) For the processing of [any] a filing under this title 1919

or [Title 13] 13 Pa.C.S. which is received by the bureau before 1920 2 p.m. and is requested to be completed within three hours, an 1921 additional fee of 300 1922

1923 (iii) For processing of [any] a filing under this title or 1924

[Title 13] 13 Pa.C.S. which is received by the bureau before 10 1925

ACTIVE/ 6744855.14 46

a.m. and is requested to be completed the same day, an 1926 additional fee of 100 1927

1928 (16) Entity transactions: 1929 1930

(i) Statement of merger, interest exchange, conversion, 1931 division or domestication 70 1932

1933 (ii) Additional fee for each association that is a party to 1934

a merger 40 1935 1936 (iii) Additional fee for each new association resulting 1937

from a division 125 1938 1939 (iv) Each ancillary transaction 70 1940

1941 (17) Special processing fees: 1942 1943

(i) Request that multiple documents delivered to the department on the 1944 same day be filed in a certain order 70 1945

1946 (ii) (Reserved). 1947

1948 (b) Daily listings. – The bureau may provide listings or copies of microfilm, or both, 1949

of complete daily filings of any class of documents or papers for a fee of 25¢ per filing listed 1950 or set forth therein. 1951

1952 (c) Other services. – The bureau may charge equivalent fees for any like service not 1953

specified in subsection (a) or (b). 1954 1955 (d) Restriction. – UCC Revenue received by a county recorder of deeds under 13 1956

Pa.C.S. § 9525 (relating to fees) after June 30, 2001, shall be restricted for use by the county 1957 recorder of deeds and the county prothonotary. The revenue shall be credited to the offices of 1958 the county recorder of deeds and the county prothonotary on the basis of the amount collected 1959 in each office in calendar year 2000, excluding any amounts paid to the Commonwealth. 1960 Revenue received in excess of the total amount received by each office during the year 2000, 1961 excluding amounts paid to the Commonwealth, shall be distributed pro rata to the county 1962 recorder of deeds and the county prothonotary. In a county without a recorder of deeds or a 1963 prothonotary, the provisions of this subsection shall apply to the equivalent county officials. 1964

1965 Amended Committee Comment (2014): 1966 1967

Subsection (a) describes the fees payable to the Department of State under this section 1968 as “nonrefundable” to make clear that if the department rejects a document delivered to it for 1969 filing the department will not return the fee paid. In effect, the fees payable to the department 1970 under this section are “processing” fees rather than “filing” fees because they are required in 1971

ACTIVE/ 6744855.14 47

connection with the processing of a document without regard to whether the document is 1972 filed. The addition of the term “nonrefundable” by the GAA Amendments Act of 2013 was 1973 not intended to abrogate the bureau's regulation at 19 Pa.Code § 11.12(d), which permits a 1974 limited time for resubmission of rejected documents without the payment of an additional fee 1975 in order to retain as the filing date the day the document was originally delivered to the 1976 department. 1977 1978

The fees specified in subsection (a)(15) for expedited processing of a filing are in 1979 addition to the basic fee prescribed in this section for the type of filing involved. Every time a 1980 filing is submitted with a request that it receive expedited processing, the appropriate fee 1981 under subsection (a)(15) will be payable as an extra charge for the expedited handling, even if 1982 a document is resubmitted within the time period permitted under 19 Pa.Code § 11.12(d). 1983 Thus, for example, if articles of incorporation are submitted under the three-hour expedited 1984 procedure, the initial filing fee will be $425. If the articles are rejected for filing and not 1985 timely resubmitted, the Department of State will keep the full $425. If the articles are timely 1986 resubmitted under the bureau's regulation at 19 Pa. Code § 11.12(d) and again under the three-1987 hour expedited procedure, they must be accompanied by payment of a $300 fee for the 1988 expedited processing but not the basic filing fee of $125. 1989 1990

The term “ancillary transaction” used in this section is defined in 15 Pa.C.S. § 152. 1991 1992 1993

Subchapter D 1994 [Definitive and Contingent] Domestication of Certain 1995

Alien Associations 1996 1997 § 161. Domestication of certain alien associations. 1998 1999

(a) General rule. – Except as restricted by subsection (e), any association as defined in 2000 subsection (f) may become a domestic association by filing in the Department of State a 2001 statement of domestication. 2002 2003

(b) Statement of domestication.—The statement of domestication shall be [executed] 2004 signed by the association and shall set forth in the English language: 2005

2006 (1) The name of the association. If the name is in a foreign language, it shall be 2007

set forth in Roman letters or characters or Arabic or Roman numerals. If the name is 2008 one that is rendered unavailable for use by a [corporation by any provision of section 2009 1303(b) or (c) (relating to corporate name)] domestic entity by section 202(b) or (c) 2010 (relating to requirements for names generally), the association shall adopt a new name, 2011 in accordance with any procedures for changing the name of the association that are 2012 applicable prior to the domestication of the association, and shall set forth the new name 2013 in the statement. 2014

2015 (2) The name of the jurisdiction under the laws of which and the date on which it 2016

was first formed, incorporated or otherwise came into being. 2017

ACTIVE/ 6744855.14 48

2018 (3) The name of the jurisdiction that constituted the seat, siege social or principal 2019

place of business or control administration of the association, or any equivalent under 2020 applicable law, immediately prior to the filing of the statement. 2021

2022 (4) A statement of the type of domestic association that the association will be 2023

upon domestication. 2024 2025

(5) A statement that the filing of the statement of domestication and, if desired, 2026 the renunciation of the prior domicile has been authorized (unless its [charter or other 2027 organic documents] organic rules require a greater vote) by a majority in interest of the 2028 [shareholders, members or other proprietors] interest holders of the association. 2029

2030 (6) If the association will be a type of domestic association that is created by a 2031

filing in the department, such other provisions as are required to be included in an initial 2032 filing to create that type of domestic association, except that it shall not be necessary to 2033 set forth the name of the person organizing the association. 2034 2035

(7) Any other provision that the association may choose to insert unless this title 2036 prohibits the inclusion of such a provision in a filing that creates the type of domestic 2037 association that the association will be upon domestication. 2038 2039 (c) Execution. – The statement shall be signed on behalf of the association by any 2040

authorized person. 2041 2042 (d) Effect of domestication. – Upon the filing of the statement of domestication, the 2043

association shall be domesticated in this Commonwealth and the association shall thereafter 2044 be subject to any applicable provisions of this title and any other provisions of law applicable 2045 to associations existing under the laws of this Commonwealth. If the association will be a 2046 type of domestic association that is created by a filing in the department, the statement of 2047 domestication shall constitute that filing. The domestication of any association in this 2048 Commonwealth pursuant to this section shall not be deemed to affect any obligations or 2049 liabilities of the association incurred prior to its domestication. 2050 2051

(e) Exclusion.—An association that can be domesticated under [any of the following 2052 sections] Subchapter G of Chapter 3 (relating to domestication) shall not be domesticated 2053 under this section[:]. 2054

2055 [Section 4161 (relating to domestication). 2056 Section 6161 (relating to domestication). 2057 Section 8590 (relating to domestication). 2058 Section 8982 (relating to domestication). 2059 Section 9501(a)(1)(ii) (relating to application and effect of chapter).] 2060 2061 (f) Definition. – As used in this section, the term “association,” except as restricted by 2062

subsection (e), includes any [alien] incorporated organization, private law corporation 2063

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(whether or not organized for business purposes), public law corporation, partnership, 2064 proprietorship, joint venture, foundation, trust, association or similar organization or entity 2065 existing under the laws of any jurisdiction other than this Commonwealth. 2066 2067

(g) Cross references. – See sections 134 (relating to docketing statement) and 135 2068 (relating to requirements to be met by filed documents). 2069 2070 Amended Committee Comment (2014): 2071 2072

This section sets forth a procedure by which an association that is organized under the 2073 laws of a jurisdiction other than Pennsylvania and that is not an “entity” (and thus is not 2074 eligible to domesticate in Pennsylvania under Subchapter G or Chapter 3) may become a 2075 domestic Pennsylvania association. 2076 2077

Since this section is addressed particularly to associations that do not correspond 2078 directly to a recognized type of Pennsylvania association, subsection (b)(4) leaves to the 2079 domesticating association the choice of the type of association it will be under Pennsylvania 2080 law. 2081 2082

If the name of a domesticating association is one that cannot be used under 15 Pa.C.S. § 2083 202(b) or (c), subsection (b)(1) requires the association to “adopt” a new name, which is 2084 intended to parallel the usage of that term in 15 Pa.C.S. § 206(b). It is not intended that the 2085 association must formally change its name prior to domesticating since there would be no 2086 reason for Pennsylvania to require a filing in the jurisdiction that the association is leaving. 2087 Rather, it will be sufficient for the association to obtain whatever approvals by the interest 2088 holders of the association and those persons managing its affairs would be necessary to 2089 change its name. 2090 2091

Rules on what constitutes delivery of documents to and by the Department of State are 2092 set forth in 15 Pa.C.S. § 113. 2093

2094 The cross reference to 15 Pa.C.S. § 135 in subsection (g) reflects a change in style by 2095

the Committee. Similar cross references will be added throughout Title 15 as the opportunity 2096 arises. In the meantime, no contrary implication is intended with respect to sections lacking 2097 that cross reference and 15 Pa.C.S. § 135 will continue to be applicable to all filings under 2098 Title 15. 2099 2100

The following terms used in this section are defined in 15 Pa.C.S. § 102: 2101 2102

“association” 2103 “department” 2104 “domestic association” 2105 “domestic entity” 2106 “interest holder” 2107 “organic rules” 2108 “sign” 2109

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“type” 2110 2111 2112 § 162. Contingent domestication of certain alien associations. (Repealed.) 2113 2114 2115

Chapter 2 2116 Entities Generally 2117

2118 Subchapter 2119 A. Names 2120 B. (Reserved) 2121 2122

Subchapter A 2123 Names 2124

2125 Section 2126 201. Definitions. 2127 202. Requirements for names generally. 2128 203. Corporation names. 2129 204. Partnership and limited liability company names. 2130 205. Business trust names. 2131 206. Requirements for foreign association names. 2132 207. Required name changes by senior associations. 2133 208. Reservation of name. 2134 209. Registration of name of nonregistered foreign association. 2135 2136 § 201. Definitions. 2137 2138

The following words and phrases when used in this subchapter shall have the meanings 2139 given to them in this section unless the context clearly indicates otherwise: 2140

2141 “Covered association.” Any of the following: 2142 2143

(1) a domestic filing entity; 2144 2145 (2) a domestic limited liability partnership; 2146 2147 (3) an electing partnership; or 2148 2149 (4) a registered foreign association. 2150

2151 “Proper name.” The name set forth in: 2152 2153

(1) the public organic record of a domestic filing association; 2154

ACTIVE/ 6744855.14 51

2155 (2) the statement of registration of a limited liability partnership; 2156 2157 (3) the statement of election of an electing partnership; or 2158 2159 (4) the statement of registration of a registered foreign association under section 2160

412(a)(1)(i) (relating to foreign registration statement) or, if that name does not comply 2161 with this section, the name set forth in the statement under section 412(a)(1)(ii). 2162

2163 Committee Comment (2014): 2164 2165

This section was added in 2014 by the Association Transactions Act. The same 2166 definition of “proper name” appears in 54 Pa.C.S. § 302 for purposes of Title 54. 2167 2168

The following terms used in this section are defined in 15 Pa.C.S. § 102: 2169 2170 “domestic filing association” 2171 “domestic filing entity” 2172 “electing partnership” 2173 “limited liability partnership” 2174 “public organic record” 2175 “registered foreign association” 2176

2177 2178 § 202. Requirements for names generally. 2179 2180

(a) General rule.—The proper name of a covered association may be in any language, 2181 but must be expressed in Roman letters or characters, Arabic or Roman numerals or symbols 2182 or characters specified by regulation of the department under section 133(a)(3)(vi) (relating to 2183 powers of department of state). 2184 2185

(b) Duplicate use of names.—Except as provided in subsection (f), the proper name of 2186 a covered association must be distinguishable on the records of the department from the 2187 following: 2188 2189

(1) The proper name of another covered association or the name of an 2190 association registered at any time under 54 Pa.C.S. Ch. 5 (relating to corporate and other 2191 association names), unless the covered association or other association has: 2192

2193 (i) stated that it is about to change its name, is about to cease to do 2194

business, is being wound up or is a foreign association about to withdraw from 2195 doing business in this Commonwealth, and the statement and a consent to the 2196 adoption of the name are delivered to the department for filing; 2197

2198 (ii) filed a tax return or certificate with the Department of Revenue 2199

indicating that the covered association or other association is out of existence or 2200

ACTIVE/ 6744855.14 52

has failed for a period of three successive years to file with the Department of 2201 Revenue a report or return required by law and the fact of the failure has been 2202 certified by the Department of Revenue to the Department of State; 2203

2204 (iii) abandoned its name under the laws of its jurisdiction of formation, by 2205

amendment, merger, consolidation, division, expiration, dissolution or otherwise, 2206 without its name being adopted by a successor, and an official record of that fact, 2207 certified as provided under 42 Pa.C.S. § 5328 (relating to proof of official records), 2208 is presented by a person to the department; or 2209

2210 (iv) had the registration of its name under 54 Pa.C.S. Ch. 5 terminated. 2211

2212 (2) A name that has been reserved or registered pursuant to section 208 (relating 2213

to reservation of name) or 209 (relating to registration of name of nonregistered foreign 2214 association). A name shall be rendered unavailable for use under this subchapter by 2215 reason of the filing by the department of an assumed or fictitious name registration 2216 under 54 Pa.C.S. Ch. 3 (relating to fictitious names) only to the extent expressly 2217 provided in 54 Pa.C.S. Ch.3. 2218

2219 (c) Required approvals or conditions.— 2220

2221 (1) The proper name of a covered association shall not imply that the association 2222

is: 2223 2224

(i) A governmental agency of the Commonwealth or of the United States. 2225 2226 (ii) A bank, bank and trust company, savings bank, private bank or trust 2227

company, as defined in the act of November 30, 1965 (P.L. 847, No. 356), known 2228 as the Banking Code of 1965, unless: 2229

2230 (A) The association is a Pennsylvania bank holding company or is 2231

otherwise authorized by statute to use its name. 2232 2233 (B) The association is a nonprofit corporation holding property in 2234

trust under section 5547 (relating to authority to take and hold trust property) 2235 and has been converted from a trust company under Subchapter E of Chapter 2236 3 (relating to conversion). The preceding sentence controls over section 2237 805(b) of the Banking Code of 1965. 2238 2239 (iii) An insurance company, nor contain any of the words "annuity," 2240

"assurance," "beneficial," "bond," "casualty," "endowment," "fidelity," "fraternal," 2241 "guaranty," "indemnity," "insurance," "insurer," "reassurance," "reinsurance," 2242 "surety" or "title" when used in a manner as to imply that the association is 2243 engaged in the business of writing insurance or reinsurance as principal or any 2244 other words of like purport unless it is duly licensed as an insurance company by 2245 its jurisdiction of formation or the Insurance Department certifies that it has no 2246

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objection to the use by the association or proposed association of the designation. 2247 The proper name of a domestic insurance company shall: 2248

2249 (A) contain the word "mutual" only if it is a mutual insurance 2250

company; and 2251 2252 (B) clearly designate the object and purpose of the association. 2253

2254 (iv) A public utility furnishing electric or gas service to the public, unless 2255

the association or proposed association has as an express purpose the furnishing of 2256 service subject to the jurisdiction of the Pennsylvania Public Utility Commission 2257 or the Federal Energy Regulatory Commission. 2258

2259 (v) A credit union. See 17 Pa.C.S. § 104 (relating to prohibition on use of 2260

words "credit union"). 2261 2262

(2) The proper name of a covered association shall not contain: 2263 2264

(i) The word "college," "university" or "seminary" when used in a manner 2265 as to imply that it is an educational institution conforming to the standards and 2266 qualifications prescribed by the State Board of Education, unless there is submitted 2267 a certificate from the Department of Education certifying that the association or 2268 proposed association is entitled to use that designation. 2269

2270 (ii) Words that constitute blasphemy, profane cursing or swearing or that 2271

profane the Lord’s name. 2272 2273 (iii) The words "engineer" or "engineering," or "surveyor" or "surveying" or 2274

any other word implying that any form of the practice of engineering or surveying 2275 as defined in the act of May 23, 1945 (P.L. 913, No. 367), known as the Engineer, 2276 Land Surveyor and Geologist Registration Law, is provided unless at least one of 2277 the individuals signing the initial public organic record of the association or one of 2278 the governors of the existing association has been properly registered with the 2279 State Registration Board for Professional Engineers in the practice of engineering 2280 or surveying and there is submitted to the department a certificate from the board 2281 to that effect. 2282

2283 (iv) The words "architect" or "architecture" or any other word implying that 2284

any form of the practice of architecture as defined in the act of December 14, 1982 2285 (P.L. 1227, No. 281), known as the Architects Licensure Law, is provided unless at 2286 least one of the individuals signing the initial public organic record of the 2287 association or one of the governors of the existing association has been properly 2288 registered with the Architects Licensure Board in the practice of architecture and 2289 there is submitted to the department a certificate from the board to that effect. 2290

2291 (v) The word "cooperative" or an abbreviation thereof unless the 2292

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corporation is a cooperative corporation. 2293 2294 (vi) Any other words prohibited by law. See section 103 (relating to 2295

subordination of title to regulatory laws). 2296 2297

(d) Other rights unaffected.—This section shall not abrogate or limit the law as to 2298 unfair competition or unfair practices nor derogate from the common law, the principles of 2299 equity or the provisions of 54 Pa.C.S. (relating to names) with respect to the right to acquire 2300 and protect trade names. 2301 2302

(e) Remedies for violation of section.—The use of a name in violation of this section 2303 shall not vitiate or otherwise affect the existence or any acts of an association, but a court 2304 having jurisdiction may enjoin the association from using or continuing to use a name in 2305 violation of this section on the application of: 2306 2307

(1) the Attorney General, acting on his or her own motion or at the instance of an 2308 administrative department, board or commission of this Commonwealth; or 2309

2310 (2) a person adversely affected. 2311

2312 (f) Court-ordered use of name. – Subsection (b) shall not apply if an association 2313

delivers to the department for filing a certified copy of a final judgment of a court of 2314 competent jurisdiction establishing the right of the association to use a name in this 2315 Commonwealth. 2316

2317 Committee Comment (2014): 2318 2319

This section was added in 2014 by the Association Transactions Act. Subsections (a) 2320 through (e) are a generalization of former 15 Pa.C.S. § 1303. Subsection (f) is patterned after 2321 Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-301(f). 2322 2323

The requirement in subsection (b) that a name be distinguishable on the records of the 2324 department is discussed in the Committee Comment to 15 Pa.C.S. § 135. 2325 2326

Chapter 3 of Title 54, which is referred to in subsection (b)(2), does not provide that the 2327 registration of a fictitious name blocks the appropriation of that name. See 54 Pa.C.S. §§ 2328 311(a)(6) and 332. 2329 2330

Except as expressly provided in subsection (c)(1)(ii), use of the word “trust” in the name 2331 of an association is prohibited when it implies that an association is a trust company or bank 2332 and trust company. In general, use of “trust” other than in the phrase “trust company” will be 2333 permissible. 2334

2335 Subsection (c)(2)(ii) was found to be unconstitutional in Kalman v. Cortes, 723 F. 2336

Supp.2d 766 (E.D. Pa. 2010). 2337 2338

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Subsection (f) permits a court to approve the use of a name even though it is not 2339 distinguishable from another name that already appears on the records of the department. The 2340 order of the court establishing the right of the association to use the name is to be delivered to 2341 the department “for filing” so that the publicly available records in the department will show 2342 the reason the association was allowed to use the name. 2343 2344

Rules on what constitutes delivery of documents to and by the Department of State are 2345 set forth in 15 Pa.C.S. § 113. 2346

2347 The following terms used in this section are defined in 15 Pa.C.S. § 201: 2348 2349 “covered association” 2350 “proper name” 2351 2352 The following terms used in this section are defined in 15 Pa.C.S. § 102: 2353

2354 “association” 2355 “cooperative corporation” 2356 “credit union” 2357 “department” 2358 “domestic corporation for profit” 2359 “domestic corporation not-for-profit” 2360 “domestic insurance corporation” 2361 “foreign corporation for profit” 2362 “foreign corporation not-for-profit” 2363 “jurisdiction of formation” 2364 2365 The term “court of competent jurisdiction” used in subsection (d) and the term “court 2366

having jurisdiction” used in subsection (e) are not intended to refer exclusively to the “court” 2367 as defined in 15 Pa.C.S. § 102. 2368

2369 The term “administrative department” used in subsection (e)(1) is not intended to refer 2370

exclusively to the “department” as defined in 15 Pa.C.S. § 102. 2371 2372 2373 § 203. Corporation names. 2374 2375

(a) Business corporations.—The proper name of a domestic or registered foreign 2376 business corporation must contain: 2377

2378 (1) the word "corporation," "company," "incorporated" or "limited" or an 2379

abbreviation of any of the terms; 2380 2381

(2) the word "association," "fund" or "syndicate"; or 2382 2383

(3) words or abbreviations of like import used in a jurisdiction other than this 2384

ACTIVE/ 6744855.14 56

Commonwealth. 2385 2386

(b) Nonprofit corporations.—The proper name of a domestic nonprofit corporation or 2387 registered foreign corporation not-for-profit shall not be required to contain one of the words 2388 or abbreviations described under subsection (a). 2389 2390 Committee Comment (2014): 2391 2392

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 2393 derived from former 15 Pa.C.S. § 1303(a). Subsection (b) is derived from former 15 Pa.C.S. 2394 § 5303(a). 2395

2396 Under subsection (a)(1) a name in the form of “Jones & Co.” is acceptable as the proper 2397

name of a business corporation. Under subsection (a)(3) a business corporation may use a 2398 term such as “S.A.” or “P.L.C.” in lieu of “Inc.” 2399

2400 The term “proper name” used in this section is defined in 15 Pa.C.S. § 201. 2401 2402 The following terms used in this section are defined in 15 Pa.C.S. § 102: 2403 2404 “business corporation” 2405 “nonprofit corporation” 2406

2407 2408 § 204. Partnership and limited liability company names. 2409 2410

(a) Limited liability partnerships.—The proper name of a domestic limited liability 2411 partnership or registered foreign limited liability partnership must contain the term 2412 "company," "limited" or "limited liability partnership," or an abbreviation of one of those 2413 terms, or words or abbreviations of like import used in a jurisdiction other than this 2414 Commonwealth. 2415

2416 (b) Limited partnerships.—The proper name of a domestic or registered foreign 2417

limited partnership: 2418 2419

(1) shall not be required to contain a word or abbreviation indicating that it is a 2420 limited partnership; 2421

2422 (2) if it is a limited liability limited partnership, must contain: 2423 2424

(i) the term "company," "limited" or "limited liability limited partnership" 2425 or a term of like import; or 2426

2427 (ii) an abbreviation of a term under subparagraph (i); and 2428

2429 (3) may contain the name of a partner. 2430

ACTIVE/ 6744855.14 57

2431 (c) Limited liability companies.—The proper name of a domestic limited liability 2432

company or registered foreign limited liability company must contain the term “company,” 2433 “limited” or “limited liability company,” or an abbreviation of one of those terms, or words or 2434 abbreviations of like import used in a jurisdiction other than this Commonwealth. 2435 2436 Committee Comment (2014): 2437 2438

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 2439 derived from former 15 Pa.C.S. § 8203(a)(2). Subsection (b) is derived from former 15 2440 Pa.C.S. § 8505(a)(3). Subsection (c) is derived from former 15 Pa.C.S. § 8905(a)(3). 2441

2442 Pennsylvania law has never required the inclusion in the name of a limited liability 2443

partnership of an indication that it is a limited liability partnership. Subsection (a) continues 2444 to follow that practice. 2445

2446 Pennsylvania law has never required the inclusion in the name of a limited partnership 2447

of an indication that it is a limited partnership. Pennsylvania law has also never restricted the 2448 name of a limited partnership from including a corporate designator. The permission for the 2449 name of a limited partnership to contain the name of any partner without restriction also is a 2450 continuation of established Pennsylvania practice. 2451

2452 Under the rules of subsection (b), a permissible name for a limited partnership could be, 2453

for example, “[name of a limited partner], Ltd.” 2454 2455 It is intended that any of the standard designations of corporate status will be a word or 2456

abbreviation “of like import” and thus acceptable under subsections (a), (b)(2)(i), and (c). A 2457 name with a corporate designator should put persons dealing with a limited liability 2458 partnership, limited liability limited partnership, or limited liability company on notice that 2459 they should inquire as to the credit standing behind the entity because there would appear to 2460 be no one with personal liability for its debts. 2461

2462 The term “proper name” used in this section is defined in 15 Pa.C.S. § 201. 2463 2464 The following terms used in this section are defined in 15 Pa.C.S. § 102” 2465 2466 “limited liability company” 2467 “limited liability limited partnership” 2468 “limited liability partnership” 2469 “limited partnership” 2470

2471 2472 § 205. Business trust names. 2473 2474

The proper name of a domestic business trust or registered foreign business trust shall 2475 not be required to contain a word or abbreviation indicating that it is a business trust. 2476

ACTIVE/ 6744855.14 58

2477 Committee Comment (2014): 2478 2479

Pennsylvania law has never required the inclusion in the name of a business trust of an 2480 indication that it is a business trust. 2481

2482 The name of a business trust may include the term “trust” so long as the name does not 2483

imply that it is a trust company. See 15 Pa.C.S. § 202(c)(1)(ii). 2484 2485 The term “proper name” used in this section is defined in 15 Pa.C.S. § 201. 2486 2487 The term “business trust” used in this section is defined in 15 Pa.C.S. § 102. 2488 2489 2490

§ 206. Requirements for foreign association names. 2491 2492

(a) General rule.—The department shall not file a registration statement pursuant to 2493 section 412 (relating to foreign registration statement) for a foreign association that, except as 2494 provided under subsection (b), has a name that is rendered unavailable for use by a covered 2495 association under section 202(a), (b) or (c)(1)(i), (iii), (iv) or (v) or (2) (relating to 2496 requirements for names generally). 2497 2498

(b) Exception.—The provisions of section 202(b) and (c) shall not prevent the filing of 2499 a registration statement of a foreign association setting forth a name that is prohibited by 2500 section 202(b) and (c) if the foreign association delivers to the department for filing a 2501 resolution of its governors adopting a name for use in registering to do business in this 2502 Commonwealth that is available for use by a covered association. 2503 2504 Committee Comment (2014): 2505 2506

This section was added in 2014 by the Association Transactions Act and is a 2507 generalization of former 15 Pa.C.S. § 4123. 2508

2509 If a foreign association cannot register to do business under its own name by reason of 2510

the prior and valid appropriation of that name in Pennsylvania, this section permits the 2511 association to adopt for use in Pennsylvania and register under some other available name. 2512

2513 For purposes of Title 15, it is sufficient if the adoption of an alternate name is approved 2514

just by action of the governors of the association and not by its interest holders. If the organic 2515 rules of the association or the law of its jurisdiction of formation require other approvals, the 2516 association may nonetheless use the alternate name without obtaining those approvals, but it 2517 will be in breach or default under those other requirements. 2518

2519 Rules on what constitutes delivery of documents to and by the Department of State are 2520

set forth in 15 Pa.C.S. § 113. 2521 2522

ACTIVE/ 6744855.14 59

The term “covered association” used in this section is defined in 15 Pa.C.S. § 201. 2523 2524 “covered association” 2525 “proper name” 2526 2527 The following terms used in this section are defined in 15 Pa.C.S. § 102: 2528 2529 “department” 2530 “foreign association” 2531 “governors” 2532 2533 2534

§ 207. Required name changes by senior associations. 2535 2536

(a) Loss of rights to name. – A covered association shall cease to have the exclusive 2537 right to its proper name if the association: 2538

2539 (1) has failed to file in the Department of Revenue a report or a return required 2540

by law; 2541 2542 (2) has filed in the Department of Revenue a tax return or certificate indicating 2543

that it is out of existence; or 2544 2545 (3) has failed to file the most recent required decennial filing under 54 Pa.C.S. § 2546

503 (relating to decennial filing required). 2547 2548 (b) Adoption of new name on reactivation.—Upon the removal of the reason why a 2549

covered association has lost the exclusive right to its proper name under subsection (a), the 2550 association shall make inquiry with the Department of State with regard to the availability of 2551 its name and, if the name has been appropriated by another person, the covered association 2552 shall adopt a new name in accordance with law before resuming its activities. 2553 2554

(c) Enforcement of undertaking to release name.—If a covered association has used a 2555 name that is not distinguishable on the records of the Department of State from the name of 2556 another association as permitted by section 202(b)(1) (relating to requirements for names 2557 generally) and the other association continues to use its name in this Commonwealth and does 2558 not change its name, cease to do business, be wound up or withdraw as it proposed to do in its 2559 consent or change its name as required by subsection (a), any court having jurisdiction may 2560 enjoin the other association from continuing to use its name or a name that is not 2561 distinguishable therefrom on the application of: 2562 2563

(1) the Attorney General, acting on his or her own motion or at the instance of an 2564 administrative department, board or commission of this Commonwealth; or 2565

2566 (2) any person adversely affected. 2567

2568

ACTIVE/ 6744855.14 60

Committee Comment (2014): 2569 2570

This section was added in 2014 by the Association Transactions Act and is a 2571 generalization of former 15 Pa.C.S. § 1304. 2572

2573 The requirement in subsection (b) that a name be distinguishable upon the records of the 2574

Department of State is discussed in the Committee Comment to 15 Pa.C.S. § 135. 2575 2576 The following terms used in this section are defined in 15 Pa.C.S. § 201: 2577 2578 “covered association” 2579 “proper name” 2580 2581 The term “court having jurisdiction” used in subsection (b) is not intended to refer 2582

exclusively to the “court” as defined in 15 Pa.C.S. § 102. 2583 2584 The term “administrative department” used in subsection (b)(1) is not intended to refer 2585

exclusively to the “department” as defined in 15 Pa.C.S. § 102. 2586 2587 2588 § 208. Reservation of name. 2589 2590

(a) General rule.—The exclusive right to the use of a name may be reserved by any 2591 person. The reservation shall be made by delivering to the department an application to 2592 reserve a specified name, signed by the applicant. If the department finds that the name is 2593 available for use, it shall reserve the name for the exclusive use of the applicant for a period of 2594 120 days. 2595 2596

(b) Transfer of reservation.—The right to exclusive use of a name reserved pursuant to 2597 subsection (a) may be transferred to any other person by delivering to the department a notice 2598 in record form of the transfer, signed by the person who reserved the name, and specifying the 2599 name and address of the other person. 2600 2601

(c) Cross references.—See: 2602 2603 Section 134 (relating to docketing statement). 2604 Section 135 (relating to requirements to be met by filed documents). 2605 Section 209 (relating to registration of name of nonregistered foreign association). 2606

2607 Committee Comment (2014): 2608 2609

This section was added in 2014 by the Association Transactions Act and is a 2610 generalization of former 15 Pa.C.S. § 1305. 2611

2612 Under the definition of “person” in 1 Pa.C.S. § 1991, a corporation, partnership, or other 2613

association, as well as a natural person, may reserve a corporate name. 2614

ACTIVE/ 6744855.14 61

2615 This section only provides for a single, one-time reservation of a name. After the 120-2616

day reservation period expires, the name becomes available again and anyone, including the 2617 original reserver, may reserve the name. Nothing prevents the formation of an association for 2618 the purpose of holding a name if a longer period of reservation is desired than the 120-day 2619 period specified by subsection (a). 2620

2621 Rules on what constitutes delivery of documents to and by the Department of State are 2622

set forth in 15 Pa.C.S. § 113. 2623 2624 The following terms used in this section are defined in 15 Pa.C.S. § 102. 2625 2626 “department” 2627 “record form” 2628 “sign” 2629

2630 2631 § 209. Registration of name of nonregistered foreign association. 2632 2633

(a) General rule.—A nonregistered foreign association may register its name under 54 2634 Pa.C.S. Ch. 5 (relating to corporate and other association names) if the name is available for 2635 use by a registered foreign association pursuant to section 206 (relating to requirements for 2636 foreign association names) by delivering to the department for filing an application for 2637 registration of name, signed by the association, setting forth: 2638 2639

(1) The name of the association. 2640 2641 (2) The address, including street and number, if any, of the principal office of the 2642

association. 2643 2644

(b) Annual renewal.—An association that has in effect a registration of its name may 2645 renew the registration from year to year by annually delivering to the department for filing an 2646 application for renewal setting forth the facts required to be set forth in an original application 2647 for registration. A renewal application may be filed between October 1 and December 31 in 2648 each year and shall extend the registration for the following calendar year. 2649 2650

(c) Use of registered name. – A foreign association whose name registration is 2651 effective may register as a foreign association under the registered name or consent in record 2652 form to the use of that name by another association. 2653 2654

(d) Cross references.—See sections 134 (relating to docketing statement) and 135 2655 (relating to requirements to be met by filed documents). 2656 2657 Committee Comment (2014): 2658 2659

ACTIVE/ 6744855.14 62

This section was added in 2014 by the Association Transactions Act and is a 2660 generalization of former 15 Pa.C.S. § 4131. 2661

2662 Rules on what constitutes delivery of documents to and by the department are set forth 2663

in 15 Pa.C.S. § 113. 2664 2665 The following terms used in this section are defined in 15 Pa.C.S. § 102: 2666 2667 “association” 2668 “department” 2669 “foreign association” 2670 “nonregistered foreign association” 2671 “principal office” 2672 “record form” 2673 “registered foreign association” 2674 “sign” 2675

2676 2677

Chapter 3 2678 Entity Transactions 2679

2680 Subchapter 2681 A. Preliminary Provisions 2682 B. Approval of Entity Transactions 2683 C. Merger 2684 D. Interest Exchange 2685 E. Conversion 2686 F. Division 2687 G. Domestication 2688 2689

Subchapter A 2690 Preliminary Provisions 2691

2692 Section 2693 311. Short title of chapter. 2694 312. Definitions. 2695 313. Relationship of chapter to other provisions of law. 2696 314. Regulatory conditions and required notices and approvals. 2697 315. Nature of transactions. 2698 316. Contents of plan. 2699 317. Contractual dissenters rights in entity transactions. 2700 318. Excluded entities and transactions. 2701 319. Party to plan or transaction. 2702 320. Submission of matters to interest holders. 2703 2704 § 311. Short title of chapter. 2705

ACTIVE/ 6744855.14 63

2706 This chapter may be cited as the Entity Transactions Law. 2707

2708 Committee Comment (2014): 2709 2710

This section was added in 2014 by the Association Transactions Act. 2711 2712 The Committee Comments to Chapter 3 are intended to form part of the legislative 2713

history of the chapter and to be citable as such under 1 Pa.C.S. § 1939. The Committee 2714 Comments have been adapted from the commentary to the Model Entity Transactions Act 2715 (2007) (Last Amended 2013) and are intended to supersede that commentary. 2716 2717 2718 § 312. Definitions. 2719 2720

(a) Definitions.—The following words and phrases when used in this chapter shall 2721 have the meanings given to them in this subsection unless the context clearly indicates 2722 otherwise: 2723 2724

“Acquired association.” The domestic entity or foreign association, all of one or more 2725 classes or series of interests in which are acquired in an interest exchange. 2726 2727

“Acquiring association.” The domestic entity or foreign association that acquires all of 2728 one or more classes or series of interests of the acquired association in an interest exchange. 2729

2730 “Conversion.” A transaction authorized by Subchapter E (relating to conversion). 2731

2732 “Converted association.” The converting association as it continues in existence after a 2733

conversion. 2734 2735

“Converting association.” The domestic entity or domestic banking institution that 2736 approves a plan of conversion pursuant to section 353 (relating to approval of conversion) or 2737 the foreign association that approves a conversion pursuant to the law of its jurisdiction of 2738 formation. 2739 2740

“Dividing association.” The domestic entity that approves a plan of division pursuant to 2741 section 363 (relating to approval of division) or 364 (relating to division without interest 2742 holder approval) or the foreign association that approves a division pursuant to the law of its 2743 jurisdiction of formation. 2744 2745

“Division.” A transaction authorized by Subchapter F (relating to division). 2746 2747

“Domesticated entity.” The domesticating entity as it continues in existence after a 2748 domestication. 2749 2750

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“Domesticating entity.” The domestic entity that approves a plan of domestication 2751 pursuant to section 373(a) (relating to approval of domestication) or the foreign entity that 2752 approves a domestication pursuant to section 373(b). 2753 2754

“Domestication.” A transaction authorized by Subchapter G (relating to domestication). 2755 2756

“Interest exchange.” A transaction authorized by Subchapter D (relating to interest 2757 exchange). 2758 2759

“Interest holder liability.” Either of the following: 2760 2761

(1) Personal liability for a liability of an association that is imposed on a person 2762 either: 2763

2764 (i) Solely by reason of the status of the person as an interest holder. 2765 2766 (ii) By the organic rules of the association that make one or more specified 2767

interest holders or categories of interest holders liable in their capacity as interest 2768 holders for all or specified liabilities of the entity. 2769

2770 (2) An obligation of an interest holder under the organic rules of an association 2771

to contribute to the association. 2772 2773

“Merger.” A transaction in which two or more merging associations are combined into 2774 a surviving association pursuant to a document filed by the department or similar office in 2775 another jurisdiction. 2776 2777

“Merging association.” A domestic entity, domestic banking institution or foreign 2778 association that is a party to a merger under Subchapter C (relating to merger) and exists 2779 immediately before the merger becomes effective. 2780

2781 “New association.” An association that is created by a division. 2782

2783 “Plan.” A plan of merger, plan of interest exchange, plan of conversion, plan of division 2784

or plan of domestication, as applicable. 2785 2786

“Protected agreement.” Either of the following: 2787 2788

(1) A record evidencing indebtedness and any related agreement in effect on 2789 July 1, 2015. 2790

2791 (2) A protected governance agreement. 2792

2793 “Protected governance agreement.” Either of the following: 2794 2795

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(1) The organic rules of a domestic entity or foreign association in effect on {the 2796 Legislative Reference Bureau shall insert here on the effective date of this chapter}. 2797

2798 (2) An agreement that is binding on any of the governors or interest holders of a 2799

domestic entity or foreign association on July 1, 2015. 2800 2801

“Registered office.” In the case of a domestic banking institution that is a corporation, 2802 the principal place of business of the corporation set forth in its articles of incorporation as 2803 required by section 1004 of the act of November 30, 1965 (P.L. 847, No. 356), known as the 2804 Banking Code of 1965. 2805

2806 “Resulting association.” A dividing association, if it survives the division, or a new 2807

association. 2808 2809

“Special treatment.” A provision of a plan permitted by section 329 (relating to special 2810 treatment of interest holders). 2811 2812

“Surviving association.” The domestic entity, domestic banking institution or foreign 2813 association that continues in existence after or is created by a merger under Subchapter C. 2814 2815

(b) Index of definitions.—Following is a nonexclusive list of definitions in section 2816 102 (relating to definitions) that apply to this chapter: 2817

2818 “Act” or “action.” 2819 “Banking institution.” 2820 “Department.” 2821 “Dissenters rights.” 2822 “Domestic entity.” 2823 “Entity.” 2824 “Filing entity.” 2825 “Foreign entity.” 2826 “Governor.” 2827 “Interest.” 2828 “Interest holder.” 2829 “Obligation.” 2830 “Organic law.” 2831 “Organic rules.” 2832 “Private organic rules.” 2833 “Property.” 2834 “Public organic record.” 2835 “Record form.” 2836 “Registered foreign association.” 2837 “Representative.” 2838 “Sign.” 2839 “Transfer” 2840 “Type.” 2841

ACTIVE/ 6744855.14 66

2842 Committee Comment (2014): 2843 2844

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 2845 patterned after Model Entity Transactions Act (2007) (Last Amended 2013) § 102. 2846

2847 This section defines the terms that are used in other parts of the chapter. Because the 2848

laws of some states use different terms to describe the transactions authorized by this chapter, 2849 the definitions are intended to be broad enough to encompass those similar transactions, 2850 regardless of how described. 2851 2852

“Acquired association.” This definition recognizes that an interest exchange may 2853 involve only the acquisition of a particular “class” or “series” of interests in a domestic entity 2854 or foreign association. Because the interests of members in an unincorporated business 2855 organization often tend to be distinctive, it may be that each member’s interest will comprise 2856 a separate class or series. 2857 2858

“Conversion.” As used in this chapter, the term “conversion” does not include a 2859 transaction in which an association changes the jurisdiction in which it is organized but does 2860 not change to a different type of entity; that type of transaction is referred to in Title 15 as a 2861 “domestication.” A “conversion” also does not include a transaction in which an entity 2862 changes from one form of an entity to another form of the same entity, such as an election to 2863 be a statutory close corporation under 15 Pa.C.S. § 2305. 2864 2865

“Interest exchange.” The consideration that may be provided to the interest holders 2866 whose interests are being acquired in an exchange may consist in whole or part of interests in 2867 a third party that is not one of the two parties to the exchange itself. 2868 2869

“Interest holder liability.” This term is used to describe the liability of an interest 2870 holder, by virtue of being an interest holder, for liabilities of the association. The term 2871 includes only personal liability of an interest holder for a liability of the association imposed 2872 on the interest holder either by statute or by the organic rules to the extent authorized pursuant 2873 to the organic law. Liabilities that an interest holder incurs in any other fashion are not 2874 interest holder liabilities for purposes of this chapter. Thus, for example, if a state’s business 2875 corporation law makes shareholders personally liable for unpaid wages because of their status 2876 as shareholders, that liability would be an “interest holder liability.” If, on the other hand, a 2877 shareholder were to guarantee payment of an obligation of a corporation, that liability would 2878 not be an “interest holder liability” because it is a direct liability and not based on the status of 2879 being a shareholder. Similarly, the liability to return an improper distribution is not an 2880 interest holder liability because it is a direct liability of the interest holder. 2881 2882

“Merger.” The term means a transaction in which two or more domestic entities or 2883 foreign associations are combined into a single entity pursuant to a filing with the Department 2884 of State. The term “merger” in this chapter includes the transaction formerly known under 2885 Pennsylvania law as a consolidation in which a new entity results from the combination of 2886 two or more pre-existing entities. 2887

ACTIVE/ 6744855.14 67

2888 “Merging association.” The term “merging association” refers to each domestic entity, 2889

domestic banking institution, and foreign association that is in existence immediately before a 2890 merger and is a party to the merger. It will include the surviving association if the surviving 2891 association exists before the merger becomes effective. It does not include an association that 2892 provides consideration to be received by interest holders if that association is not a party to 2893 the merger. 2894 2895

“Protected agreement.” The term “protected agreement” refers to protected 2896 governance agreements or evidences of indebtedness and related agreements binding on a 2897 domestic entity or foreign association immediately before the effectiveness of a plan that are 2898 unpaid or executory in whole or in part on the effective date of this chapter. Thus a revolving 2899 line of credit from a bank to a domestic entity or foreign association would constitute a 2900 protected agreement even if advances were not made until after the effective date of this 2901 chapter. 2902

2903 “Protected governance agreement.” The term “protected governance agreement” 2904

refers to the organic rules of a domestic entity or foreign association or agreements binding on 2905 those persons that are in effect on the effective date of this chapter. 2906

2907 “Registered office.” A domestic banking corporation is not required to maintain a 2908

registered office address in Pennsylvania, instead its articles of incorporation are required to 2909 state the location and post office address of its principal place of business. See 7 P.S. § 2910 1004(b)((ii). The effect of the definition of “registered office” is that when this chapter 2911 requires a statement of merger or statement of conversion to state the registered office of a 2912 domestic banking corporation, the address that should be used is that of its principal place of 2913 business. 2914 2915 2916 § 313. Relationship of chapter to other provisions of law. 2917 2918

(a) Antitakeover provisions. – A transaction under this chapter to which a registered 2919 corporation is a party may not impair any right or obligation that a person has under, and may 2920 not make applicable to the corporation, any provision of section 2538 (relating to approval of 2921 transactions with interested shareholders) or Subchapters E (relating to control transactions), 2922 F (relating to business combinations), G (relating to control-share acquisitions), H (relating to 2923 disgorgement by certain controlling shareholders following attempts to acquire control), I 2924 (relating to severance compensation for employees terminated following certain control-share 2925 acquisitions) and J (relating to business combination transactions - labor contracts) of Chapter 2926 25, nor shall it change the standard of care applicable to the directors under Subchapter B of 2927 Chapter 17 (relating to fiduciary duty) unless: 2928 2929

(1) If the corporation does not survive the transaction, the transaction satisfies 2930 any requirements of the provision. 2931

2932

ACTIVE/ 6744855.14 68

(2) If the corporation survives the transaction, the approval of the transaction is 2933 by a vote of the shareholders or directors which would be sufficient to impair the right 2934 or obligation under, or make the corporation subject to, the provision. 2935 2936 (b) Transitional provision. – 2937 2938

(1) This subsection applies to a transaction of a type authorized by this chapter 2939 if: 2940

2941 (i) prior to July 1, 2015, a step has been taken to effectuate the transaction; 2942

but 2943 2944 (ii) the transaction does not take effect by July 1, 2015. 2945 2946

(2) Except as set forth in paragraph (3), the transaction shall remain subject to 2947 the former provisions of law supplied by this chapter under the transaction: 2948

2949 (i) is abandoned; or 2950 2951 (ii) takes effect. 2952 2953

(3) Notwithstanding paragraph (2), if the plan provides that this chapter applies 2954 to the transaction, this chapter shall apply to the transaction after June 30, 2015. 2955 2956

Committee Comment (2014): 2957 2958

This section was added in 2014 by the Association Transactions Act. Subsection (a) 2959 was derived from former 15 Pa.C.S. § 1924(b)(5) and is patterned after Model Entity 2960 Transactions Act (2007) (Last Amended 2013) § 103(c). 2961

2962 Subsection (a) protects the application of the antitakeover statutes in Chapter 25 from 2963

being affected by a transaction under this chapter by requiring that the transaction be 2964 approved in a manner that would be sufficient to approve changing the application of the 2965 antitakeover statute. If a transaction is approved in that manner, there is no policy reason to 2966 prohibit the application of the antitakeover statute from being varied by a transaction under 2967 this chapter. If the application of an antitakeover statute cannot be varied by action of a 2968 corporation subject to it, then a transaction under this chapter will be permissible only if the 2969 antitakeover provision continues to apply after the transaction or the transaction itself is 2970 permissible under the antitakeover statute. Any limitations on the ability of a corporation to 2971 opt out of an antitakeover provision are also intended to be preserved. For example, the 18 2972 month delay on opting out of 15 Pa.C.S. Subch 25F imposed by 15 Pa.C.S. § 2551(b)(3) will 2973 also apply in a transaction under this chapter. 2974

2975 Subsection (a) also reflects a policy decision that action solely by the board of directors 2976

to effectuate a transaction as permitted by 15 Pa.C.S. § 321(d) should not affect the 2977 application to the corporation of the antitakeover provisions of the 1988 BCL. The 2978

ACTIVE/ 6744855.14 69

Committee decided that rather than attempting to analyze and predict all of the ways that a 2979 transaction under this chapter could affect the application of 15 Pa.C.S. § 2538 or Subchapters 2980 17B and 25E-J, it would be preferable to adopt simply a general statement of policy on the 2981 relationship between the antitakeover provisions and this chapter. 2982

2983 As one example, 15 Pa.C.S. § 2543(b)(2)(i) provides that a person will not be a 2984

controlling person under Subchapter 25E (i.e., a person over the 20% threshold) if it is 2985 necessary to take into account shares owned “continuously since January 1, 1983.” Because 2986 the effect of a transaction under this chapter may be to convert the shares of the constituent 2987 corporation into shares of a holding company (see 15 Pa.C.S. § 321(d)(4)), it could be argued 2988 that after such a transaction ownership of shares of the holding company would no longer 2989 satisfy the test of 15 Pa.C.S. § 2543(b)(2)(i). That is not intended and the effect of the 2990 requirement that a transaction “not impair any right” of a person will be that the holding 2991 period for the shares of the constituent corporation will tack to the holding period for the 2992 shares of the holding company. 2993

2994 It was not considered necessary to refer to 15 Pa.C.S. § 2539 because that section itself 2995

is intended simply to protect the applicability of Subchapter 25F. In the case of a registered 2996 corporation that is not subject to Subchapter 25F, the only effect of 15 Pa.C.S. § 2539 is to 2997 require board approval. Where Subchapter 25F is applicable to a registered corporation, 2998 subsection (a) should protect the application of both Subchapter 25F and 15 Pa.C.S. § 2539. 2999

3000 While the principal focus of this section is on registered corporations, the prohibition 3001

against changing the standard of care will apply to all domestic business corporations. 3002 3003 The term “registered corporation” used in this section is defined in 15 Pa.C.S. § 102. 3004

3005 3006 § 314. Regulatory conditions and required notices and approvals. 3007 3008

(a) Regulatory approvals.—If law of this Commonwealth other than this chapter 3009 requires notice to, or the approval of, a governmental agency or officer of this Commonwealth 3010 in connection with the participation under an organic law that is not part of this title by a 3011 domestic or foreign association in a transaction which is a form of transaction authorized by 3012 this chapter, the notice must be given or the approval obtained by the association before it 3013 may participate in any form of transaction under this chapter. 3014

3015 (b) Certain regulated businesses. – A domestic converted association, domestic 3016

domesticated entity, domestic new association, domestic resulting association or domestic 3017 surviving association may not acquire as a result of a transaction under this chapter the power 3018 to engage in the business of banking, insurance or acting as a trust company unless an 3019 association of that type is authorized to have and exercise that power under the law of this 3020 Commonwealth. 3021

3022 (c) Charitable assets.—Property held for a charitable purpose under the law of this 3023

Commonwealth by a domestic or foreign association immediately before a transaction under 3024

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this chapter becomes effective may not, as a result of the transaction, be diverted from the 3025 objects for which it was donated, granted, devised or otherwise transferred unless, to the 3026 extent required by or pursuant to the law of this Commonwealth concerning cy pres or other 3027 law dealing with nondiversion of charitable assets, the domestic or foreign association obtains 3028 an appropriate order of a court of competent jurisdiction specifying the disposition of the 3029 property. 3030

3031 (d) Preservation of transfers. – A bequest, devise, gift, grant or promise contained in a 3032

will or other instrument of donation, subscription or conveyance that is made to a merging 3033 association that is not the surviving association and that takes effect or remains payable after 3034 the merger inures to the surviving association. A trust obligation that would govern property 3035 if transferred to a merging association that is not the surviving association applies to property 3036 that is transferred to the surviving association. 3037

3038 (e) Cross reference. – See section 318 (relating to excluded entities and transactions). 3039

3040 Committee Comment (2014): 3041 3042

1. This section was added in 2014 by the Association Transactions Act. Subsections 3043 (a), (c), and (d) are patterned after Model Entity Transactions Act (2007) (Last Amended 3044 2013) § 104. Subsection (c) is also patterned after 15 Pa.C.S. § 5547(b). 3045

3046 2. The purpose of subsection (a) is to ensure that transactions under this chapter will 3047

be subject to appropriate regulatory approval. If an association must obtain regulatory 3048 approval under Pennsylvania law to participate in a fundamental transaction pursuant to an 3049 organic law outside of Title 15, subsection (a) requires the same approval to be obtained if the 3050 association participates in any form of transaction under this chapter. The regulatory 3051 approvals that subsection (a) makes applicable are found outside of this title. 3052

3053 The consequence of violating subsection (a) should be the same as in the case of a 3054

transaction consummated without the required approval under the organic law outside of Title 3055 15. 3056

3057 15 Pa.C.S. § 318(b) prohibits certain regulated nonprofit corporations from engaging in 3058

a transaction under this chapter that would change the corporation to a different type of entity. 3059 3060 The requirement to obtain tax clearance certificates is governed by section 139 (relating 3061

to tax clearance of certain fundamental transactions) and not by subsection (a). 3062 3063

3. This chapter permits certain associations organized under an organic law outside 3064 of Title 15 to participate in a transaction with an entity organized under an organic law found 3065 within Title 15. For example, a bank may acquire a computer consulting firm organized as a 3066 limited partnership for the purpose of bolstering the bank’s internal data processing 3067 capabilities by means of a merger of the limited partnership with the bank pursuant to this 3068 chapter but only if the bank is the surviving association. Subsection (b) provides that if the 3069 limited partnership were the surviving association in the merger it could not exercise the 3070

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banking powers of the merging bank because a limited partnership is prohibited by 15 Pa.C. § 3071 8102 from engaging in the business of banking; thus effectively prohibiting the limited 3072 partnership from being the surviving association. 3073

3074 4. This chapter applies generally to nonprofit corporations and unincorporated 3075

nonprofit associations. To prevent the procedures in this chapter from being used to avoid 3076 restrictions on the use of property held by nonprofit associations, subsection (c) requires court 3077 approval if a transaction under this chapter would divert property held for charitable purposes 3078 from the objects for which its was transferred to the nonprofit association. 3079 3080

An approval or order obtained under subsection (c) may impose conditions or specify 3081 the disposition of property or liabilities in a manner different than would otherwise be the 3082 case. In such an instance, the approval or order will control over the provisions of this chapter 3083 specifying the effects of a transaction. See 15 Pa.C.S. §§ 336, 346, 356, 367, and 376. 3084

3085 5. Subsection (d) only applies to bequests, etc. that have been made to a merging 3086

association that does not survive a merger. It was not considered necessary to provide a rule 3087 for bequests, etc. that have been made to associations that are parties to transactions under this 3088 charter in other capacities because in those situations the association survives the transaction, 3089 albeit sometimes of a different type. 3090

3091 6. The following terms used in this section are defined in 15 Pa.C.S. § 312: 3092 3093 “converted association” 3094 “domesticated entity” 3095 “merger” 3096 “merging association” 3097 “new association” 3098 “resulting association” 3099 “surviving association” 3100 3101 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3102 3103 “domestic association” 3104 “foreign association” 3105 “organic law” 3106 “transfer” 3107

3108 3109 § 315. Nature of transactions. 3110 3111

The fact that a sale or conversion of the interests in or assets of an association or a 3112 transaction under a particular subchapter produces a result that could be accomplished in any 3113 other manner permitted by a different subchapter or other law shall not be a basis for 3114 recharacterizing the sale, conversion or transaction as a different form of sale, conversion or 3115 transaction under any other subchapter or other law. 3116

ACTIVE/ 6744855.14 72

3117 Committee Comment (2014): 3118 3119

This section was added in 2014 by the Association Transactions Act and is patterned in 3120 part after Model Entity Tranasctions Act (2007) (Last Amended 2013) § 106. 3121

3122 This section protects a transaction that has the same end result as a second type of 3123

transaction, but is not accomplished under the provisions of Title 15 applicable to the second 3124 type of transaction, from being recharacterized as the second type of transaction. For 3125 example, a sale of assets and transfer of liabilities by two entities to a third entity followed by 3126 the liquidation of the two transferring entities does not need to be structured as a merger under 3127 Subchapter C and should not be recharacterized as a merger, even though the end result of the 3128 transaction is essentially the same as if the two entities had merged into the third entity. 3129

3130 In effect, this section confirms that Pennsylvania law includes what is known under 3131

Delaware law as the doctrine of independent legal significance. As stated by the Supreme 3132 Court of Delaware in Orzeck v. Englehart, 41 De. Ch. 361, 365-6, 195 A.2d 375 (Del. 1963): 3133

3134 … action taken in accordance with different sections of [the Delaware General 3135 Corporation Law] are acts of independent legal significance even though the 3136 end result may be the same under different sections. The mere fact that the 3137 result of actions taken under one section may be the same as the result of action 3138 taken under another section does not require that the legality of the result must 3139 be tested by the requirement of the second section. 3140 3141 See 15 Pa.C.S. § 1904 which provides a similar rule with respect to business 3142

corporations. 3143 3144 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3145 3146 “association” 3147 “business corporation” 3148 “interests” 3149

3150 3151 § 316. Contents of plan. 3152 3153

(a) Omission of certain provisions.—A plan as delivered to the department for filing 3154 under any provision of this chapter in lieu of a statement of merger, statement of interest 3155 exchange, statement of conversion, statement of division or statement of domestication may 3156 omit all provisions of the plan except provisions, if any, that: 3157 3158

(1) are intended to amend or constitute the operative provisions of the public 3159 organic record of a domestic association as in effect subsequent to the effectiveness of 3160 the plan; 3161 3162

ACTIVE/ 6744855.14 73

(2) are required by this chapter in the statement in lieu of which the plan is being 3163 delivered to the department for filing; or 3164

3165 (3) allocate or specify the respective property and liabilities of the resulting 3166

associations, in the case of a plan of division. 3167 3168

(b) Availability of full plan.—If any of the provisions of a plan are omitted from the 3169 plan as delivered to the department as permitted under subsection (a), the plan must state that 3170 the full text of the plan is on file at the principal office of the surviving, acquiring, converted, 3171 new or resulting association or domesticated entity and the address thereof. An association 3172 that takes advantage of this section shall furnish a copy of the full text of the plan, on request 3173 and without cost, to any interest holder of any domestic or foreign association that was a party 3174 to the plan. 3175 3176

(c) Reference to external facts.—A plan may refer to facts ascertainable outside of the 3177 plan if the manner in which the facts will operate on the plan is specified in the plan. The 3178 facts may include the occurrence of an event or a determination or action by a person, whether 3179 or not the event, determination, or action is within the control of a party to the transaction. 3180 3181 Committee Comment (2014): 3182 3183

This section was added in 2014 by the Association Transactions Act. Subsections (a) 3184 and (b) are a generalization of former 15 Pa.C.S. § 1901. Subsection (c) is a generalization of 3185 former 15 Pa.C.S. § 1922(e) and is patterned after Model Entity Transactions Act (2007) (Last 3186 Amended 2013) § 107. 3187

3188 Subsections (a) and (b) only apply to plans that are delivered to the Department of State 3189

in lieu of filing a statement of merger, etc. Subsection (c), on the other hand, applies to all 3190 plans, including those not filed in the department. 3191

3192 Rules on what constitutes delivery of documents to and by the Department of State are 3193

set forth in 15 Pa.C.S. § 113. 3194 3195 The following terms used in this section are defined in 15 Pa.C.S. § 312: 3196 3197 “acquiring association” 3198 “converted association” 3199 “domesticated entity” 3200 “new association” 3201 “plan” 3202 “resulting association” 3203 “surviving association” 3204 3205 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3206 3207 “department” 3208

ACTIVE/ 6744855.14 74

“domestic association” 3209 “foreign association” 3210 “interest holder” 3211 “principal office” 3212 “property” 3213 “public organic record” 3214

3215 3216 § 317. Contractual dissenters rights in entity transactions. 3217 3218

(a) General rule.—An interest holder of a domestic entity other than a nonprofit 3219 corporation or unincorporated nonprofit association shall be entitled to contractual dissenters 3220 rights in connection with a transaction under this chapter, even though the interest holder 3221 would not otherwise be entitled to dissenters rights under this title to the extent provided: 3222 3223

(1) in the entity’s organic rules; or 3224 3225

(2) in the plan. 3226 3227

(b) Procedures for contractual dissenters rights.—If an interest holder is entitled to 3228 contractual dissenters rights pursuant to subsection (a), Subchapter D of Chapter 15 (relating 3229 to dissenters rights) applies to the extent practicable except as otherwise provided in the 3230 organic rules of the domestic entity or the plan. 3231 3232

(c) Cross references.—See sections 329 (relating to special treatment of interest 3233 holders) and 1571(c) (relating to application and effect of subchapter). 3234 3235 Committee Comment (2014): 3236 3237

This section was added in 2014 by the Association Transactions Act. Subsections (a) 3238 and (b) are patterned after Model Entity Transactions Act (2007) (Last Amended 2013) § 3239 109(b) and (c). 3240

3241 This section permits a domestic entity other than a nonprofit corporation or 3242

unincorporated nonprofit association to grant optional dissenters rights as part of the terms of 3243 a transaction in circumstances where dissenters rights would not otherwise be available. Cf. 6 3244 Del. Code §§ 15-120 (general partnerships), 17-212 (limited partnerships), and 18-210 3245 (limited liability companies) which provide for “contractual appraisal rights.” Contractual 3246 appraisal rights may not be granted to interest holders in a nonprofit corporation or 3247 unincorporated nonprofit association because interest holders in thos types of associations 3248 have never been entitled to dissenters rights under Pennsylvania law. 3249

3250 Legislative authorization of the grant of contractual dissenters rights removes any 3251

question as to whether a court would have jurisdiction to hear a case in which the parties were 3252 attempting to create jurisdiction in the court by private agreement. Subsection (b) makes the 3253

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dissenters rights procedures in 15 Pa.C.S. Subch. 15D applicable unless the entity’s organic 3254 rules or the plan provide otherwise. 3255

3256 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 3257 3258 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3259 3260 “dissenters rights” 3261 “domestic entity” 3262 “interest holder” 3263 “nonprofit corporation” 3264 “organic rules” 3265 “unincorporated nonprofit association” 3266

3267 3268 § 318. Excluded entities and transactions. 3269 3270

(a) Excluded entities.—The following entities may not participate in a transaction 3271 under this chapter: 3272 3273

(1) A cooperative corporation subject to Chapter 73 (relating to electric 3274 cooperative corporations). 3275

3276 (2) A beneficial, benevolent, fraternal or fraternal benefit society: 3277 3278

(i) having a lodge system and a representative form of government; or 3279 3280 (ii) transacting any type of insurance. 3281

3282 (b) Excluded transactions involving certain nonprofit corporations.—The following 3283

apply to nonprofit corporations: 3284 3285

(1) Except as provided in paragraph (2), this chapter may not be used to 3286 accomplish a transaction that has the effect of converting a domestic nonprofit 3287 corporation that is subject to the supervision of the Department of Banking and 3288 Securities, the Insurance Department or the Pennsylvania Public Utility Commission to 3289 a different type of entity. 3290 3291

(2) Paragraph (1) does not apply to a transaction under this chapter in which a 3292 health maintenance organization is converted to a different type of entity if the 3293 transaction has received the prior approval of the Insurance Department. 3294 3295 (c) Cross references.—See sections 103 (relating to subordination of title to regulatory 3296

laws) and 314 (relating to required notice or approval). 3297 3298 Committee Comment (2014): 3299

ACTIVE/ 6744855.14 76

3300 This section was added in 2014 by the Association Transactions Act and is patterned 3301

after Model Entity Transactions Act (2007) (Last Amended 2013) § 110. Subsection (a)(1) is 3302 derived from 15 Pa.C.S. §§ 7302(b) and 7331. Subsections (a)(2) and (b) are derived from 3303 former 15 Pa.C.S. § 5961(b)(1)(iii). 3304

3305 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3306 3307 “cooperative corporation” 3308 “entity” 3309 “fraternal benefit society” 3310 “health maintenance organization” 3311 “nonprofit corporation” 3312 “type” 3313

3314 3315 § 319. Party to plan or transaction. 3316

3317 An association that approves a plan in its capacity as an interest holder or creditor of a 3318

domestic or foreign association that is a party to the transaction under the plan, or that 3319 furnishes all or a part of the consideration contemplated by a plan, does not thereby become a 3320 party to the plan or the transaction under the plan for purposes of this chapter. 3321 3322 Committee Comment (2014): 3323 3324

This section was added in 2014 by the Association Transactions Act and is a 3325 generalization of former 15 Pa.C.S. §§ 1922(d) and 5922(e). Former 15 Pa.C.S. § 1922(d) 3326 was based on Terry v. Penn Central Corp., 527 F.Supp. 118 (E.D. Pa. 1981), aff'd 668 F.2d 3327 188 (3d Cir. 1981). 3328

3329 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 3330 3331 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3332 3333 “association” 3334 “domestic association” 3335 “foreign association” 3336 “interest holder” 3337

3338 3339 § 320. Submission of matters to interest holders. 3340 3341

(a) General rule.—A domestic association may agree, in record form, to submit a plan 3342 to its interest holders whether or not the governors determine, at any time after approving the 3343 plan, that the plan is no longer advisable and recommend that the interest holders reject or 3344 vote against it, regardless of whether the governors change their recommendation. If an 3345

ACTIVE/ 6744855.14 77

association so agrees to submit a plan to its interest holders, the plan is deemed to have been 3346 validly adopted by the association when it has been approved by the interest holders. 3347

3348 (b) Cross references.—See sections 321(c) (relating to approval by business 3349

corporations) and 325(c)(2) (relating to approval by limited liability companies). 3350 3351 Committee Comment (2014): 3352 3353

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 3354 patterned after 6 Del. Code § 146. A similar provision applicable to amendments of the 3355 articles of incorporation and other matters involving a business corporation is found at 15 3356 Pa.C.S. § 1908. 3357

3358 This section adopts the Delaware approach of permitting an association to agree to a 3359

“force the vote” provision. Under this section governors can agree to submit a fundamental 3360 transaction to the interest holders for approval even if they later determine that they no longer 3361 recommend it. 3362

3363 In Smith v. Van Gorkom, 488 A.2d 858, the Delaware Supreme Court interpreted 6 Del. 3364

Code § 251(b) to mean that a board of directors of a corporation considering a merger 3365 agreement “had but two options: (1) to proceed with the merger and the stockholder meeting, 3366 with the Board’s approval; or (2) to rescind its agreement …, withdraw its approval of the 3367 merger, and notify its stockholders.” Id. at 888. The court also stated that “in the merger 3368 context, a director may not … leav[e] to the shareholders alone the decision to approve or 3369 disapprove the [merger] agreement.” Id. at 873 (citing Beard v. Elster, 160 A.2d 731, 737 3370 (1960)). 3371

3372 In response to the quoted language from Smith v. Van Gorkom, Delaware amended 6 3373

Del. Code § 251(c) in 1998 to allow a merger agreement of a corporation to be submitted to 3374 the stockholders without a recommendation of the board. Delaware subsequently deleted that 3375 language from § 251(c) in 2003 and adopted a new section 146 which is not specific to 3376 mergers and permits any matter to be submitted to the stockholders of a corporation without a 3377 recommendation of the board. 3378

3379 The last sentence of subsection (a) has been added to the language taken from the 3380

Delaware provision to clarify how this section relates to the “two house” requirement of 15 3381 Pa.C.S. § 321(c) and similar sections. The initial approval of a plan by the governors is 3382 considered sufficient to satisfy the required approval by the governors and that approval does 3383 not have to be refreshed at the time of approval of the plan by the interest holders. 3384

3385 This section is not intended to relieve the governors of any applicable duty to consider 3386

carefully a proposed transaction and the interests of the interest holders. 3387 3388 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 3389 3390 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3391

ACTIVE/ 6744855.14 78

3392 “domestic association” 3393 “governors” 3394 “interest holders” 3395 “record form” 3396

3397 3398

Subchapter B 3399 Approval of Entity Transactions 3400

3401 Section 3402 321. Approval by business corporation. 3403 322. Approval by nonprofit corporation. 3404 323. Approval by general partnership. 3405 324. Approval by limited partnership. 3406 325. Approval by limited liability company. 3407 326. Approval by professional association. 3408 327. Approval by business trust. 3409 328. Approval by unincorporated nonprofit association. 3410 329. Special treatment of interest holders. 3411 330. Alternative means of approval of transactions. 3412 3413 § 321. Approval by business corporation. 3414 3415

(a) Proposal of plan.—Except where the approval of the board of directors is 3416 unnecessary pursuant to section 330 (relating to alternative means of approval of 3417 transactions), a plan shall be proposed in the case of a domestic business corporation by the 3418 adoption by the board of directors of a resolution approving the plan. Except where the 3419 approval of the shareholders is unnecessary under this chapter, the board of directors shall 3420 direct that the plan be submitted to a vote of the shareholders entitled to vote thereon at a 3421 regular or special meeting of the shareholders. 3422

3423 (b) Notice of meeting of shareholders.—Notice in record form of the meeting of 3424

shareholders that will act on the proposed plan must be given to each shareholder of record, 3425 whether or not entitled to vote thereon, of each domestic business corporation that is a party to 3426 the transaction under the plan. There shall be included in or enclosed with the notice a copy 3427 of the proposed plan or a summary thereof and any notice required by section 329 (relating to 3428 special treatment of interest holders). If the holders of shares of any class or series are 3429 entitled to assert dissenters rights, the notice must include or be accompanied by the text of 3430 the provision of this chapter granting dissenters rights and of Chapter 15 Subch. D (relating to 3431 dissenters rights). The notice must state that a copy of the organic rules of the surviving, 3432 acquired, converted, new or resulting association or domesticated entity as they will be in 3433 effect immediately following the transaction will be furnished to any shareholder of the 3434 corporation giving the notice on request and without cost. 3435

3436

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(c) Shareholder vote required.—Except as provided in section 1757 (relating to action 3437 by shareholders) or subsection (d), a plan shall be adopted by a domestic business corporation 3438 that is a party to the transaction under the plan upon receiving the affirmative vote of a 3439 majority of the votes cast by all shareholders entitled to vote on the plan and, if any class or 3440 series of shares is entitled to vote thereon as a class, the affirmative vote of a majority of the 3441 votes cast in each class vote. The holders of any class or series of shares of a domestic 3442 business corporation that is a party to a transaction under a plan that would effect any change 3443 in the articles of the corporation shall be entitled to vote as a class on the plan if they would 3444 have been entitled to a class vote under the provisions of section 1914 (relating to adoption of 3445 amendments) had the change been accomplished under Subchapter B of Chapter 19 (relating 3446 to amendment of articles). Except as provided in section 330, a proposed plan shall not be 3447 deemed to have been adopted by a domestic business corporation unless it has also been 3448 approved by the board of directors, regardless of the fact that the board has directed or 3449 suffered the submission of the plan to the shareholders for action. 3450 3451

(d) Adoption of plan of merger without shareholder vote.— 3452 3453

(1) Unless otherwise required by the organic rules, a plan of merger shall not 3454 require the approval of the shareholders of a domestic business corporation that is a 3455 merging association if: 3456

3457 (i) whether or not the corporation is the surviving association: 3458

3459 (A) the surviving association is a domestic business corporation and 3460

its articles are identical to the articles of the corporation for which 3461 shareholder approval is not required, except for changes that could be made 3462 without shareholder approval pursuant to section 1914(c); 3463

3464 (B) each share of the corporation outstanding immediately prior to the 3465

effectiveness of the merger is to continue as or be converted into, except as 3466 may be otherwise agreed by the holder thereof, an identical share of the 3467 surviving association; and 3468

3469 (C) the plan provides that the shareholders of the corporation are to 3470

hold in the aggregate shares of the surviving association to be outstanding 3471 immediately after the effectiveness of the merger entitled to cast at least a 3472 majority of the votes entitled to be cast generally for the election of directors; 3473

3474 (ii) immediately prior to the adoption of the plan and at all times thereafter 3475

prior to the effectiveness of the merger, another association owns directly or 3476 indirectly 80% or more of the outstanding shares of each class of the corporation; 3477 or 3478

3479 (iii) no shares of the corporation have been issued prior to the adoption of 3480

the plan by the board of directors pursuant to subsection (a). 3481 3482

ACTIVE/ 6744855.14 80

(2) If a merger is effected pursuant to paragraph (1)(i) or (iii), the plan shall be 3483 deemed adopted by the corporation when it has been adopted by the board of directors 3484 pursuant to subsection (a). 3485

3486 (3) If a merger of a subsidiary corporation is effected pursuant to paragraph 3487

(1)(ii), the plan shall be deemed adopted by the subsidiary corporation when it has been 3488 adopted by the governors of the parent association and neither approval of the plan by 3489 the board of directors of the subsidiary corporation nor signing of the statement of 3490 merger by the subsidiary corporation shall be necessary. 3491

3492 (4) Unless otherwise required by the organic rules, a plan of merger providing 3493

for the merger of a domestic business corporation (referred to in this paragraph as a 3494 “constituent corporation”) with or into a single indirect wholly owned subsidiary 3495 (referred to in this paragraph as the "subsidiary corporation") of the constituent 3496 corporation shall not require the approval of the shareholders of either the constituent 3497 corporation or the subsidiary corporation if all of the following provisions are satisfied. 3498

3499 (i) A merger under this paragraph must satisfy the following conditions: 3500

3501 (A) The constituent corporation and the subsidiary corporation are the 3502

only parties to the merger, other than a surviving association that is a 3503 corporation created in the merger. 3504

3505 (B) Each share or fraction of a share of the capital stock of the 3506

constituent corporation outstanding immediately prior to the effectiveness of 3507 the merger is converted in the merger into a share or equal fraction of a share 3508 of capital stock of a holding company having the same designations, rights, 3509 powers and preferences and the qualifications, limitations and restrictions as 3510 the share of capital stock of the constituent corporation being converted in 3511 the merger. 3512

3513 (C) The holding company and the surviving association are each 3514

domestic business corporations. 3515 3516

(D) Immediately following the effectiveness of the merger, the 3517 articles of incorporation and bylaws of the holding company are identical to 3518 the articles of incorporation and bylaws of the constituent corporation 3519 immediately before the effectiveness of the merger, except for changes that 3520 could be made without shareholder approval pursuant to section 1914(c). 3521

3522 (E) Immediately following the effectiveness of the merger, the 3523

surviving association is a direct or indirect wholly owned subsidiary of the 3524 holding company. 3525

3526 (F) The directors of the constituent corporation become or remain the 3527

directors of the holding company on the effectiveness of the merger. 3528

ACTIVE/ 6744855.14 81

3529 (G) The board of directors of the constituent corporation has made a 3530

good faith determination that the shareholders of the constituent corporation 3531 will not recognize gain or loss for United States Federal income tax 3532 purposes. 3533

3534 (ii) If the holding company is a registered corporation, the shares of the 3535

holding company issued in connection with the merger shall be deemed to have 3536 been acquired at the time that the shares of the constituent corporation converted in 3537 the merger were acquired. 3538

3539 (iii) As used in this paragraph only, the term "holding company" means a 3540

corporation that, from its incorporation until consummation of the merger 3541 governed by this paragraph, was at all times a direct wholly owned subsidiary of 3542 the constituent corporation and whose capital stock is issued in the merger. 3543

3544 (e) Approval of division by preferred shares. – If a dividing association that is a 3545

business corporation has outstanding any shares of a preferred or special class or series of 3546 shares, regardless of a limitation stated in the articles or bylaws on the voting rights of the 3547 class or series of shares, the holders of outstanding shares of the class or series shall be 3548 entitled to vote as a class on a plan of division which: 3549

3550 (1) provides that the dividing association will not survive the division; or 3551

3552 (2) amends the articles of bylaws of the surviving corporation in a manner that 3553

would entitle the holders of the preferred or special shares to a class vote on the 3554 amendment under the articles, the bylaws or section 1914(b). 3555 3556 (f) Cross references.—See: 3557 3558 Subchapter A of Chapter 17 (relating to notice and meetings generally). 3559 Section 2512 (relating to dissenters rights procedure). 3560 Section 2539 (relating to adoption of plan of merger by board of directors). 3561 Section 3304(b) (relating to election of benefit corporation status). 3562 Section 3305(b) (relating to termination of benefit corporation status). 3563

3564 Committee Comment (2014): 3565 3566

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 3567 substantially a reenactment of former 15 Pa.C.S. § 1922(c). Subsection (b) is substantially a 3568 reenactment of 15 Pa.C.S. § 1923(a). Subsections (c) and (d) are substantially a reenactment 3569 of former 15 Pa.C.S. § 1924 (a) and (b). Subsection (e) is substantially a reenactment of 3570 former 15 Pa.C.S. § 1952(f). Subsection (f) is derived from former 15 Pa.C.S. §§ 1923(b) and 3571 1924(d). 3572

3573

ACTIVE/ 6744855.14 82

Subsection (b) applies to any meeting “that will act on” a plan to make clear that this 3574 section applies not just to special meetings called for the express purpose of considering a 3575 transaction under Chapter 3, but also to a regularly scheduled annual meeting at which a 3576 transaction is to be considered. 3577

3578 The requirement that a copy of 15 Pa.C.S. Subch. 15D be supplied with the notice does 3579

not apply to certain registered corporations. See 15 Pa.C.S. § 2512. 3580 3581 A majority of all votes cast on the adoption of a plan satisfies the statutory vote 3582

requirements of Chapter 3. In addition to the class vote requirements of 15 Pa.C.S. § 1914, a 3583 form of statutory class or group voting may arise under 15 Pa.C.S. § 329. The vote 3584 requirements of subsection (c) are modified for certain registered corporations. See 15 3585 Pa.C.S. Subch. 25F. 3586

3587 The last sentence of subsection (c) is intended to make clear that the inclusion in 3588

management proxy material of a shareholder proposal recommending approval of a plan 3589 results only in an advisory vote unless or until the board has embraced the plan by approving 3590 it. 3591

3592 Subparagraph (d)(1)(i) authorizes the board to effect a merger (including a merger 3593

where it is a nonsurviving corporation) without shareholder approval if the charter of the 3594 corporation and its previously outstanding shares are unaffected by the merger (except for 3595 changes in the articles that the board could effect on its own initiative under 15 Pa.C.S. § 3596 1914) and the shareholders before the merger will be in control of the surviving entity. 3597

3598 The Delaware certificate of ownership and merger procedure is adopted in substance by 3599

subsection (b)(1)(ii) and (3) which eliminates the need for the adoption of a plan of merger, or 3600 execution of articles of merger, by certain subsidiaries, except that the required level of 3601 ownership by the parent in the subsidiary has been reduced from 90% to 80%. 3602

3603 Subsection (d)(4) authorizes the board of directors to effect a merger with a wholly-3604

owned indirect subsidiary which in effect converts the corporation into a subsidiary of a 3605 holding company, and converts the shares owned by the shareholders into shares of the 3606 holding company. 3607

3608 Under 15 Pa.C.S. § 1731(a)(2)(i), any action that may be taken by the board of directors 3609

under this section that does not involve submission of a merger to the shareholders may be 3610 taken by a duly authorized committee of the board, subject to compliance by the committee 3611 with any procedure applicable to action by the full board. 3612

3613 This section is not a comprehensive statement of the procedures that must be followed to 3614

approve a plan. The provisions of the Business Corporation Law and the organic rules of the 3615 business corporation will apply as appropriate with respect to issues not dealt with in this 3616 section, such as how far in advance of a meeting notice must given, quorum requirements for 3617 meetings, action by consent without a meeting, etc. 3618

3619

ACTIVE/ 6744855.14 83

The following terms used in this section are defined in 15 Pa.C.S. § 312: 3620 3621 “acquired association” 3622 “converted association” 3623 “domesticated entity” 3624 “new association” 3625 “plan” 3626 “resulting association” 3627 “surviving association” 3628 3629 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3630 3631 “business corporation” 3632 “dissenters rights” 3633 “organic rules” 3634 “record form” 3635 “registered corporation” 3636 3637 3638

§ 322. Approval by nonprofit corporation. 3639 3640

(a) Proposal of plan.—A plan shall be proposed in the case of a domestic nonprofit 3641 corporation as follows: 3642 3643

(1) by the adoption by the board of directors or other body of a resolution 3644 approving the plan; 3645

3646 (2) unless otherwise provided in the articles, by petition of members entitled to 3647

cast at least 10% of the votes that all members are entitled to cast thereon, setting forth 3648 the proposed plan, which petition shall be directed to the board of directors and filed 3649 with the secretary of the corporation; or 3650

3651 (3) by such other method as may be provided in the bylaws. 3652

3653 (b) Submission to members.—Except where the domestic nonprofit corporation has 3654

no members entitled to vote thereon, the board of directors or other body shall direct that the 3655 plan be submitted to a vote of the members entitled to vote thereon at a regular or special 3656 meeting of the members. 3657 3658

(c) Notice of meeting of members.—Notice in record form of the meeting of members 3659 that will act on the proposed plan shall be given to each member of record, whether or not 3660 entitled to vote thereon, of each domestic nonprofit corporation that is a party to the 3661 transaction under the plan. A copy of the proposed plan or a summary thereof shall be 3662 included in or enclosed with the notice. The notice shall state that a copy of the organic rules 3663 of the surviving, acquired, converted, new or resulting association or domesticated entity as 3664

ACTIVE/ 6744855.14 84

they will be in effect immediately following the transaction will be furnished to any member 3665 of the corporation giving the notice on request and without cost. 3666

3667 (d) Member vote required.—Except as provided in section 5757 (relating to action by 3668

members), a plan shall be adopted upon receiving the affirmative vote of at least a majority of 3669 the votes that all members present are entitled to cast thereon of each domestic nonprofit 3670 corporation that is a party to the transaction under the plan. If any class of members is 3671 entitled to vote on a plan as a class, the plan must be adopted by the affirmative vote of at 3672 least a majority of the votes that all members present of such class are entitled to cast thereon. 3673 3674

(e) Adoption in absence of voting members.—If a domestic nonprofit corporation has 3675 no members entitled to vote thereon, a plan shall be deemed adopted by the corporation when 3676 it has been adopted by the board of directors or other body pursuant to subsection (a). 3677

3678 (f) Cross references.—See Subchapter A of Chapter 57 (relating to notice and 3679

meetings generally) and section 3304(b) (relating to election of benefit corporation status). 3680 3681 Committee Comment (2014): 3682 3683

This section was added in 2014 by the Association Transactions Act. Subsections (a) 3684 and (b) are a generalization of former 15 Pa.C.S. § 5922(c) and (d). Subsection (c) is a 3685 generalization of former 15 Pa.C.S. § 5923(a). Subsections (d) and (e) are a generalization of 3686 former 15 Pa.C.S. § 5924(a) and (b). 3687

3688 This section is not a comprehensive statement of the procedures that must be followed to 3689

approve a plan. The provisions of the Nonprofit Corporation Law and the organic rules of the 3690 nonprofit corporation will apply as appropriate with respect to issues not dealt with in this 3691 section, such as how far in advance of a meeting notice must given, quorum requirements for 3692 meetings, action by consent without a meeting, etc. 3693

3694 The following terms used in this section are defined in 15 Pa.C.S. § 312: 3695 3696 “acquired association” 3697 “converted association” 3698 “domesticated entity” 3699 “new association” 3700 “plan” 3701 “resulting association” 3702 “surviving association” 3703 3704 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3705 3706 “nonprofit corporation” 3707 “organic rules” 3708 “record form” 3709

3710

ACTIVE/ 6744855.14 85

3711 § 323. Approval by general partnership. 3712 3713

(a) General rule. – A plan shall be approved in the case of a domestic general 3714 partnership as follows: 3715

3716 (1) in the manner provided in its organic rules for the type of plan involved; 3717

3718 (2) if its organic rules do not provide for approval of the type of plan involved, 3719

then in the manner provided in its organic rules for approval of a plan of merger; or 3720 3721

(3) if its organic rules do not provide for approval of the type of plan involved or 3722 a plan of merger, then the plan shall be approved by all of the partners. 3723

3724 (b) Cross reference. – See section 3304(b) (relating to election of benefit corporation 3725

status) 3726 3727 Committee Comment (2014): 3728 3729

This section was added in 2014 by the Association Transactions Act and is a 3730 generalization of Uniform Partnership Act (1997) (Last Amended 2013) § 905(c)(1). 3731

3732 This section looks first to the organic rules of a general partnership to determine what 3733

vote of the partners is required to approve a transaction under this chapter. If the organic 3734 rules do not provide for the required vote, then unanimous approval is required. 3735

3736 This section is not a comprehensive statement of the procedures that must be followed to 3737

approve a plan. The provisions of Chapter 83 and the organic rules of the partnership will 3738 apply as appropriate with respect to issues not dealt with in this section, such as how far in 3739 advance of a meeting notice must given, quorum requirements for meetings, action by consent 3740 without a meeting, etc. 3741

3742 The following terms used in this section are defined in 15 Pa.C.S. § 312: 3743 3744 “merger” 3745 “plan” 3746 3747 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3748 3749 “domestic” 3750 “general partnership” 3751 “organic rules” 3752

3753 3754 § 324. Approval by limited partnership. 3755 3756

ACTIVE/ 6744855.14 86

(a) Proposal of plan.—A plan shall be proposed in the case of a domestic limited 3757 partnership by the adoption by a unanimous vote of the general partners of a resolution 3758 approving the plan. Except where the approval of the limited partners is unnecessary under 3759 this chapter or the organic rules, the general partners shall submit the plan to a vote of the 3760 limited partners entitled to vote thereon at a regular or special meeting of the limited partners. 3761 3762

(b) Notice of meeting of limited partners.—Notwithstanding any other provision of 3763 the organic rules, notice in record form of the meeting of limited partners called for the 3764 purpose of considering the proposed plan shall be given to each limited partner, whether or 3765 not entitled to vote thereon, of each domestic limited partnership that is a party to the 3766 transaction under the plan. A copy of the proposed plan or a summary thereof shall be 3767 included in or enclosed with the notice. The notice must state that a copy of the organic rules 3768 of the surviving, acquired, converted, new or resulting association or domesticated entity as 3769 they will be in effect immediately following the transaction will be furnished to any limited 3770 partner of the limited partnership giving the notice on request and without cost. 3771 3772

(c) Required vote by limited partners.—The plan shall be adopted upon receiving a 3773 majority of the votes cast by all limited partners, if any, entitled to vote thereon of each 3774 domestic limited partnership that is a party to the proposed transaction under the plan and, if 3775 any class of limited partners is entitled to vote thereon as a class, a majority of the votes cast 3776 in each class vote. A proposed plan shall not be deemed to have been adopted by the limited 3777 partnership unless it has also been approved by the general partners, regardless of the fact that 3778 the general partners have directed or suffered the submission of the plan to the limited 3779 partners for action. 3780 3781

(d) Merger by action of general partners only. – Except as provided in the organic 3782 rules, a plan of merger shall not require the approval of the limited partners of a domestic 3783 limited partnership that is a merging association and shall be deemed adopted by the limited 3784 partnership when it has been adopted by the general partners pursuant to subsection (a) if: 3785 3786

(1) whether or not the limited partnership is the surviving association, the 3787 surviving association is a domestic limited partnership and its organic rules are identical 3788 to the organic rules of the merging limited partnership, except for changes that could be 3789 made without action by the limited partners; and 3790

3791 (2) each partnership interest outstanding immediately before the effectiveness of 3792

the merger is to continue as or to be converted into, except as may be otherwise agreed 3793 by the holder thereof, an identical partnership interest in the surviving limited 3794 partnership after the effectiveness of the merger. 3795

3796 (e) Cross reference. – See section 3304(b) (relating to election of benefit corporation 3797

status) 3798 3799 Committee Comment (2014): 3800 3801

ACTIVE/ 6744855.14 87

This section was added in 2014 by the Association Transactions Act and was derived 3802 from former 15 Pa.C.S. 8546(c), (e), (f) and (g). 3803

3804 Unless the organic rules of a limited partnership provide otherwise, the general partners 3805

must approve a transaction under this chapter by unanimous vote. However, only a majority 3806 vote of the limited partners is required unless the organic rules provide otherwise. 3807

3808 This section is not a comprehensive statement of the procedures that must be followed to 3809

approve a plan. The provisions of Chapter 85 and the organic rules of the limited partnership 3810 will apply as appropriate with respect to issues not dealt with in this section, such as how far 3811 in advance of a meeting notice must given, quorum requirements for meetings, action by 3812 consent without a meeting, etc. 3813

3814 The following terms used in this section are defined in 15 Pa.C.S. § 312: 3815 3816 “acquired association” 3817 “converted association” 3818 “domesticated entity” 3819 “new association” 3820 “plan” 3821 “resulting association” 3822 “surviving association” 3823 3824 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3825 3826 “limited partnership” 3827 “organic rules” 3828 “record form” 3829

3830 3831 § 325. Approval by limited liability company. 3832 3833

(a) Proposal of plan in manager-managed company.—Except as provided in the 3834 organic rules or where the approval of the managers is unnecessary under section 330 3835 (relating to alternative means of approval of transactions), a plan shall be proposed, in the 3836 case of a manager-managed, domestic limited liability company, by the adoption by the 3837 managers of a resolution approving the plan. Except where the approval of the members of a 3838 manager-managed, domestic limited liability company is unnecessary under this chapter or 3839 the organic rules, the plan shall be submitted to a vote of the members entitled to vote thereon 3840 at a regular or special meeting of the members. 3841 3842

(b) Notice of meeting of members.—Except as provided in the organic rules: 3843 3844

(1) Notice in record form of the meeting of members of a domestic limited 3845 liability company that will act on the proposed plan shall be given to each member of 3846

ACTIVE/ 6744855.14 88

record, whether or not entitled to vote thereon, of each domestic limited liability 3847 company that is a party to the transaction under the plan. 3848

3849 (2) There shall be included in or enclosed with the notice a copy of the proposed 3850

plan or a summary thereof. 3851 3852 (3) The notice shall state that a copy of the organic rules of the surviving, 3853

acquired, converted, new or resulting association or domesticated entity as they will be 3854 in effect immediately following the transaction will be furnished to any member of the 3855 company giving the notice on request and without cost. 3856

3857 (c) Adoption of plan by members. – A plan: 3858 3859

(1) Except as provided in the organic rules, shall be adopted upon receiving a 3860 majority of the votes cast by all members, if any, entitled to vote thereon of each of the 3861 domestic limited liability companies that is a party to the transaction under the plan and, 3862 if any class of members is entitled to vote thereon as a class, a majority of the votes cast 3863 in each class vote. 3864

3865 (2) Except as provided in the organic rules or section 330, shall not be deemed to 3866

have been adopted by a manager-managed company unless it has also been approved by 3867 the managers, regardless of the fact that the managers have directed or suffered the 3868 submission of the plan to the members for action. 3869

3870 (d) Merger by action of managers only. – Unless otherwise required by a provision of 3871

the organic rules in record form, a plan of merger shall not require the approval of the 3872 members of a manager-managed, domestic limited liability company and shall be deemed 3873 adopted by the company when a resolution approving the plan has been adopted by the 3874 managers pursuant to subsection (a), if: 3875 3876

(1) Whether the company is the surviving association: 3877 3878

(i) the surviving association is a domestic limited liability company and its 3879 organic rules are identical to the organic rules of the limited liability company that 3880 is a party to the merger, except for changes that could be made without action by 3881 the members; and 3882

3883 (ii) each membership interest outstanding immediately prior to the 3884

effectiveness of the merger is to continue as or to be converted into, except as may 3885 be otherwise agreed by the holder thereof, an identical membership interest in the 3886 surviving association after the effectiveness of the merger. 3887

3888 (2) The plan of merger provides for the merger of the company, referred to in 3889

this paragraph as the “constituent company,” with or into a single indirect wholly owned 3890 subsidiary, referred to in this paragraph as the "subsidiary company," of the constituent 3891 company if all of the following provisions are satisfied: 3892

ACTIVE/ 6744855.14 89

3893 (i) The constituent company and the subsidiary company are the only 3894

parties to the merger, other than a surviving association that is created in the 3895 merger. 3896

3897 (ii) Each interest of the constituent company outstanding immediately prior 3898

to the effectiveness of the merger is converted in the merger into an interest of a 3899 holding company having the same designations, rights, powers and preferences 3900 and the qualifications, limitations and restrictions as the interest of the constituent 3901 company being converted in the merger. 3902 3903

(iii) The holding company and the surviving association are each domestic 3904 limited liability companies. 3905 3906

(iv) Immediately following the effectiveness of the merger, the certificate 3907 of organization and operating agreement of the holding company are identical to 3908 the certificate of organization and operating agreement of the constituent company 3909 immediately before the effectiveness of the merger, except for changes that could 3910 be made without member approval pursuant to Chapter 89 (relating to limited 3911 liability companies). 3912 3913

(v) Immediately following the effectiveness of the merger, the surviving 3914 association is a direct or indirect wholly owned subsidiary of the holding company. 3915 3916

(vi) The managers of the constituent company become or remain the 3917 managers of the holding company on the effectiveness of the merger. 3918 3919

(vii) The managers of the constituent company have made a good faith 3920 determination that the members of the constituent company will not recognize gain 3921 or loss for United States Federal income tax purposes. 3922

3923 (viii) As used in this paragraph only, the term "holding company" means a 3924

limited liability company that, from its formation until consummation of the 3925 merger governed by this paragraph, was at all times a direct wholly owned 3926 subsidiary of the constituent company and interests in which are issued in the 3927 merger. 3928

3929 (e) Cross reference. – See section 3304(b) (relating to election of benefit corporation 3930

status) 3931 3932

Committee Comment (2014): 3933 3934

This section was added in 2014 by the Association Transactions Act and was derived 3935 from former 15 Pa.C.S. 8957(d), (f), (g) and (h). 3936

3937

ACTIVE/ 6744855.14 90

This section applies to both manager-managed and member-managed limited liability 3938 companies, but in the case of a member-managed limited liability company only subsections 3939 (b) and (c)(1) will be relevant. 3940

3941 Subsection (b) requires that notice of a meeting of members that will act on a plan must 3942

be given to all of the members except as provided in the organic rules. Susection (b) does not 3943 prescribe what the period for such notice must be, which will be determined by the organic 3944 rules of the domestic limited liability company. 3945

3946 This section is not a comprehensive statement of the procedures that must be followed to 3947

approve a plan. The provisions of Chapter 89 and the organic rules of the limited liability 3948 company will apply as appropriate with respect to issues not dealt with in this section, such as 3949 how far in advance of a meeting notice must given, quorum requirements for meetings, action 3950 by consent without a meeting, etc. 3951

3952 The following terms used in this section are defined in 15 Pa.C.S. § 312: 3953 3954 “acquired association” 3955 “converted association” 3956 “domesticated entity” 3957 “new association” 3958 “plan” 3959 “resulting association” 3960 “surviving association” 3961 3962 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3963 3964 “limited liability company” 3965 “organic rules” 3966 “record form” 3967

3968 3969 § 326. Approval by professional association. 3970

3971 (a) General rule. – A plan shall be approved in the case of a domestic professional 3972

association by vote of a majority, or such higher percentage as may be provided in the organic 3973 rules, of the associates, voting according to their proportionate shares of ownership. 3974

3975 (b) Cross reference. – See section 3304(b) (relating to election of benefit corporation 3976

status) 3977 3978 Committee Comment (2014): 3979 3980

This section was added in 2014 by the Association Transactions Act and was patterned 3981 in part after 15 Pa.C.S. § 9319(a)(2). 3982

3983

ACTIVE/ 6744855.14 91

This section is not a comprehensive statement of the procedures that must be followed to 3984 approve a plan. The provisions of Chapter 93 and the organic rules of the professional 3985 association will apply as appropriate with respect to issues not dealt with in this section, such 3986 as how far in advance of a meeting notice must given, quorum requirements for meetings, 3987 action by consent without a meeting, etc. 3988

3989 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 3990 3991 The following terms used in this section are defined in 15 Pa.C.S. § 102: 3992 3993 “organic rules” 3994 “professional association” 3995

3996 3997 § 327. Approval by business trust. 3998

3999 (a) General rule. – Except as provided in subsection (b), a plan shall be approved in 4000

the case of a domestic business trust as follows: 4001 4002

(1) in the manner provided in its organic rules for the type of plan involved; 4003 4004

(2) if its organic rules do not provide for approval of the type of plan involved, 4005 in the manner provided in its organic rules for approval of a plan of merger; or 4006

4007 (3) if its organic rules do not provide for approval of the type of plan involved or 4008

a plan of merger, the plan shall be approved by all of the beneficial owners. 4009 4010

(b) Adoption of plan of merger without beneficiary vote. – Unless otherwise required 4011 by the organic rules, a plan of merger providing for the merger of a domestic business trust, 4012 referred to in this paragraph as the “constituent trust,” with or into a single indirect wholly 4013 owned subsidiary, referred to in this paragraph as the "subsidiary trust," of the constituent 4014 trust shall not require the approval of the beneficiaries of the constituent trust if all of the 4015 following provisions are satisfied: 4016 4017

(1) The constituent trust and the subsidiary trust are the only parties to the 4018 merger, other than a surviving association created in the merger. 4019 4020

(2) Each interest in the constituent trust outstanding immediately prior to the 4021 effectiveness of the merger is converted in the merger into an interest in the holding 4022 trust having the same designations, rights, powers and preferences and the 4023 qualifications, limitations and restrictions as the interests in the constituent trust being 4024 converted in the merger. 4025 4026

(3) The holding trust and the surviving association are each domestic business 4027 trusts. 4028 4029

ACTIVE/ 6744855.14 92

(4) Immediately following the effectiveness of the merger, the instrument and 4030 organic rules of the holding trust are identical to the instrument and organic rules of the 4031 constituent trust immediately before the effectiveness of the merger, except for changes 4032 that could be made without beneficiary approval under Chapter 95 (relating to business 4033 trusts). 4034 4035

(5) Immediately following the effectiveness of the merger, the surviving 4036 association is a direct or indirect wholly owned subsidiary of the holding trust. 4037 4038

(6) The trustees of the constituent trust become or remain the trustees of the 4039 holding trust on the effectiveness of the merger. 4040 4041

(7) The trustees of the constituent trust have made a good faith determination 4042 that the beneficiaries of the constituent trust will not recognize gain or loss for United 4043 States Federal income tax purposes. 4044 4045

(8) As used in this subsection only, the term "holding trust" means a business 4046 trust that, from its formation until consummation of the merger governed by this 4047 subsection, was at all times a direct wholly owned subsidiary of the constituent trust and 4048 the interests in which are issued in the merger. 4049

4050 (c) Cross reference. – See section 3304(b) (relating to election of benefit corporation 4051

status) 4052 4053 Committee Comment (2014): 4054 4055

This section was added in 2014 by the Association Transactions Act. 4056 4057

This section looks first to the organic rules of a business trust to determine what vote of 4058 the beneficial owners is required to approve a transaction under this chapter. If the organic 4059 rules do not provide for the required vote, then unanimous approval is required. 4060

4061 This section is not a comprehensive statement of the procedures that must be followed to 4062

approve a plan. The provisions of Chapter 95 and the organic rules of the business trust will 4063 apply as appropriate with respect to issues not dealt with in this section, such as how far in 4064 advance of a meeting notice must given, quorum requirements for meetings, action by consent 4065 without a meeting, etc. 4066

4067 The following terms used in this section are defined in 15 Pa.C.S. § 312: 4068 4069 “merger” 4070 “plan” 4071 “surviving association” 4072 4073 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4074 4075

ACTIVE/ 6744855.14 93

“business trust” 4076 “domestic” 4077 “organic rules” 4078

4079 4080 § 328. Approval by unincorporated nonprofit association. 4081 4082

(a) General rule. – Except as provided in the governing principles, a plan shall be 4083 approved in the case of a domestic unincorporated nonprofit association by the affirmative 4084 vote of at least a majority of the votes cast at a meeting of the members. 4085

4086 (b) Cross reference. – See section 3304(b) (relating to election of benefit corporation 4087

status) 4088 4089 Committee Comment (2014): 4090 4091

This section was added in 2014 by the Association Transactions Act and was patterned 4092 in part after 15 Pa.C.S. § 9124(a)(1). 4093 4094

This section is not a comprehensive statement of the procedures that must be followed to 4095 approve a plan. The provisions of Chapter 91 and the organic rules of the nonprofit 4096 association will apply as appropriate with respect to issues not dealt with in this section, such 4097 as how far in advance of a meeting notice must given, quorum requirements for meetings, 4098 action by consent without a meeting, etc. 4099

4100 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 4101

4102 4103 § 329. Special treatment of interest holders. 4104 4105

(a) General rule.—Except as otherwise restricted in the organic rules, a plan may 4106 contain a provision classifying the interest holders of a class or series of interests into one or 4107 more separate groups by reference to any facts or circumstances that are not manifestly 4108 unreasonable and providing mandatory treatment for interests of the class or series held by 4109 particular interest holders or groups of interest holders that differs materially from the 4110 treatment accorded other interest holders or groups of interest holders that hold interests of the 4111 same class or series, including a provision modifying or rescinding rights previously created 4112 under this section if either of the following applies: 4113 4114

(1) The plan: 4115 4116

(i) is approved by a majority of the votes cast by the holders of any class 4117 or series of interests any of the interests of which are so classified into groups, 4118 whether or not such class or series would otherwise be entitled to vote on the plan; 4119 and 4120

4121

ACTIVE/ 6744855.14 94

(ii) specifically enumerates the type and extent of the special treatment 4122 authorized. 4123

4124 (2) Under all the facts and circumstances, a court of competent jurisdiction finds 4125

such special treatment is undertaken in good faith, after reasonable deliberation and is in 4126 the best interest of the association. 4127

4128 (b) Statutory voting rights on special treatment.—Except as provided in subsection 4129

(d), if a plan contains a provision for special treatment, each group of holders of any 4130 outstanding interests of a class or series who are to receive the same special treatment under 4131 the plan shall be entitled to vote as a special class in respect to the plan regardless of any 4132 limitations stated in the organic rules on the voting rights of any class or series. 4133 4134

(c) Determination of groups.—For purposes of applying subsections (a)(1) and (b), 4135 the determination of which interest holders are part of each group receiving special treatment 4136 shall be made as of the record date for interest holder action on the plan. 4137 4138

(d) Dissenters rights on special treatment.— If a plan contains a provision for special 4139 treatment without requiring for the adoption of the plan the statutory class vote required under 4140 subsection (b), the holder of any outstanding interests the statutory class voting rights of 4141 which are so denied shall be entitled to assert dissenters rights with respect to those interests. 4142 A shareholder of a business corporation who wishes to assert dissenters rights shall comply 4143 with Subchapter D of Chapter 15 (relating to dissenters rights). An interest holder in any 4144 other type of domestic entity shall comply with Subchapter D of Chapter 15 to the extent 4145 practicable. 4146 4147

(e) Notice to interest holders.—Any notice to interest holders of a meeting called to 4148 act on a plan that provides for special treatment shall state that the plan provides for special 4149 treatment. The notice shall identify the interest holders receiving special treatment unless the 4150 notice is accompanied by either a summary of the plan that includes that information or the 4151 full text of the plan. 4152 4153

(f) Exceptions.—This section shall not apply to any of the following: 4154 4155

(1) A provision of a plan that offers to all holders of interests of a class or series 4156 the same option to elect certain treatment. 4157

4158 (2) A plan involving any type of domestic entity that contains an express 4159

provision that this section does not apply or that fails to contain an express provision 4160 that this section shall apply. 4161

4162 (3) A provision of a plan that treats all of the holders of a particular class or 4163

series of interests of any type of domestic entity differently from the holders of another 4164 class or series. A provision of a plan that treats the holders of a class or series of shares 4165 of a domestic business corporation differently from the holders of another class or series 4166

ACTIVE/ 6744855.14 95

of shares shall not constitute a violation of section 1521(d) (relating to authorized 4167 shares). 4168

4169 Committee Comment (2014): 4170 4171

This section was added in 2014 by the Association Transactions Act and is a 4172 generalization of 15 Pa.C.S. § 1906. 4173

4174 This section only applies to special treatment in connection with a transaction pursuant 4175

to a “plan” as defined in 15 Pa.C.S. § 312, i.e., a plan of merger, plan of interest exchange, 4176 plan of conversion, plan of division, or plan of domestication. 4177

4178 This section authorizes "black hat--white hat" treatment of interest holders. The facts or 4179

circumstances forming the basis for special treatment of interest holders are specifically 4180 intended to include the identity of the individual interest holders. Commonplace examples are 4181 provisions providing marketable securities to non-management holders and earn-out securities 4182 to continuing management in connection with the acquisition of a business. Any 4183 classification of interest holders, however, is subject to the requirement that it not be 4184 "manifestly unreasonable," which is intended to prohibit special treatment on the basis of 4185 race, sex, religion, etc. 4186 4187

If there is any group of holders of a class or series of interests receiving special 4188 treatment, then the entire class or series has a statutory class vote under subsection (a)(1)(i) 4189 unless subsection (a)(2) is satisfied. The class vote under subsection (a)(1)(i) is in addition to 4190 the class vote under subsection (b) unless the exemption in subsection (d) is applicable. 4191 Where, for example, holders of shares of a class or series are allotted a new fixed rate 4192 preferred interest unless they are employees, in which case they may elect to receive instead 4193 an earn-out (variable face amount) security, there will be two groups within the meaning of 4194 subsection (b): (1) the employee holders and (2) all other holders of the class or series. 4195 Subsection (b) will be applicable separately to each group, and the governors could, for 4196 example, provide for a separate vote by group (1) (thus depriving them of dissenters rights) 4197 and no separate vote for group (2) (thus according them dissenters rights). Both group (1) and 4198 group (2) would, however, vote together as a single class under subsection (a)(1), unless the 4199 governors were willing to gamble that a court would agree that the standards of paragraph 4200 (a)(2) are satisfied. 4201 4202

In the case of a merger or other transaction in which dissenters rights will be available 4203 for the interest holders of a domestic entity even if the plan does not provide for special 4204 treatment, the decision to use that form of transaction is effectively a choice to provide 4205 dissenters rights under subsection (d). If a class vote is provided under subsection (b) in such 4206 a situation, that class vote will not deprive the interest holders of the dissenters rights granted 4207 independently by another provision of Title 15. 4208

4209 The requirement of paragraph (a)(2) is not a condition precedent to proposal of a 4210

transaction involving special treatment, but may be satisfied, e.g., by a finding of a court 4211 which has been asked to enjoin the transaction as unauthorized under subsection (a). 4212 Paragraph (a)(2), of course, is applicable only if paragraph (a)(1) is not satisfied. If the 4213

ACTIVE/ 6744855.14 96

procedures in paragraph (a)(1) are followed, the transaction will be subject to challenge only 4214 under 15 Pa.C.S. § 1105 in the case of a business corporation or 15 Pa.C.S. § 104 in the case 4215 of any other domestic entity. 4216

4217 Subsection (c) confirms that record date provisions will operate in the usual way and 4218

will fix the date for determining which interest holders are receiving special treatment. 4219 4220

The procedures of this section will apply only if a plan expressly provides that this 4221 section is to apply. 4222 4223

If this section is applicable to a plan, it is within the discretion of the governors to 4224 choose whether statutory class voting rights under subsection (b) or dissenters rights under 4225 subsection (d) will be available. The dissenters rights granted by subsection (d) are not subject 4226 to the "statutory market" exceptions of 15 Pa.C.S. § 1571(b)(1). See 15 Pa.C.S. § 4227 1571(b)(2)(iii). 4228 4229

A group may be created that consists of only a single interest holder, since under 1 4230 Pa.C.S. § 1902 (relating to number; gender; tense) words in the singular include the plural and 4231 vice versa. 4232

4233 The term “plan” used in this section is defined in 15 Pa.C.S. § 312. 4234 4235 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4236 4237 “association” 4238 “business corporation” 4239 “dissenters rights” 4240 “domestic entity” 4241 “interest” 4242 “interest holder” 4243 “organic rules” 4244 “special treatment” 4245

4246 4247 § 330. Alternative means of approval of transactions. 4248 4249

(a) General rule.—Except as provided in subsection (b) or the organic rules of a 4250 domestic entity, approval of a transaction under this chapter by the unanimous vote or consent 4251 of its interest holders satisfies the requirements of this chapter for approval of the transaction. 4252

4253 (b) Exception.—Subsection (a) shall not apply to a nonprofit corporation. 4254

4255 Committee Comment (2014): 4256 4257

ACTIVE/ 6744855.14 97

This section was added in 2014 by the Association Transactions Act. Subsection (a) is a 4258 generalization of 15 Pa.C.S. § 1905 and is patterned after Model Entity Transactions Act 4259 (2007) (Last Amended 2013) § 108. 4260

4261 This section makes it clear that a unanimous vote by the interest holders of an entity 4262

constitutes the only approval needed for a transaction under this chapter. If that vote is 4263 obtained, the separate approvals that would otherwise be required under 15 Pa.C.S. §§ 321(c) 4264 (directors of a business corporation) and 325 (managers of a manager-managed limited 4265 liability company) are not required. Approval by a limited partnership also requires a type of 4266 “two-house” requirement because the general partners are always required to approve a plan 4267 by 15 Pa.C.S. § 324, but in the case of a limited partnership that vote will be the same as the 4268 vote required by this section because general partners are interest holders. 4269

4270 A “two-house” requirement does not apply to nonprofit corporations under 15 Pa.C.S. § 4271

322 and thus nonprofit corporations are excluded from this section. If the members of 4272 nonprofit corporation propose a plan under 15 Pa.C.S. § 322(a)(2), the plan will be validly 4273 adopted if it receives the vote required by 15 Pa.C.S. § 322(d) even if the board of the 4274 nonprofit corporation does not approve the plan. 4275

4276 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4277 4278 “domestic entity” 4279 “interest holders” 4280 “nonprofit corporation” 4281 “organic rules” 4282

4283 4284

Subchapter C 4285 Merger 4286

4287 Section 4288 331. Merger authorized. 4289 332. Plan of merger. 4290 333. Approval of merger. 4291 334. Amendment or abandonment of plan of merger. 4292 335. Statement of merger; effectiveness. 4293 336. Effect of merger. 4294 4295 § 331. Merger authorized. 4296 4297

(a) General rule.—Except as provided in section 318 (relating to excluded entities and 4298 transactions) or this section, by complying with this chapter: 4299 4300

(1) One or more domestic entities may merge with one or more domestic entities 4301 or foreign associations into a surviving association. 4302

4303

ACTIVE/ 6744855.14 98

(2) Two or more foreign associations may merge into a surviving association 4304 that is a domestic entity. 4305

4306 (3) A domestic banking institution may be a merging association or surviving 4307

association in a merger with one or more domestic or foreign associations if the 4308 surviving association or at least one of the merging associations is a domestic entity. 4309

4310 (b) Foreign law authorization required.— By complying with the applicable 4311

provisions of this subchapter, a foreign association may be a party to a merger under this 4312 subchapter or may be the surviving association in such a merger if the merger is authorized by 4313 the law of the jurisdiction of formation of the foreign association. 4314 4315

(c) Banking institutions.— Subsection (a)(3) controls over any inconsistent provision 4316 of the organic law of a domestic banking institution that is a merging association. 4317

4318 (d) Exception. – A health maintenance organization may be a merging association only 4319

if the surviving association is a health maintenance organization. 4320 4321

(e) Cross reference.— See section 314 (relating to regulatory conditions and required 4322 notices and approvals). 4323 4324 Committee Comment (2014): 4325 4326

This section was added in 2014 by the Association Transactions Act. Subsections (a) 4327 and (b) are patterned after Model Entity Transactions Act (2007) (Last Amended 2013) § 201. 4328

4329 The merger transaction authorized by this subchapter involves the combination of one or 4330

more domestic associations with or into one or more other domestic or foreign associations. 4331 It also contemplates the consolidation of two or more foreign associations into a single 4332 domestic entity created in the transaction. On the effective date of the merger, all the property 4333 and liabilities of the merging associations vest in the surviving association as a matter of law. 4334 Mergers require the existence of at least two separate associations before the transaction and 4335 only one surviving association may survive the merger. If independent existence of the 4336 merging associations is desired following the conclusion of the transaction, a restructuring 4337 transaction other than a merger must be used to accomplish the transfer of property and 4338 liabilities. 4339

4340 The Banking Code of 1965, 7 P.S. § 101, et seq., was amended in 2012 to allow a 4341

limited liability company to be a banking institution. Subsections (a)(3) and (c), along with 4342 15 Pa.C.S. § 333(c), permit mergers involving such a limited liability company. For example, 4343 a limited liability company that is a banking institution may merge into a banking institution 4344 that is a corporation. Approval of the merger by the limited liability company will be 4345 governed by this chapter, while approval of the merger by the banking institution will be 4346 governed by The Banking Code of 1965. In anticipation that other types of entities in 4347 addition to limited liability companies may be permitted to be banking institutions, subsection 4348

ACTIVE/ 6744855.14 99

(a)(3) relating to mergers involving domestic banking insitutions has not been restricted to 4349 limited liability companies. 4350

4351 The following terms used in this section are defined in 15 Pa.C.S. § 312: 4352 4353 “merger” 4354 “merging association” 4355 “surviving association” 4356 4357 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4358 4359 “association” 4360 “domestic association” 4361 “domestic banking institution” 4362 “domestic entity” 4363 “foreign association” 4364 “health maintenance organization” 4365 “jurisdiction of formation” 4366 “organic law” 4367

4368 4369 § 332. Plan of merger. 4370 4371

(a) General rule.—A domestic entity may become a party to a merger by approving a 4372 plan of merger. The plan shall be in record form and contain all of the following: 4373 4374

(1) As to each merging association, its name, jurisdiction of formation and type. 4375 4376

(2) If the surviving association is to be created in the merger, a statement to that 4377 effect and the association’s name, jurisdiction of formation and type. 4378

4379 (3) The manner, if any, of: 4380 4381

(i) converting some or all of the interests in a merging association into 4382 interests, securities, obligations, money, other property, rights to acquire interests 4383 or securities, or any combination of the foregoing; or 4384

4385 (ii) canceling some or all of the interests in a merging association. 4386

4387 (4) If the surviving association exists before the merger, any proposed 4388

amendments to: 4389 4390

(i) its public organic record, if any; or 4391 4392 (ii) its private organic rules that are or are proposed to be in record form. 4393

4394

ACTIVE/ 6744855.14 100

(5) If the surviving association is to be created in the merger: 4395 4396

(i) its proposed public organic record, if any; and 4397 4398 (ii) the full text of its private organic rules that are proposed to be in record 4399

form. 4400 4401

(6) Provisions, if any, providing special treatment of interests in a merging 4402 association held by any interest holder or group of interest holders as authorized by, and 4403 subject to, section 329 (relating to special treatment of interest holders). 4404

4405 (7) The other terms and conditions of the merger. 4406

4407 (8) Any other provision required by: 4408 4409

(i) the law of this Commonwealth; 4410 4411 (ii) the law of the jurisdiction of formation of a foreign merging or 4412

surviving association; or 4413 4414 (iii) the organic rules of a merging association. 4415

4416 (b) Optional contents.—In addition to the requirements of subsection (a), a plan of 4417

merger may contain any other provision not prohibited by law. 4418 4419 (c) Cross reference.—See section 316 (relating to contents of plan). 4420

4421 Committee Comment (2014): 4422 4423

This section was added in 2014 by the Association Transactions Act and is patterned 4424 after Model Entity Transactions Act (2007) (Last Amended 2013) § 202. 4425

4426 Subsection (a)(1) requires that the plan of merger identify the parties to the merger. The 4427

name of a merging association as it appears in the plan of merger will be its name in its 4428 jurisdiction of formation. 4429 4430

The special treatment authorized by 15 Pa.C.S. § 329 may be used, for example, to 4431 provide continuing interests in the surviving association for some holders of interests of a 4432 class or series of a merging association while paying some other form of consideration to 4433 other holders of the same class or series of interests in that merging association. Similarly, 15 4434 Pa.C.S. § 329 may also be used to reorganize the capital structure of the surviving association. 4435 4436

The consideration paid to the interest holders of the merging associations may be 4437 supplied in whole or part by a person who is not a party to the merger. That person may be a 4438 party to the plan but is not considered a party to the transaction for purposes of this chapter. 4439 See 15 Pa.C.S. § 319. 4440

ACTIVE/ 6744855.14 101

4441 Subsection (b) provides the statutory authority for a merging association to include a 4442

provision in a plan of merger that is not specifically listed in this section. One such 4443 possibility is contractual dissenters rights as provided in 15 Pa.C.S. § 317. 4444

4445 The following terms used in this section are defined in 15 Pa.C.S. § 312: 4446 4447 “merger” 4448 “merging association” 4449 “plan” 4450 “surviving association” 4451 4452 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4453 4454 “domestic entity” 4455 “interests” 4456 “jurisdiction of formation” 4457 “obligations” 4458 “organic rules” 4459 “private organic rules” 4460 “property” 4461 “public organic record” 4462 “record form” 4463 “special treatment” 4464 “type” 4465

4466 4467 § 333. Approval of merger. 4468 4469

(a) Approval by domestic entities.—A plan of merger shall not be effective unless it 4470 has been approved in both of the following ways: 4471 4472

(1) The plan is approved by a domestic entity that is a merging association in 4473 accordance with the applicable provisions of Subchapter B (relating to approval of entity 4474 transactions). 4475

4476 (2) The plan is approved in record form by each interest holder, if any, of a 4477

domestic entity that is a merging association that will have interest holder liability for 4478 debts, obligations and other liabilities that arise after the merger becomes effective, 4479 unless, as to an interest holder that does not approve the plan, both of the following 4480 apply: 4481

4482 (i) The organic rules of the domestic entity provide in record form for the 4483

approval of a merger in which some or all of its interest holders become subject to 4484 interest holder liability by the vote or consent of fewer than all the interest holders. 4485

4486

ACTIVE/ 6744855.14 102

(ii) The interest holder consented in record form to or voted for that 4487 provision of the organic rules or became an interest holder after the adoption of 4488 that provision. 4489

4490 (b) Approval by foreign associations.—A merger under this subchapter in which a 4491

foreign association is a merging association is not effective unless the merger is approved by 4492 the foreign association in accordance with the law of its jurisdiction of formation. 4493

4494 (c) Approval by domestic banking institutions.—A merger under this subchapter in 4495

which a domestic banking institution that is not a domestic entity is a merging association is 4496 not effective unless the merger is approved by the domestic banking institution in accordance 4497 with the requirements in its organic law and organic rules for approval of a merger. 4498

4499 (d) Dissenters rights.— 4500 4501

(1) Except as provided in paragraph (2), if a shareholder of a domestic business 4502 corporation that is to be a merging association objects to the plan of merger and 4503 complies with Subchapter D of Chapter 15 (relating to dissenters rights), the shareholder 4504 shall be entitled to dissenters rights to the extent provided in that subchapter. 4505

4506 (2) Except as provided under section 317 (relating to contractual dissenters 4507

rights in entity transactions), dissenters rights shall not be available to shareholders of a 4508 domestic business corporation that is a merging association in a merger described in 4509 section 321(d)(1)(i) or (4) (relating to approval by business corporation). 4510

4511 (3) If a shareholder of a domestic banking institution that is to be a merging 4512

association objects to the plan of merger and complies with section 1222 of the act of 4513 November 30, 1965 (P.L. 847, No, 356), known as the Banking Code of 1965, the 4514 shareholder shall be entitled to the rights provided in that section. 4515

4516 (4) See section 329 (relating to special treatment of interest holders). 4517

4518 Committee Comment (2014): 4519 4520

This section was added in 2014 by the Association Transactions Act and is patterned 4521 after Model Entity Transactions Act (2007) (Last Amended 2013) § 203. 4522

4523 Approval under this section includes whatever actions or procedures by the governors 4524

and interest holders of a domestic entity are required by 15 Pa.C.S. Subch. 3B. 4525 4526

Subsection (a)(2) will be applicable, for example, to shareholders of a corporation that 4527 merges into a general partnership that is not a limited liability partnership if the shareholders 4528 become general partners of the surviving general partnership. If such a shareholder were to 4529 exercise dissenters rights, however, the shareholder would not become subject to owner 4530 liability because one effect of exercising dissenters rights is that the shareholder would not 4531

ACTIVE/ 6744855.14 103

become a general partner in the surviving association; and, in that case, the consent of that 4532 shareholder would not be required under subsection (a)(2). 4533 4534

The consent of an interest holder required by subsection (a)(2)(ii) may be given by (i) 4535 signing or agreeing generally to the terms of organic rules that include the required provision 4536 permitting less than unanimous approval of a merger in which interest holders become subject 4537 to interest holder liability, (ii) voting for or consenting to an amendment to add such a 4538 provision, or (iii) becoming an interest holder after the provision has been adopted. 4539 4540

Where a foreign association is a party to a merger under this subchapter, subsection (b) 4541 defers to the law of the foreign jurisdiction for the requirements for approval of the merger by 4542 the foreign association. That law will include the organic law of the foreign association and 4543 other applicable laws. The law of the foreign jurisdiction will also control the application of 4544 any special approval requirements found in the organic rules of the foreign association. 4545

4546 The effect of subsection (c) is similar to that of subsection (b). When a domestic 4547

banking institution that is not a domestic entity is a party to a merger under this subchapter, 4548 the laws applicable to it as a banking institution will control how it must approve the merger. 4549 4550

The following terms used in this section are defined in 15 Pa.C.S. § 312: 4551 4552 “interest holder liability” 4553 “merger” 4554 “merging association” 4555 “plan” 4556 4557 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4558 4559 “business corporation” 4560 “dissenters rights” 4561 “domestic banking institution” 4562 “domestic entity” 4563 “foreign association” 4564 “interest holder” 4565 “jurisdiction of formation” 4566 “obligations” 4567 “organic law” 4568 “organic rules” 4569 “record form” 4570

4571 4572 § 334. Amendment or abandonment of plan of merger. 4573 4574

(a) General rule.—A plan of merger may be amended or abandoned only with the 4575 consent of each party to the plan, except as otherwise provided in the plan. 4576

4577

ACTIVE/ 6744855.14 104

(b) Approval of amendment. – A domestic entity that is a merging association may 4578 approve an amendment of a plan of merger in one of the following ways: 4579 4580

(1) In the same manner as the plan was approved, if the plan does not provide for 4581 the manner in which it may be amended. 4582

4583 (2) By its governors or interest holders in the manner provided in the plan, but 4584

an interest holder that was entitled to vote on or consent to approval of the plan is 4585 entitled to vote on or consent to any amendment of the plan that will change any of the 4586 following: 4587

4588 (i) The amount or kind of interests, securities, obligations, money, other 4589

property, rights to acquire interests or securities, or any combination of the 4590 foregoing, to be received by the interest holders of any party to the plan. 4591

4592 (ii) The public organic record, if any, or private organic rules of the 4593

surviving association that will be in effect immediately after the merger becomes 4594 effective, except for changes that do not require approval of the interest holders of 4595 the surviving association under its organic law or organic rules. 4596

4597 (iii) Any other terms or conditions of the plan, if the change would: 4598 4599

(A) increase the interest holder liability to which the interest holder 4600 will be subject; or 4601

4602 (B) otherwise adversely affect the interest holder in any material 4603

respect. 4604 4605

(c) Approval of abandonment.—After a plan of merger has been approved by a 4606 domestic entity that is a merging association and before a statement of merger becomes 4607 effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a 4608 domestic entity that is a merging association may abandon the plan in the same manner as the 4609 plan was approved. 4610 4611

(d) Statement of abandonment.—If a plan of merger is abandoned after a statement of 4612 merger has been delivered to the department for filing and before the statement becomes 4613 effective, a statement of abandonment under section 141 (relating to abandondment of filing 4614 before effectiveness), signed by a party to the plan, must be delivered to the department for 4615 filing before the statement of merger becomes effective. 4616 4617 Committee Comment (2014): 4618 4619

This section was added in 2014 by the Association Transactions Act and is patterned 4620 after Model Entity Transactions Act (2007) (Last Amended 2013) § 204. 4621

4622 An interest holder of a domestic entity that is a merging association is entitled to vote 4623

under subsection (b)(2)(iii) on any amendment of the plan of merger that will increase the 4624

ACTIVE/ 6744855.14 105

interest holder liability to which the interest holder will be subject, but the interest holder is 4625 only entitled to vote by that provision on other amendments that will adversely affect the 4626 interest holder in a material respect. 4627

4628 Rules on what constitutes delivery of documents to and by the Department of State are 4629

set forth in 15 Pa.C.S. § 113. 4630 4631 The following terms used in this section are defined in 15 Pa.C.S. § 312: 4632 4633 “interest holder liability” 4634 “merger” 4635 “merging association” 4636 “plan” 4637 “surviving association” 4638 4639 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4640 4641 “department” 4642 “domestic entity” 4643 “governor” 4644 “interest holder” 4645 “interests” 4646 “obligations” 4647 “private organic rules” 4648 “property” 4649 “public organic record” 4650

4651 4652 § 335. Statement of merger; effectiveness. 4653 4654

(a) General rule.—A statement of merger shall be signed by each merging association 4655 and delivered to the department for filing along with the certificates, if any, required by 4656 section 139 (relating to tax clearance of certain fundamental transactions). 4657 4658

(b) Contents.—A statement of merger shall contain all of the following: 4659 4660

(1) With respect to each merging association that is not the surviving 4661 association: 4662

4663 (i) its name; 4664 4665 (ii) its jurisdiction of formation; 4666 4667 (iii) its type; 4668 4669

ACTIVE/ 6744855.14 106

(iv) if it is a domestic filing association, domestic limited liability 4670 partnership or registered foreign association, the address of its registered office, 4671 including street and number, if any, in this Commonwealth, subject to section 109 4672 (relating to name of commercial registered office provider in lieu of registered 4673 address); 4674

4675 (v) if it is a domestic association that is not a domestic filing association or 4676

limited liability partnership, the address, including street and number, if any, of its 4677 principal office; and 4678

4679 (vi) if it is a nonregistered foreign association, the address, including street 4680

and number, if any, of: 4681 4682

(A) its registered or similar office, if any, required to be maintained 4683 by the law of its jurisdiction of formation; or 4684

4685 (B) it it is not required to maintain a registered or similar office, its 4686

principal office. 4687 4688

(2) With respect to the surviving association: 4689 4690

(i) its name; 4691 4692 (ii) its jurisdiction of formation; 4693 4694 (iii) its type; 4695 4696 (iv) if it is a domestic filing association, domestic limited liability 4697

partnership or registered foreign association, the address of its registered office, 4698 including street and number, if any, in this Commonwealth, subject to section 109; 4699

4700 (v) if it is a domestic association that is not a domestic filing association or 4701

limited liability partnership, the address, including street and number, if any, of its 4702 principal office; and 4703

4704 (vi) if it is a nonregistered foreign association, the address, including street 4705

and number, if any, of: 4706 4707

(A) its registered or similar office, if any, required to be maintained 4708 by the law of its jurisdiction of formation; or 4709

4710 (B) it it is not required to maintain a registered or similar office, its 4711

principal office. 4712 4713

(3) If the statement of merger is not to be effective on filing, the later date or 4714 date and time on which it will become effective. 4715

ACTIVE/ 6744855.14 107

4716 (4) A statement that the merger was approved in the following ways as 4717

applicable: 4718 4719

(i) By a domestic entity that is a merging association, in accordance with 4720 this chapter. 4721

4722 (ii) By a foreign merging association, in accordance with the law of its 4723

jurisdiction of formation. 4724 4725 (iii) By a domestic merging association that is not a domestic entity, in the 4726

same manner required by its organic law for approving a merger that requires the 4727 approval of its interest holders. 4728

4729 (5) If the surviving association exists before the merger and is a domestic filing 4730

entity, any amendment to its public organic record approved as part of the plan of 4731 merger. 4732

4733 (6) If the surviving association is created by the merger and is a domestic filing 4734

entity, its public organic record, as an attachment. The public organic record does not 4735 need to state the name or address of an incorporator of a corporation, organizer of a 4736 limited liability company or similar person with respect to any other type of entity. 4737

4738 (7) If the surviving association is created by the merger and is a nonregistered 4739

foreign association, one of the following: 4740 4741

(i) The street and mailing addresses of its registered agent and registered 4742 office in its jurisdiction of formation if it is a filing entity. 4743

4744 (ii) The street and mailing address of its principal office if it is not a filing 4745

entity. 4746 4747

(8) If the surviving association is created by the merger and is a domestic limited 4748 liability partnership or a domestic limited liability limited partnership that is not using 4749 the alternative procedure in section 8201(f) (relating to scope), its statement of 4750 registration, as an attachment. 4751

4752 (9) If the surviving association is created by the merger and is a domestic 4753

electing partnership, its statement of election as an attachment. 4754 4755

(c) Other provisions.—In addition to the requirements of subsection (b), a statement 4756 of merger may contain any other provision not prohibited by law. 4757 4758

(d) Domestic surviving association.—If the surviving association is a domestic entity, 4759 its public organic record, if any, shall satisfy the requirements of the law of this 4760 Commonwealth, except that the public organic record does not need to be signed and may 4761

ACTIVE/ 6744855.14 108

omit any provision that is not required to be included in a restatement of the public organic 4762 record. 4763 4764

(e) Filing of plan.—A plan of merger that is signed by all of the merging associations 4765 and meets all of the requirements of subsection (b) may be delivered to the department for 4766 filing instead of a statement of merger and on filing has the same effect. If a plan of merger is 4767 filed as provided in this subsection, references in this chapter to a statement of merger refer to 4768 the plan of merger filed under this subsection. 4769 4770

(f) Effectiveness of statement of merger.—A statement of merger is effective as 4771 provided in section 136(c) (relating to processing of documents by Department of State). 4772

4773 (g) Effectiveness of merger. – If the surviving association is a domestic association, 4774

the merger is effective when the statement of merger is effective. If the surviving association 4775 is a foreign association, the merger is effective on the later of: 4776

4777 (1) the date and time provided by the organic law of the surviving association; or 4778 4779 (2) when the statement of merger is effective. 4780

4781 (h) Cross references.—See sections 134 (relating to docketing statement), 135 4782

(relating to requirements to be met by filed documents) and 316 (relating to contents of plan). 4783 4784 Committee Comment (2014): 4785 4786

This section was added in 2014 by the Association Transactions Act and is patterned 4787 after Model Entity Transactions Act (2007) (Last Amended 2013) § 205. 4788

4789 The filing of a statement of merger makes the transaction a matter of public record. 4790

4791 The name of a nonqualified foreign association that is a merging or surviving 4792

association does not need to satisfy the requirements of 15 Pa.C.S. Ch. 2, but if the surviving 4793 association is a nonqualified foreign association its name will need to satisfy the requirements 4794 of Chapter 2 at such time as it may register to do business in Pennsylvania. 4795 4796

The statement in subsection (b)(4) that the plan of merger was approved by each 4797 domestic entity in accordance with this chapter necessarily presupposes that the plan was 4798 approved in accordance with any valid, special requirements in the organic rules of each 4799 domestic entity. 4800 4801

The public organic record of a domestic surviving entity created by the merger that is 4802 attached to the statement of merger becomes the original, officially filed text of the public 4803 organic record of the surviving association when the statement of merger takes effect. It is 4804 not necessary, or appropriate, to make any other filing to create the surviving association. 4805 4806

ACTIVE/ 6744855.14 109

Similarly, if the surviving association is a domestic limited liability partnership or 4807 electing partnership its statement of registration or statement of election attached to the 4808 statement of merger does not need to be filed separately. 4809 4810

Organic laws typically require an initial filing that creates an entity to be signed by the 4811 person serving as the incorporator or other organizer. Subsection (d), however, provides that 4812 the public organic record of the surviving association does not need to be signed since it is 4813 itself attached to a signed document. 4814 4815

Subsection (d) also permits the public organic record of the surviving association to 4816 omit any provision that is not required to be included in a restatement of the public organic 4817 document. Pursuant to this provision, for example, the public organic record of a domestic 4818 business corporation created as the surviving association in a merger would not need to state 4819 the name and address of each incorporator even though that information would be required by 4820 15 Pa.C.S. § 1306(a)(5) if the corporation were being incorporated outside the context of the 4821 merger. 4822 4823

Subsection (e) permits a plan of merger that contains all the information required in the 4824 statement of merger to be used as the document delivered to the Department of State for filing 4825 instead of the statement of merger. The plan must be in record form and signed by each 4826 merging party. 4827 4828

The effective time of the statement is the effective time of its filing, unless otherwise 4829 specified. A statement may specify a delayed effective time and date, and if it does so the 4830 statement becomes effective at the time and date specified. 4831 4832

A merger involving a regulated entity may require approval of a government agency 4833 before it can become effective. See 15 Pa.C.S. § 103. 4834 4835

Rules on what constitutes delivery of documents to and by the Department of State are 4836 set forth in 15 Pa.C.S. § 113. 4837

4838 The following terms used in this section are defined in 15 Pa.C.S. § 312: 4839 4840 “merger” 4841 “merging association” 4842 “plan” 4843 “surviving association” 4844 4845 The following terms used in this section are defined in 15 Pa.C.S. § 102: 4846 4847 “department” 4848 “domestic association” 4849 “domestic entity” 4850 “domestic filing association” 4851 “domestic filing entity” 4852

ACTIVE/ 6744855.14 110

“electing partnership” 4853 “interest holder” 4854 “jurisdiction of formation” 4855 “limited liability limited partnership” 4856 “limited liability partnership” 4857 “nonregistered foreign association” 4858 “organic law” 4859 “principal office” 4860 “public organic record” 4861 “registered foreign association” 4862 “sign” 4863 “type” 4864

4865 4866 § 336. Effect of merger. 4867 4868

(a) General rule.—When a merger under this subchapter becomes effective, all of the 4869 following apply: 4870 4871

(1) The surviving association continues or comes into existence. 4872 4873

(2) Each merging association that is not the surviving association ceases to exist. 4874 4875

(3) All property of each merging association vests in the surviving association 4876 without reversion or impairment, and the merger shall not constitute a transfer of any of 4877 that property. 4878

4879 (4) All debts, obligations and other liabilities of each merging association are 4880

debts, obligations and other liabilities of the surviving association. 4881 4882

(5) Except as otherwise provided by law, all the rights, privileges, immunities 4883 and powers of each merging association vest in the surviving association. 4884

4885 (6) If the surviving association exists before the merger, all of the following 4886

apply: 4887 4888

(i) All of its property continues to be vested in it without transfer, 4889 reversion or impairment. 4890

4891 (ii) It remains subject to all its debts, obligations and other liabilities. 4892

4893 (iii) All its rights, privileges, immunities and powers continue to be vested 4894

without change in it. 4895 4896

(iv) Its public organic record, if any, is amended to the extent provided in 4897 the statement of merger. 4898

ACTIVE/ 6744855.14 111

4899 (v) Its private organic rules that are to be in record form, if any, are 4900

amended to the extent provided in the plan of merger. 4901 4902

(7) Liens of the property of the merging association shall not be impaired by the 4903 merger. 4904

4905 (8) A claim existing or an action or a proceeding pending by or against any of 4906

the merging associations may be prosecuted to judgment as if the merger had not taken 4907 place, or the surviving association may be proceeded against or substituted in place of 4908 the appropriate merging association. 4909

4910 (9) If the surviving association is created by the merger, its private organic rules 4911

are effective and the following apply: 4912 4913

(i) If it is a filing entity, its public organic record is effective. 4914 4915

(ii) If it is a limited liability partnership or a limited liability limited 4916 partnership that is not using the alternative procedure in section 8201(f) (relating 4917 to scope), its statement of registration is effective. 4918

4919 (iii) If it is an electing partnership, its statement of election is effective. 4920

4921 (10) The interests in each merging association that are to be converted or canceled 4922

as provided in the plan of merger are converted or canceled, and the interest holders of 4923 those interests are entitled only to the rights provided to them under the plan and to any 4924 dissenters rights they have pursuant to section 317 (relating to contractual dissenters 4925 rights in entity transactions) or section 333(d) (relating to approval of merger). 4926

4927 (b) No dissolution rights.—Except as provided in the organic law or organic rules of a 4928

merging association, a merger under this subchapter does not give rise to any rights that an 4929 interest holder, governor or third party would have on a dissolution, liquidation or winding up 4930 of the merging association. 4931 4932

(c) New interest holder liability.—When a merger under this subchapter becomes 4933 effective, a person that becomes subject to interest holder liability with respect to an 4934 association as a result of the merger has interest holder liability only to the extent provided by 4935 the organic law of that association and only for those debts, obligations and other liabilities 4936 that arise after the merger becomes effective. 4937 4938

(d) Prior interest holder liability.—When a merger under this subchapter becomes 4939 effective, the interest holder liability of a person that ceases to hold an interest in a domestic 4940 entity that is a merging association with respect to which the person had interest holder 4941 liability shall be as follows: 4942 4943

ACTIVE/ 6744855.14 112

(1) The merger does not discharge any interest holder liability under the organic 4944 law of the domestic entity to the extent the interest holder liability arose before the 4945 merger became effective. 4946

4947 (2) The person does not have interest holder liability under the organic law of 4948

the domestic entity for any debt, obligation or other liability that arises after the merger 4949 becomes effective. 4950

4951 (3) The organic law of the domestic entity continues to apply to the release, 4952

collection or discharge of any interest holder liability preserved under paragraph (1) as if 4953 the merger had not occurred. 4954

4955 (4) The person has whatever rights of contribution from any other person as are 4956

provided by law other than this chapter or the organic rules of the domestic entity with 4957 respect to any interest holder liability preserved under paragraph (1) as if the merger had 4958 not occurred. 4959

4960 (e) Foreign surviving association.—When a merger under this subchapter becomes 4961

effective, a foreign association that is the surviving association may be served with process in 4962 this Commonwealth for the collection and enforcement of any debts, obligations or other 4963 liabilities of a domestic entity that is a merging association in accordance with applicable law. 4964 4965

(f) Registration of foreign association.—When a merger under this subchapter 4966 becomes effective, the registration to do business in this Commonwealth of a registered 4967 foreign association that is a merging association and is not the surviving association is 4968 canceled. 4969 4970

(g) Taxes.—Any taxes, interest, penalties and public accounts of the Commonwealth 4971 claimed against any of the merging associations that are settled, assessed or determined prior 4972 to or after the merger shall be the liability of the surviving association and, together with 4973 interest thereon, shall be a lien against the franchises and property of the surviving 4974 association. 4975 4976 Committee Comment (2014): 4977 4978

This section was added in 2014 by the Association Transactions Act and is patterned 4979 after Model Entity Transactions Act (2007) (Last Amended 2013) § 206. Subsection (g) is a 4980 generalization of former 15 Pa.C.S. § 1929(c). 4981

4982 Subsection (a) states the general understanding that in a merger the property and 4983

liabilities of the merging associations automatically vest in the surviving association. The 4984 surviving association becomes the owner of all real and personal property of the merged 4985 associations and is subject to all debts, obligations, and liabilities of the merging associations. 4986 A merger does not constitute a transfer, assignment, or conveyance of any property held by 4987 the merging associations prior to the merger. A merger also does not give rise to a claim that 4988 a contract with a merging association is no longer in effect on the grounds of nonassignability, 4989

ACTIVE/ 6744855.14 113

unless the contract specifically provides that it does not survive a merger. The contract rights 4990 that are vested in the surviving association include the right to enforce subscription 4991 agreements for interests and obligations to make capital contributions entered into or incurred 4992 before the merger. 4993 4994

Subsection (a) is intended to confirm the holding in Sante Fe Energy Resources, Inc. v. 4995 Manners, 635 A.2d 648 (Pa. Super. 1993), that the surviving association in a merger simply 4996 succeeds to the assets of each merging association and those assets are neither assigned nor 4997 transferred to the surviving association. This means, for example, that if a merging 4998 association is a party to a contract that requires prior consent to its assignment or transfer, the 4999 surviving association will be bound by the contract and will be entitled to its benefits without 5000 the need to seek consent from the other party to the contract. If such a contract were also 5001 specifically to provide that consent is required before the contract will be binding on a 5002 successor to a party to the contract, the intention of subsection (a) is that the surviving 5003 association will nonetheless be a party to the contract; however in that situation the merger 5004 will constitute a breach of the contract for which the merging association (and thus the 5005 surviving association as well) may be liable. 5006 5007

The rule under subsection (a) that the surviving association is the successor to each 5008 merging association, with the result described in the preceding paragraph, applies to a 5009 merging association whether or not the merging association survives the merger. Thus the 5010 effect of a forward triangular merger is the same as that of a reverse triangular merger in this 5011 regard. 5012

5013 See 15 Pa.C.S. § 314(c) which modifies the provisions of this section with respect to the 5014

effects of a merger to the extent any of the parties holds property committed to charitable 5015 purposes. 5016 5017

All pending proceedings involving either the surviving association or a party whose 5018 separate existence ceased as a result of the merger are continued. Under subsection (a)(8), the 5019 name of the surviving association may be, but need not be, substituted in any pending 5020 proceeding for the name of a party to the merger whose separate existence ceased as a result 5021 of the merger. The substitution may be made whether the survivor is a complainant or a 5022 respondent, and may be made at the instance of either the survivor or an opposing party. Such 5023 a substitution has no substantive effect, because whether or not the survivor’s name is 5024 substituted, the survivor succeeds to the claims, and is subject to the liabilities, of any party to 5025 the merger whose separate existence ceased as a result of the merger. 5026 5027

The private organic rules of an unincorporated entity usually may be either oral or 5028 written. The plan of merger is not required to set forth amendments to oral provisions of the 5029 private organic rules of the surviving association if it exists before the merger, and thus 5030 subsection (a)(6)(v) is limited in scope just to amendments to the private organic rules that are 5031 to be in record form, if any. 5032 5033

Subsections (c) and (d) set forth rules for two circumstances that typically do not exist in 5034 a merger where all the entities involved are of the same type. Subsection (c) deals with the 5035

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situation where an interest holder that does not have interest holder liability with respect to an 5036 association before the merger has interest holder liability after the merger. An example would 5037 be a corporate shareholder who agrees to be the general partner in a general partnership that is 5038 the surviving association in a merger between a corporation and a general partnership that is 5039 not a limited liability partnership. Subsection (d) deals with the situation where an interest 5040 holder has interest holder liability with respect to a merging association before the merger but 5041 ceases to have any interest holder liability after the merger is effective. An example would be 5042 a general partner in a general partnership that merges into a corporation. 5043 5044

When an obligation arises will be determined by other applicable law. The concept of 5045 an “obligation” is defined very expansively in 15 Pa.C.S. § 102. The effects of subsections 5046 (c) and (d) will depend to a certain extent on how a contractual liability is worded. For 5047 example, a lease that provides that the entire rent is due when the lease is signed, but provides 5048 that rent may be paid in future installments, will be treated differently from a lease that does 5049 not provide that the entire rent is earned upon signing. 5050 5051

Under 15 Pa.C.S. § 333(a)(2), a merger cannot have the effect of making an interest 5052 holder of a domestic entity that is a party to the plan of merger subject to interest holder 5053 liability for the obligations or liabilities of any other person or association unless the interest 5054 holder has executed a separate consent to become subject to such liability or previously 5055 agreed to the effectuation of a transaction having that effect without the interest holder’s 5056 consent. 5057

5058 The proceedings covered by subsection (e) include a proceeding to enforce the rights of 5059

any interest holders of each domestic entity that is a party to the plan of merger who are 5060 entitled to and exercise dissenters rights. One of the liabilities that a foreign surviving 5061 association succeeds to is the obligation of a merging association to pay the amount, if any, to 5062 which its interest holders that assert dissenters rights are entitled. 5063 5064

The following terms used in this section are defined in 15 Pa.C.S. § 312: 5065 5066 “interest holder liability” 5067 “merger” 5068 “merging association” 5069 “plan” 5070 “surviving association” 5071 5072 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5073 5074 “association” 5075 “dissenters rights” 5076 “domestic entity” 5077 “electing partnership” 5078 “filing entity” 5079 “foreign association” 5080 “governor” 5081

ACTIVE/ 6744855.14 115

“interest holder” 5082 “interests” 5083 “limited liability partnership” 5084 “limited liability limited partnership” 5085 “obligations” 5086 “organic law” 5087 “organic rules” 5088 “private organic rules” 5089 “property” 5090 “public organic record” 5091 “record form” 5092 “registered foreign association” 5093 “transfer” 5094

5095 5096

Subchapter D 5097 Interest Exchange 5098

5099 Section 5100 341. Interest exchange authorized. 5101 342. Plan of interest exchange. 5102 343. Approval of interest exchange. 5103 344. Amendment or abandonment of plan of interest exchange. 5104 345. Statement of interest exchange; effectiveness. 5105 346. Effect of interest exchange. 5106 5107 § 341. Interest exchange authorized. 5108 5109

(a) General rule.—Except as provided in section 318 (relating to excluded entities and 5110 transactions) or this section, by complying with this subchapter: 5111 5112

(1) A domestic or foreign association may acquire all of one or more classes or 5113 series of interests of a domestic entity in exchange for interests, securities, obligations, 5114 money, other property, rights to acquire interests or securities or any combination of the 5115 foregoing. 5116

5117 (2) A domestic entity may acquire all of one or more classes or series of interests 5118

of a foreign association in exchange for interests, securities, obligations, money, other 5119 property, rights to acquire interests or securities, or any combination of the foregoing. 5120

5121 (b) Foreign associations.— By complying with the applicable provisions of this 5122

subchapter: 5123 5124

(1) A foreign association may be the acquiring association in an interest 5125 exchange under this subchapter regardless of whether the law of its jurisdiction of 5126 formation authorizes an interest exchange. 5127

ACTIVE/ 6744855.14 116

5128 (2) A foreign association may be the acquired association in an interest exchange 5129

under this subchapter only if the interest exchange is authorized by the law of its 5130 jurisdiction of formation. 5131

5132 (c) Protected agreements. – If a protected agreement of a domestic entity other than a 5133

business corporation contains a provision that applies to a merger of the entity but does not 5134 refer to an interest exchange, the provision shall apply to an interest exchange in which the 5135 domestic entity is the acquired association as if the interest exchange were a merger until the 5136 provision is amended after July 1, 2015. 5137

5138 (d) Excluded entities. – The following domestic entities shall not be the acquired 5139

association in an interest exchange: 5140 5141

(1) a health maintenance organization; 5142 5143 (2) a hospital plan corporation; or 5144 5145 (3) a professional health service organization. 5146

5147 (e) Transitional provision. – A reference to a share exchange in a provision of the 5148

organic rules of a domestic business corporation which took effect before July 1, 2015, shall 5149 be deemed to include an interest exchange. 5150

5151 (f) Cross reference.— See section 314 (relating to regulatory conditions and required 5152

notices and approvals). 5153 5154 Committee Comment 2014: 5155 5156

1. This section was added in 2014 by the Association Transactions Act and is 5157 patterned after Model Entity Transactions Act (2007) (Last Amended 2013) § 301. 5158

5159 2. An interest exchange is the same type of transaction as the share exchange 5160

previously provided for in former 15 Pa.C.S. § 1931. The effect of an interest exchange is 5161 that: (1) the separate existence of the acquired association is not affected; and (2) the 5162 acquiring association acquires all of the interests of one or more classes or series of the 5163 acquired association. An interest exchange also allows an indirect acquisition through the use 5164 of consideration in the exchange that is not provided by the acquiring association (e.g., 5165 consideration from another or related association). Neither share exchanges nor interest 5166 exchanges are universally recognized in either corporation or unincorporated entity laws. 5167 Where there is no existing interest exchange statutory authority, a triangular merger in which 5168 the acquiring association forms a new subsidiary and the acquired association is then merged 5169 into the new subsidiary can produce the same result. This subchapter allows the interest 5170 exchange to be accomplished directly in a single step, rather than indirectly through the 5171 triangular merger route. 5172 5173

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The “classes or series” referenced in subsection (a) are commonly found in corporation 5174 law. Specific provisions authorizing classes and series are less common in unincorporated 5175 entity law. 5176 5177

3. The acquiring association is not required to acquire all of the interests in the 5178 acquired association. For example, assume that an LLC with three classes of membership 5179 interests enters into an interest exchange with another entity. The acquiring association need 5180 only acquire all of one or more classes of the LLC membership interests. 5181 5182

4. Subsection (b) allows a foreign association to be the acquired association in an 5183 interest exchange with a domestic entity if the interest exchange is authorized by the organic 5184 law of the foreign association. If a foreign association is the acquiring association in an 5185 interest exchange with a domestic entity, the foreign law is not required to authorize the 5186 interest exchange because the foreign association is simply providing the consideration for the 5187 transaction and the transaction does not affect the capital structure of the foreign association. 5188 The foreign law may be relevant to the transaction, however, if it applies to the payment of 5189 the consideration in the transaction. For example, if the foreign association is a business 5190 corporation and the foreign law includes the provision in section 6.21 of the Model Business 5191 Corporation Act that requires shareholder approval of the issuance of more than 20% of a 5192 corporation’s shares, the corporation will need to obtain shareholder approval if it is using 5193 more than 20% of its shares as the consideration in an interest exchange. 5194 5195

5. Subsection (c) deals with rights of parties to protected agreements (defined in 15 5196 Pa.C.S. § 312) when an interest exchange takes place. Because the concept of an interest 5197 exchange is new for associations other than business corporations, a person contracting with 5198 an association or loaning it money who drafted and negotiated special rights relating to the 5199 transaction before the enactment of this subchapter should not be charged with the 5200 consequences of not having dealt with the concept of an interest exchange in the context of 5201 those special rights. Subsection (c) accordingly provides a transitional rule that is intended to 5202 protect such special rights as to third parties. If, for example, a domestic entity is a party to a 5203 contract that provides that the domestic entity cannot participate in a merger without the 5204 consent of the other party to the contract, the requirement to obtain the consent of the other 5205 party will also apply to an interest exchange in which the domestic entity is the acquired 5206 entity. If the entity fails to obtain the consent, the result will be that the other party will have 5207 the same rights it would have had if the domestic entity were to participate in a merger 5208 without the required consent. 5209 5210

The transitional rule in subsection (c) ceases to make sense at such time as the 5211 provisions of the agreement giving rise to the special rights is first amended after the effective 5212 date of this chapter because at that time the provision may be amended to address expressly 5213 an interest exchange. The transitional rule will continue to apply, however, if just a provision 5214 other than the specific provisions giving rise to the special rights is amended. 5215 5216

6. The following terms used in this section are defined in 15 Pa.C.S. § 312: 5217 5218 “acquired association” 5219

ACTIVE/ 6744855.14 118

“acquiring association” 5220 “interest exchange” 5221 “merger” 5222 “protected agreement” 5223 5224 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5225 5226 “business corporation” 5227 “domestic association” 5228 “domestic entity” 5229 “foreign association” 5230 “health maintenance organization” 5231 “hospital plan corporation” 5232 “interests” 5233 “jurisdiction of formation” 5234 “obligations” 5235 “organic rules” 5236 “professional health services organization” 5237 “property” 5238

5239 5240 § 342. Plan of interest exchange. 5241 5242

(a) General rule.—A domestic entity may be the acquired association in an interest 5243 exchange under this chapter by approving a plan of interest exchange. The plan shall be in 5244 record form and contain all of the following: 5245 5246

(1) The name and type of the acquired association. 5247 5248

(2) The name, jurisdiction of formation and type of the acquiring association. 5249 5250

(3) The manner of: 5251 5252

(i) exchanging the interests in the acquired association to be acquired in 5253 the interest exchange into interests, securities, obligations, money, other property, 5254 rights to acquire interests or securities, or any combination of the foregoing; and 5255

5256 (ii) canceling, if desired, some or all other interests in the acquired 5257

association. 5258 5259

(4) Any proposed amendments to: 5260 5261

(i) the public organic record, if any, of the acquired association; and 5262 5263 (ii) the private organic rules of the acquired association that are or are 5264

proposed to be in record form. 5265

ACTIVE/ 6744855.14 119

5266 (5) Provisions, if any, providing special treatment of interests in the acquired 5267

association held by any interest holder or group of interest holders as authorized by, and 5268 subject to, section 329 (relating to special treatment of interest holders). 5269

5270 (6) The other terms and conditions of the interest exchange. 5271

5272 (7) Any other provision required by: 5273 5274

(i) the law of this Commonwealth; or 5275 5276 (ii) the organic rules of the acquired association. 5277

5278 (b) Optional contents.—In addition to the requirements of subsection (a), a plan of 5279

interest exchange may contain any other provision not prohibited by law. 5280 5281 (c) Cross reference.—See section 316(c) (relating to contents of plan). 5282

5283 Committee Comment (2014): 5284 5285

This section was added in 2014 by the Association Transactions Act and is patterned 5286 after Model Entity Transactions Act (2007) (Last Amended 2013) § 302. 5287

5288 This section sets forth the requirements for the plan of interest exchange, which must be 5289

approved by the acquired association in accordance with 15 Pa.C.S. § 343. The content of the 5290 plan of interest exchange is similar to the content of a plan of merger. See 15 Pa.C.S. § 332. 5291 Subsection (a) lists the mandatory provisions that must be in the plan. Subsection (b) 5292 authorizes the plan to contain any other provision the parties wish to include, unless the 5293 provision is prohibited by law. 5294 5295

The following terms used in this section are defined in 15 Pa.C.S. § 312: 5296 5297 “acquired association” 5298 “acquiring association” 5299 “interest exchange” 5300 “plan” 5301 5302 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5303 5304 “domestic entity” 5305 “interest holder” 5306 “interests” 5307 “jurisdiction of formation” 5308 “obligations” 5309 “organic rules” 5310 “private organic rules” 5311

ACTIVE/ 6744855.14 120

“property” 5312 “public organic record” 5313 “record form” 5314 “special treatment” 5315 “type” 5316

5317 5318 § 343. Approval of interest exchange. 5319 5320

(a) Approval by domestic entities.—A plan of interest exchange in which the acquired 5321 association is a domestic entity shall not be effective unless it has been approved in the 5322 following ways: 5323 5324

(1) By the acquired domestic entity in accordance with the applicable provisions 5325 of Subchapter B (relating to approval of entity transactions). 5326

5327 (2) In record form, by each interest holder of the acquired domestic entity that 5328

will have interest holder liability for debts, obligations and other liabilities that arise 5329 after the interest exchange becomes effective, unless, as to an interest holder that does 5330 not approve the plan, both of the following apply: 5331

5332 (i) The organic rules of the entity provide in record form for the approval 5333

of an interest exchange or a merger in which some or all of its interest holders 5334 become subject to interest holder liability by the vote or consent of fewer than all 5335 the interest holders. 5336

5337 (ii) The interest holder voted for or consented in record form to that 5338

provision of the organic rules or became an interest holder after the adoption of 5339 that provision. 5340

5341 (3) Except as provided in the organic rules of the domestic entity, by the 5342

following class votes: 5343 5344

(i) the holders of any class or series of interests of the acquired association 5345 to be exchanged or canceled shall be entitled to vote as a class on the plan; and 5346

5347 (ii) the holders of any class or series of interests of the acquired association 5348

shall be entitled to vote as a class on the plan if the plan effects any change in the 5349 organic rules and those holders would have been entitled to vote as a class if the 5350 change had been made in any other manner. 5351

5352 (b) Approval by foreign associations.—An interest exchange in which the acquired 5353

association is a foreign association is not effective unless it is approved by the foreign 5354 association in accordance with the law of its jurisdiction of formation. 5355 5356

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(c) Acquiring association.—Except as provided in its organic law or organic rules, the 5357 interest holders of the acquiring association are not required to approve the interest exchange. 5358

5359 (d) Dissenters rights.—If a shareholder of a domestic business corporation that is to be 5360

the acquired association in an interest exchange objects to the plan of exchange and complies 5361 with Subchapter D of Chapter 15 (relating to dissenters rights), the shareholder shall be 5362 entitled to dissenters rights to the extent provided in that subchapter. 5363

5364 (e) Cross references. – See sections 317 (relating to contractual dissenters rights in 5365

entity transactions) and 329 (relating to special treatment of interest holders). 5366 5367 Committee Comment (2014): 5368 5369

This section was added in 2014 by the Association Transactions Act and is patterned 5370 after Model Entity Transactions Act (2007) (Last Amended 2013) § 303. 5371

5372 This section sets forth the approval required for an interest exchange. An interest 5373

exchange transaction governed by this subchapter only requires approval by the acquired 5374 association, unless the organic rules of the acquiring association otherwise provide (see 5375 subsection (c)), a situation that rarely exists. 5376 5377

The following terms used in this section are defined in 15 Pa.C.S. § 312: 5378 5379 “acquired association” 5380 “acquiring association” 5381 “interest exchange” 5382 “merger” 5383 “plan” 5384 5385 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5386 5387 “business corporation” 5388 “dissenters rights” 5389 “domestic entity” 5390 “foreign association” 5391 “interest holder” 5392 “interest holder liability” 5393 “interests” 5394 “obligations” 5395 “organic law” 5396 “organic rules” 5397 “record form” 5398

5399 5400 § 344. Amendment or abandonment of plan of interest exchange. 5401 5402

ACTIVE/ 6744855.14 122

(a) General rule. – A plan of interest exchange may be amemded or abandoned only 5403 with the consent of each party to the plan, except as otherwise provided in the plan. 5404

5405 (b) Approval of amendment.—A domestic entity that is the acquired association may 5406

approve an amendment of a plan of interest exchange in one of the following ways: 5407 5408

(1) In the same manner as the plan was approved, if the plan does not provide for 5409 the manner in which it may be amended. 5410

5411 (2) By its governors or interest holders in the manner provided in the plan, but 5412

an interest holder that was entitled to vote on or consent to approval of the plan is 5413 entitled to vote on or consent to any amendment of the plan that will change any of the 5414 following: 5415

5416 (i) The amount or kind of interests, securities, obligations, money, other 5417

property, rights to acquire interests or securities, or any combination of the 5418 foregoing, to be received by any of the interest holders of the entity under the plan. 5419

5420 (ii) The public organic record, if any, or private organic rules of the entity 5421

that will be in effect immediately after the interest exchange becomes effective, 5422 except for changes that do not require approval of the interest holders of the entity 5423 under its organic law or organic rules. 5424

5425 (iii) Any other terms or conditions of the plan, if the change would: 5426 5427

(A) increase the interest holder liability to which the interest holder 5428 will be subject; or 5429

5430 (B) otherwise adversely affect the interest holder in any material 5431

respect. 5432 5433

(c) Approval of abandonment.—After a plan of interest exchange has been approved 5434 by a domestic entity that is the acquired entity and before a statement of interest exchange 5435 becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by 5436 the plan, a domestic entity that is the acquired association may abandon the plan in the same 5437 manner as the plan was approved. 5438 5439

(d) Statement of abandonment.—If a plan of interest exchange is abandoned after a 5440 statement of interest exchange has been delivered to the department for filing and before the 5441 statement becomes effective, a statement of abandonment under section 141 (relating to 5442 abandondment of filing before effectiveness), signed by the acquired association, must be 5443 delivered to the department for filing before the time the statement of interest exchange 5444 becomes effective. 5445 5446 Committee Comment (2014): 5447 5448

ACTIVE/ 6744855.14 123

This section was added in 2014 by the Association Transactions Act and is patterned 5449 after Model Entity Transactions Act (2007) (Last Amended 2013) § 304 It parallels 5450 analogous provisions in this chapter relating to mergers, conversions, and divisions. 5451 5452

Rules on what constitutes delivery of documents to and by the Department of State are 5453 set forth in 15 Pa.C.S. § 113. 5454

5455 The following terms used in this section are defined in 15 Pa.C.S. § 312: 5456 5457 “acquired association” 5458 “interest exchange” 5459 “plan” 5460 5461 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5462 5463 “department” 5464 “domestic entity” 5465 “governor” 5466 “interest holder” 5467 “interest holder liability” 5468 “interests” 5469 “obligations” 5470 “organic law” 5471 “organic rules” 5472 “private organic rules” 5473 “property” 5474 “public organic record” 5475 “sign” 5476

5477 5478 § 345. Statement of interest exchange; effectiveness. 5479 5480

(a) General rule.—If the acquired association is a domestic entity, a statement of 5481 interest exchange shall be signed by that entity and delivered to the department for filing. 5482 5483

(b) Contents.—A statement of interest exchange shall contain all of the following: 5484 5485

(1) With respect to the acquired association: 5486 5487

(i) its name; 5488 5489 (ii) its jurisdiction of formation; 5490 5491 (iii) its type; 5492 5493

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(iv) if it is a domestic filing association or domestic limited liability 5494 partnership, the address of its registered office, including street and number, if any, 5495 in this Commonwealth, subject to section 109 (relating to name of commercial 5496 registered office provider in lieu of registered address); and 5497

5498 (v) if it is a domestic association that is not a domestic filing association or 5499

limited liability partnership, the address, including street and number, if any, of its 5500 principal office. 5501

5502 (2) With respect to the acquiring association: 5503 5504

(i) its name; 5505 5506 (ii) its jurisdiction of formation; 5507 5508 (iii) its type; 5509 5510 (iv) if it is a domestic filing association, domestic limited liability 5511

partnership or registered foreign association, the address of its registered office, 5512 including street and number, if any, in this Commonwealth, subject to section 109; 5513

5514 (v) if it is a domestic association that is not a domestic filing association or 5515

limited liability partnership, the address, including street and number, if any, of its 5516 principal office; and 5517

5518 (vi) if it is a nonregistered foreign association, the address, including street 5519

and number, if any, of: 5520 5521

(A) its registered or similar office, if any, required to be maintained 5522 by the law of its jurisdiction of formation; or 5523

5524 (B) it it is not required to maintain a registered or similar office, its 5525

principal office. 5526 5527

(3) If the statement of interest exchange is not to be effective on filing, the later 5528 date or date and time on which it will become effective. 5529

5530 (4) A statement that the plan of interest exchange was approved by the acquired 5531

association in accordance with this chapter. 5532 5533

(5) Any amendments to the public organic record of the acquired association 5534 approved as part of the plan of interest exchange. 5535

5536 (c) Other provisions.—In addition to the requirements of subsection (b), a statement 5537

of interest exchange may contain any other provision not prohibited by law. 5538 5539

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(d) Filing of plan—A plan of interest exchange that is signed by the domestic entity 5540 that is the acquired association and that meets all of the requirements of subsection (b) may be 5541 delivered to the department for filing instead of a statement of interest exchange and on filing 5542 shall have the same effect. If a plan of interest exchange is delivered to the department for 5543 filing as provided in this subsection, references in this chapter to a statement of interest 5544 exchange shall refer to the plan of interest exchange filed under this subsection. 5545 5546

(e) Effectiveness.—An interest exchange in which the acquired association is a 5547 domestic entity is effective when the statement of interest exchange is effective as provided in 5548 section 136(c) (relating to processing of documents by Department of State). 5549

5550 (f) Cross references.—See sections 134 (relating to docketing statement) and 135 5551

(relating to requirements to be met by filed documents). 5552 5553 Committee Comment (2014): 5554 5555

This section was added in 2014 by the Association Transactions Act and is patterned 5556 after Model Entity Transactions Act (2007) (Last Amended 2013) § 305. 5557

5558 The filing of a statement of interest exchange makes the transaction a matter of public 5559

record. A separate public filing by the acquiring entity is not required. The mandatory 5560 requirements for a statement of interest exchange are set forth in subsection (b). They are 5561 patterned after the requirements for a statement of merger in 15 Pa.C.S. § 335. 5562 5563

An interest exchange involving a regulated entity may require approval of a government 5564 agency before it can become effective. See 15 Pa.C.S. § 103. 5565 5566

Rules on what constitutes delivery of documents to and by the Department of State are 5567 set forth in 15 Pa.C.S. § 113. 5568

5569 The following terms used in this section are defined in 15 Pa.C.S. § 312: 5570 5571 “acquired association” 5572 “acquiring association” 5573 “interest exchange” 5574 5575 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5576 5577 “department” 5578 “domestic association” 5579 “domestic entity” 5580 “domestic filing association” 5581 “jurisdiction of formation” 5582 “limited liability partnership” 5583 “nonregistered foreign association” 5584 “principal office” 5585

ACTIVE/ 6744855.14 126

“public organic record” 5586 “registered foreign association” 5587 “sign” 5588 “type” 5589

5590 5591 § 346. Effect of interest exchange. 5592 5593

(a) General rule.—When an interest exchange in which the acquired association is a 5594 domestic entity becomes effective, all of the following apply: 5595 5596

(1) Interests in the acquired association are exchanged or canceled as provided in 5597 the plan of exchange, and the interest holders of those interests are entitled only to the 5598 rights provided to them under the plan and to any dissenters rights they have pursuant to 5599 section 317 (relating to contractual dissenters rights in entity transactions) or section 5600 343(d) (relating to approval of interest exchange). 5601

5602 (2) The acquiring association becomes the interest holder of the interests in the 5603

acquired association stated in the plan of interest exchange to be acquired by the 5604 acquiring entity. 5605

5606 (3) The public organic record, if any, of the acquired association is amended to 5607

the extent provided in the statement of interest exchange. 5608 5609

(4) The private organic rules of the acquired association that are to be in record 5610 form, if any, are amended to the extent provided in the plan of interest exchange. 5611

5612 (b) No dissolution rights. – Except as provided in the organic rules of the acquired 5613

association, the interest exchange shall not give rise to any rights that an interest holder, 5614 governor or third party would have upon a dissolution, liquidation or winding up of the 5615 acquired association. 5616 5617

(c) New interest holder liability.—When an interest exchange becomes effective, a 5618 person that becomes subject to interest holder liability with respect to an association as a 5619 result of the interest exchange has interest holder liability only to the extent provided by the 5620 organic law of the association and only for those debts, obligations and other liabilities that 5621 arise after the interest exchange becomes effective. 5622 5623

(d) Prior interest holder liability.—When an interest exchange becomes effective, the 5624 interest holder liability of a person that ceases to hold an interest in a domestic acquired 5625 association with respect to which the person had interest holder liability is as follows: 5626 5627

(1) The interest exchange does not discharge any interest holder liability under 5628 the organic law of the domestic acquired association to the extent the interest holder 5629 liability arose before the interest exchange became effective. 5630

5631

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(2) The person does not have interest holder liability under the organic law of 5632 the domestic acquired association for any debt, obligation or other liability that arises 5633 after the interest exchange becomes effective. 5634

5635 (3) The organic law of the domestic acquired association continues to apply to 5636

the release, collection or discharge of any interest holder liability preserved under 5637 paragraph (1) as if the interest exchange had not occurred. 5638

5639 (4) The person has whatever rights of contribution from any other person as are 5640

provided by law other than this title or the organic law or organic rules of the domestic 5641 acquired association with respect to any interest holder liability preserved under 5642 paragraph (1) as if the interest exchange had not occurred. 5643

5644 Committee Comment (2014): 5645 5646

This section was added in 2014 by the Association Transactions Act and is patterned 5647 after Model Entity Transactions Act (2007) (Last Amended 2013) § 306. 5648

5649 In contrast to a merger, an interest exchange does not in and of itself affect the separate 5650

existence of the parties, vest in the acquiring association the property of the acquired 5651 association, or render the acquiring association liable for the liabilities of the acquired 5652 association. Thus, subsection (a) is significantly simpler than 15 Pa.C.S. § 336(a) with 5653 respect to the effects of a merger. 5654 5655

When an interest exchange becomes effective: 5656 5657

(1) the interests of the acquired association are exchanged or canceled as 5658 provided in the plan; 5659

5660 (2) the only rights of the former interest holders of the acquired association 5661

whose interests are affected by the interest exchange are those rights related to the 5662 exchange or cancelation; 5663

5664 (3) the acquiring association becomes the owner of the acquired association’s 5665

interests as provided in the plan; and 5666 5667 (4) the organic rules of the acquired association are amended as provided in the 5668

statement of interest exchange, thus obviating the need for repetitive filings (i.e., a filing 5669 as to the interest exchange and another filing to reflect amendments to the public organic 5670 record of the acquired association). 5671

5672 The following terms used in this section are defined in 15 Pa.C.S. § 312: 5673 5674 “acquired association” 5675 “acquiring association” 5676 “interest exchange” 5677

ACTIVE/ 6744855.14 128

“interest holder liability” 5678 “plan” 5679 5680 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5681 5682 “association” 5683 “dissenters rights” 5684 “domestic entity” 5685 “governor” 5686 “interest holder” 5687 “interests” 5688 “obligations” 5689 “organic law” 5690 “organic rules” 5691 “private organic rules” 5692 “public organic record” 5693 “record form” 5694

5695 5696

Subchapter E 5697 Conversion 5698

5699 Section 5700 351. Conversion authorized. 5701 352. Plan of conversion. 5702 353. Approval of conversion. 5703 354. Amendment or abandonment of plan of conversion. 5704 355. Statement of conversion; effectiveness. 5705 356. Effect of conversion. 5706 5707 § 351. Conversion authorized. 5708 5709

(a) Domestic converting associations.—Except as provided in section 318 (relating to 5710 excluded entities and transactions) or this section, by complying with this chapter: 5711 5712

(1) A domestic entity may become a domestic entity of a different type or a 5713 domestic banking institution. 5714

5715 (2) A domestic banking institution may become a domestic association of a 5716

different type. 5717 5718 (3) A domestic entity may become a foreign association of a different type, if the 5719

conversion is authorized by the law of the foreign jurisdiction. 5720 5721

ACTIVE/ 6744855.14 129

(b) Foreign converting associations.—By complying with the applicable provisions of 5722 this subchapter, a foreign association may become a domestic entity of a different type if the 5723 conversion is authorized by the law of the jurisdiction of formation of the foreign association. 5724 5725

(c) Protected governance agreements.—If a protected governance agreement that is 5726 binding on a domestic entity immediately before the effectiveness of a transaction under this 5727 chapter contains a provision that applies to a merger of the domestic entity but does not refer 5728 to a conversion, the provision shall apply to a conversion of the entity as if the conversion 5729 were a merger until the provision is amended after July 1, 2015. 5730

5731 (d) Exceptions.—This subchapter may not be used to accomplish a transaction that 5732

has the same effect as a transaction under any of the following provisions: 5733 5734

(1) Section 7104 (relating to election of an existing business corporation to 5735 become a cooperative corporation). 5736

5737 (2) Section 7105 (relating to termination of status as a cooperative corporation 5738

for profit). 5739 5740 (3) Section 7106 (relating to election of an existing nonprofit corporation to 5741

become a cooperative corporation). 5742 5743 (4) Section 7107 (relating to termination of nonprofit cooperative corporation 5744

status). 5745 5746

(e) Cross reference.—See section 314 (relating to regulatory conditions and required 5747 notices and approvals). 5748 5749 Committee Comment (2014): 5750 5751

This section was added in 2014 by the Association Transactions Act. Subsections (a) – 5752 (c) are patterned generally after Model Entity Transactions Act (2007) (Last Amended 2013) 5753 § 401. 5754

5755 The procedure in this subchapter permits an association subject to this subchapter to 5756

change to a different type of association. A transaction in which an association simply 5757 changes its jurisdiction of formation, but does not change its type, is a domestication 5758 transaction and is not covered by this subchapter. 5759 5760

Subsection (b) allows a foreign association to effectuate a conversion into a domestic 5761 entity only if the conversion is permitted by the laws of the foreign association’s jurisdiction 5762 of formation. When a foreign association becomes a domestic entity pursuant to this 5763 subchapter, the effect of the conversion for purposes of Pennsylvania law will be as provided 5764 in 15 Pa.C.S. § 356. The procedures by which the conversion is approved, however, will be 5765 determined by the laws of the jurisdiction of formation of the foreign association. 5766 5767

ACTIVE/ 6744855.14 130

Subsection (a)(3) permits a domestic entity to become a foreign association if the 5768 conversion is authorized by the law of the foreign jurisdiction. If this is not the case, it may 5769 be possible to achieve the same result by forming an association of the type desired in the 5770 foreign jurisdiction and then merging the domestic entity into the new foreign association 5771 under Subchapter 3C. 5772 5773

This subchapter does not authorize a transaction of the types provided for in the 5774 following sections of the Business Corporation Law because those sections do not involve a 5775 change in the basic type of entity involved: 5776

5777 section 2104 (relating to election of an existing business corporation to become a 5778

nonstock corporation); 5779 section 2105 (relating to termination of nonstock corporation status); 5780 section 2305 (relating to election of an existing business corporation to become a 5781

statutory close corporation); 5782 section 2307 (relating to voluntary termination of statutory close corporation status 5783

by amendment of articles); 5784 section 2704 (relating to election of an existing business corporation to become a 5785

management corporation); 5786 section 2705 (relating to termination and renewal of status as a management 5787

corporation); 5788 section 2904 (relating to election of an existing business corporation to become a 5789

professional corporation); or 5790 section 2906 (relating to termination of professional corporation status). 5791 5792

Instead, in each of the transactions listed, the entity involved is a business corporation both 5793 before the transaction and after its completion. Similarly, the election or termination of the 5794 status of an entity as a limited liability partnership, limited liability limited partnership, or 5795 electing partnership does not involve a change in the type of entity involved. 5796 5797

Certain types of entities are prohibited from engaging in a conversion under this 5798 subchapter by either 15 Pa.C.S. § 318 or subsection (d). 5799

5800 The following terms used in this section are defined in 15 Pa.C.S. § 312: 5801 5802 “conversion” 5803 “merger” 5804 “protected governance agreement” 5805 5806 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5807 5808 “domestic association” 5809 “domestic banking institution” 5810 “domestic entity” 5811 “foreign association” 5812 “jurisdiction of formation” 5813

ACTIVE/ 6744855.14 131

“type” 5814 5815 5816 § 352. Plan of conversion. 5817 5818

(a) General rule.—A domestic entity or domestic banking institution may be a party to 5819 a conversion by approving a plan of conversion. The plan shall be in record form and contain 5820 all of the following: 5821 5822

(1) The name and type of the converting association. 5823 5824

(2) The name, jurisdiction of formation and type of the converted association. 5825 5826

(3) The manner of: 5827 5828

(i) canceling, if desired, some, but less than all, of the interests in the 5829 converting association; 5830

5831 (ii) converting at least some of the interests in the converting association 5832

into interests in the converted association; and 5833 5834 (iii) converting the interests in the converting association not canceled 5835

under subparagraph (i) or converted under subparagraph (ii) into interests, 5836 securities, obligations, money, other property, rights to acquire interests or 5837 securities or any combination of the foregoing. 5838

5839 (4) The proposed public organic record of the converted association if it will be 5840

a filing entity. 5841 5842

(5) The full text of the private organic rules of the converted association that are 5843 proposed to be in record form. 5844

5845 (6) Provisions, if any, providing special treatment of interests in the converting 5846

association held by any interest holder or group of interest holders as authorized by and 5847 subject to section 329 (relating to special treatment of interest holders). 5848

5849 (7) The other terms and conditions of the conversion. 5850

5851 (8) Any other provision required by: 5852 5853

(i) the law of this Commonwealth; 5854 5855 (ii) the law of the jurisdiction of formation of the converted association if it 5856

is to be a foreign association; or 5857 5858 (iii) the organic rules of the converting association. 5859

ACTIVE/ 6744855.14 132

5860 (b) Optional contents.—In addition to the requirements of subsection (a), a plan of 5861

conversion may contain any other provision not prohibited by law. 5862 5863 (c) Terms of interests. – The ownership, voting and other rights of the interest holders 5864

in the converted association shall be substantially the same as they were in the converting 5865 association except: 5866

5867 (1) as provided in the express terms of the plan of conversion; 5868 5869 (2) as provided in the express terms of the organic rules of the converted 5870

association that are in record form; or 5871 5872 (3) to the extent a difference in those rights is required by a provision of the 5873

organic law of the converted association that cannot be varied in its organic rules. 5874 5875

(d) Cross reference.—See section 316(c) (relating to contents of plan). 5876 5877 Committee Comment (2014): 5878 5879

This section was added in 2014 by the Association Transactions Act. Subsections (a) 5880 and (b) are patterned after Model Entity Transactions Act (2007) (Last Amended 2013) § 402. 5881

5882 This section sets forth the requirements for the plan of conversion which must be 5883

approved by the converting association in accordance with 15 Pa.C.S. § 353. The contents of 5884 a plan of conversion are similar to the contents of plans relating to other forms of transactions 5885 under this chapter. Subsection (a) lists the mandatory provisions that must be in the plan. 5886 Subsection (b) authorizes the plan to contain any other provision the parties wish to include, 5887 unless the provision is prohibited by law. 5888 5889

Subsection (c) confirms that the governance of the converting association and the rights 5890 of its interest holders remain the same after the conversion except as provided in subsection 5891 (c). Consistent with that basic policy, 15 Pa.C.S. § 356(a)(11) confirms that a conversion 5892 does not constitute and shall not be deemed to result in a change of control of the converting 5893 association except as provided in the plan of conversion or organic rules of the converted 5894 association. The manner in which a plan of conversion will usually vary the rights of interest 5895 holders or control of the converting association is by (i) specifying which interest holders will 5896 receive what types of interests in the converted association and which interest holders will not 5897 have a continuing interest in the converted association, or (ii) changing the rights of one or 5898 more classes or series of interests in the converted association. If the converting association 5899 and the converted association each has only one class or series of interests and the plan of 5900 conversion does not provide for special treatment of any of the interest holders of the 5901 converting association, the governance and control of the association will remain with the 5902 same persons who governed and controlled the converting association immediately before the 5903 conversion. 5904

5905

ACTIVE/ 6744855.14 133

The plan of conversion may be used as a substitute for a statement of conversion as 5906 provided in 15 Pa.C.S. § 355(e), so long as it contains all of the information required to be in 5907 the statement of conversion and is delivered to the Department of State for filing after the plan 5908 has been adopted and approved. 5909 5910

The following terms used in this section are defined in 15 Pa.C.S. § 312: 5911 5912 “conversion” 5913 “converted association” 5914 “converting association” 5915 “plan” 5916 5917 The following terms used in this section are defined in 15 Pa.C.S. § 102: 5918 5919 “domestic banking institution” 5920 “domestic entity” 5921 “filing entity” 5922 “foreign association” 5923 “interest holder” 5924 “interests” 5925 “jurisdiction of formation” 5926 “obligations” 5927 “organic law” 5928 “organic rules” 5929 “private organic rules” 5930 “property” 5931 “public organic record” 5932 “record form” 5933 “special treatment” 5934 “type” 5935

5936 5937 § 353. Approval of conversion. 5938 5939

(a) Approval by domestic associations.—A plan of conversion in which the 5940 converting association is a domestic entity or domestic banking institution shall not be 5941 effective unless it has been approved in the following ways: 5942 5943

(1) In the case of a domestic entity, in accordance with the applicable provisions 5944 of Subchapter B (relating to approval of entity transactions). 5945

5946 (2) In the case of a domestic banking institution that is a corporation, by at least: 5947 5948

(i) In the case of a mutual savings bank: 5949 5950

ACTIVE/ 6744855.14 134

(A) two-thirds of the trustees present at a meeting at which the plan is 5951 proposed; and 5952

5953 (B two-thirds of all the trustees at a subsequent meeting held upon 5954

not less than ten days' notice to all the trustees. 5955 5956

(ii) In the case of any other institution: 5957 5958

(A) a majority of the directors; and 5959 5960 (B) the shareholders entitled to cast at least two-thirds of the votes 5961

which all shareholders are entitled to cast thereon, and, if any class of shares 5962 is entitled to vote thereon as a class, the holders of at least two-thirds of the 5963 outstanding shares of such class, at a meeting held upon not less than ten 5964 days' notice to all shareholders. 5965

5966 (3) In record form, by each interest holder, if any, of the converting association 5967

that will have interest holder liability for debts, obligations and other liabilities that arise 5968 after the conversion becomes effective, unless, as to an interest holder that does not 5969 approve the plan, both of the following apply: 5970

5971 (i) The organic rules of the converting association provide in record form 5972

for the approval of a conversion or a merger in which some or all of its interest 5973 holders become subject to interest holder liability by the vote or consent of fewer 5974 than all of the interest holders. 5975

5976 (ii) The interest holder voted for or consented in record form to that 5977

provision of the organic rules or became an interest holder after the adoption of 5978 that provision. 5979

5980 (b) Approval by foreign associations.—A conversion in which the converting 5981

association is a foreign association shall not be effective unless it is approved by the foreign 5982 association in accordance with the law of its jurisdiction of formation. 5983

5984 (c) Dissenters rights.—The following apply with respect to the rights of an interest 5985

holder of the converting association: 5986 5987

(1) A shareholder of a domestic business corporation that is to be a converting 5988 association shall be entitled to dissenters rights if: 5989

5990 (i) the shareholder objects to the plan of conversion and complies with 5991

Subchapter D of Chapter 15 (relating to dissenters rights); and 5992 5993 (ii) the conversion involves a change in the rights of the shareholder 5994

pursuant to section 352(c)(1) or (2) (relating to plan of conversion). 5995 5996

ACTIVE/ 6744855.14 135

(2) A shareholder of a domestic banking institution that is to be a converting 5997 association shall be entitled to the rights provided in section 1222 of the act of 5998 November 30, 1965 (P.L. 847, No. 356), known as the Banking Code of 1965, if: 5999

6000 (i) the shareholder objects to the plan of conversion and complies with 6001

Section 1222 of the Banking Code of 1965; and 6002 6003 (ii) the conversion involves a change in the rights of the shareholder 6004

pursuant to section 352(c)(1) or (2). 6005 6006 (3) See sections 317 (relating to contractual dissenters rights in entity 6007

transactions) and 329 (relating to special treatment of interest holders). 6008 6009 Committee Comment (2014): 6010 6011

This section was added in 2014 by the Association Transactions Act and is patterned 6012 after Model Entity Transactions Act (2007) (Last Amended 2013) § 403. Subsection (c)(2) is 6013 derived from Sections 1222 and 1607 of the act of November 30, 1965 (P.L. 847, No. 356), 6014 known as the Banking Code of 1965, 7 P.S. §§ 1222 and 1607. 6015

6016 In the case of a foreign association that is converting into a Pennsylvania entity, the 6017

required approval is determined by the laws of the foreign association’s jurisdiction of 6018 formation. 6019 6020

The following terms used in this section are defined in 15 Pa.C.S. § 312: 6021 6022 “conversion” 6023 “converting association” 6024 “interest holder liability” 6025 “merger” 6026 “plan” 6027 6028 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6029 6030 “business corporation” 6031 “dissenters rights” 6032 “domestic banking institution” 6033 “domestic entity” 6034 “foreign association” 6035 “interest holder” 6036 “jurisdiction of formation” 6037 “obligations” 6038 “organic rules” 6039 “record form” 6040

6041 6042

ACTIVE/ 6744855.14 136

§ 354. Amendment or abandonment of plan of conversion. 6043 6044

(a) Approval of amendment.—A plan of conversion in which the converting 6045 association is a domestic association may be amended in one of the following ways: 6046 6047

(1) In the same manner as the plan was approved, if the plan does not provide for 6048 the manner in which it may be amended. 6049

6050 (2) By its governors or interest holders in the manner provided in the plan, but 6051

an interest holder that was entitled to vote on or consent to approval of the plan is 6052 entitled to vote on or consent to any amendment of the plan that will change any of the 6053 following: 6054

6055 (i) The amount or kind of interests, securities, obligations, money, other 6056

property, rights to acquire interests or securities, or any combination of the 6057 foregoing, to be received by any of the interest holders of the converting 6058 association under the plan. 6059

6060 (ii) The public organic record, if any, or private organic rules of the 6061

converted association that will be in effect immediately after the conversion 6062 becomes effective, except for changes that do not require approval of the interest 6063 holders of the converted association under its organic law or organic rules. 6064

6065 (iii) Any other terms or conditions of the plan, if the change would: 6066 6067

(A) increase the interest holder liability to which the interest holder 6068 will be subject; or 6069

6070 (B) otherwise adversely affect the interest holder in any material 6071

respect. 6072 6073

(b) Approval of abandonment.—After a plan of conversion has been approved by a 6074 converting association that is a domestic association and before a statement of conversion 6075 becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by 6076 the plan, a domestic converting association may abandon the plan in the same manner as the 6077 plan was approved. 6078 6079

(c) Statement of abandonment.—If a plan of conversion is abandoned after a 6080 statement of conversion has been delivered to the department for filing and before the 6081 statement of conversion becomes effective, a statement of abandonment under section 141 6082 (relating to abandonment of filing before effectiveness), signed by the converting association, 6083 must be delivered to the department for filing before the statement of conversion becomes 6084 effective. 6085 6086 Committee Comment (2014): 6087 6088

ACTIVE/ 6744855.14 137

This section was added in 2014 by the Association Transactions Act and is patterned 6089 after Model Entity Transactions Act (2007) (Last Amended 2013) § 404. It parallels 6090 analogous provisions in Subchapters C (mergers), D (interest exchanges), F (divisions), and G 6091 (domestication). 6092 6093

Rules on what constitutes delivery of documents to and by the Department of State are 6094 set forth in 15 Pa.C.S. § 113. 6095

6096 The following terms used in this section are defined in 15 Pa.C.S. § 312: 6097 6098 “conversion” 6099 “converted association” 6100 “converting association” 6101 “interest holder liability” 6102 “plan” 6103 6104 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6105 6106 “domestic association” 6107 “department” 6108 “governor” 6109 “interest holder” 6110 “interests” 6111 “obligations” 6112 “organic law” 6113 “organic rules” 6114 “private organic rules” 6115 “property” 6116 “public organic record” 6117 “sign” 6118

6119 6120 § 355. Statement of conversion; effectiveness. 6121 6122

(a) General rule.—A statement of conversion shall be signed by the converting 6123 association and delivered to the department for filing along with the certificates, if any, 6124 required by section 139 (relating to tax clearance of certain fundamental transactions). 6125 6126

(b) Contents.—A statement of conversion shall contain all of the following: 6127 6128

(1) With respect to the converting association: 6129 6130

(i) its name; 6131 6132 (ii) its jurisdiction of formation; 6133 6134

ACTIVE/ 6744855.14 138

(iii) its type; 6135 6136 (iv) the date on which it was first created, incorporated, formed or 6137

otherwise came into existence; 6138 6139 (v) if it is a domestic filing association, the statute under which it was first 6140

created, incorporated, formed or otherwise came into existence; 6141 6142 (vi) if it is a domestic filing association, domestic limited liability 6143

partnership or registered foreign association: 6144 6145

(A) the address of its registered office, including street and number, if 6146 any, in this Commonwealth, subject to section 109 (relating to name of 6147 commercial registered office provider in lieu of registered address); or 6148

6149 (B) if it is not required to maintain a registered office in this 6150

Commonwealth, the address, including street and number, if any, of its 6151 principal office; 6152 6153 (vii) if it is a domestic association that is not a domestic filing association or 6154

limited liability partnership, the address, including street and number, if any, of its 6155 principal office; and 6156

6157 (viii) if it is a nonregistered foreign association, the address, including street 6158

and number, if any, of: 6159 6160

(A) its registered or similar office, if any, required to be maintained 6161 by the laws of its jurisdiction of formation; or 6162

6163 (B) it it is not required to maintain a registered or similar office, its 6164

principal office. 6165 6166

(2) With respect to the converted association: 6167 6168

(i) its name; 6169 6170 (ii) its jurisdiction of formation; 6171 6172 (iii) its type; 6173 6174 (iv) if it is a domestic filing association, domestic limited liability 6175

partnership or registered foreign association: 6176 6177

(A) the address of its registered office, including street and number, if 6178 any, in this Commonwealth, subject to section 109; or 6179

6180

ACTIVE/ 6744855.14 139

(B) if it is not required to maintain a registered office in this 6181 Commonwealth, the address, including street and number, if any, of its 6182 principal office; 6183 6184 (v) if it is a domestic association that is not a domestic filing association or 6185

limited liability partnership, the address, including street and number, if any, of its 6186 principal office; and 6187

6188 (vi) if it is a nonregistered foreign association, the address, including street 6189

and number, if any, of: 6190 6191

(A) its registered or similar office, if any, required to be maintained 6192 by the laws of its jurisdiction of formation; or 6193

6194 (B) it it is not required to maintain a registered or similar office, its 6195

principal office. 6196 6197

(3) If the statement of conversion is not to be effective on filing, the later date or 6198 date and time on which it will become effective. 6199

6200 (4) if the converting association is a domestic association, a statement that the 6201

plan of conversion was approved in accordance with this chapter or, if the converting 6202 association is a foreign association, a statement that the conversion was approved by the 6203 foreign association in accordance with the law of its jurisdiction of formation. 6204

6205 (5) If the converted association is a domestic filing entity or domestic banking 6206

institution, its public organic record as an attachment. The public organic record does 6207 not need to state the name or address of an incorporator of a corporation, organizer of a 6208 limited liability company or similar person with respect to any other type of entity. 6209

6210 (6) If the converted association is a domestic limited liability partnership or a 6211

domestic limited liability limited partnership that is not using the alternative procedure 6212 in section 8201(f) (relating to scope), its statement of registration as an attachment. 6213

6214 (7) If the converted association is a domestic electing partnership, its statement 6215

of election as an attachment. 6216 6217 (8) If the converted association is a nonregistered foreign association, one of the 6218

following: 6219 6220

(i) The street and mailing addresses of its registered agent and registered 6221 office in its jurisdiction of formation if it is a filing entity. 6222

6223 (ii) The street and mailing address of its principal office if it is not a filing 6224

entity. 6225 6226

ACTIVE/ 6744855.14 140

(c) Other provisions.—In addition to the requirements of subsection (b), a statement 6227 of conversion may contain any other provision not prohibited by law. 6228 6229

(d) Domestic converted association.—If the converted association is a domestic 6230 association, its public organic record, if any, must satisfy the requirements of the law of this 6231 Commonwealth, except that the public organic record does not need to be signed and may 6232 omit any provision that is not required to be included in a restatement of the public organic 6233 record. 6234 6235

(e) Filing of plan.—A plan of conversion that is signed by the converting association 6236 and meets all the requirements of subsection (b) may be delivered to the department for filing 6237 instead of a statement of conversion and on filing has the same effect. If a plan of conversion 6238 is filed as provided in this subsection, references in this chapter to a statement of conversion 6239 refer to the plan of conversion filed under this subsection. 6240 6241

(f) Effectiveness of statement of conversion.—A statement of conversion is effective 6242 as provided in section 136(c) (relating to processing of documents by Department of State). 6243

6244 (g) Effectiveness of conversion. – If the converted association is a domestic 6245

association, the conversion is effective when the statement of conversion is effective. If the 6246 converted association is a foreign association, the conversion is effective on the later of: 6247

6248 (1) the date and time provided by the organic law of the converted association; 6249

or 6250 6251 (2) when the statement of conversion is effective. 6252

6253 (h) Cross references.—See sections 134 (relating to docketing statement) and 135 6254

(relating to requirements to be met by filed documents). 6255 6256 Committee Comment (2014): 6257 6258

This section was added in 2014 by the Association Transactions Act and is patterned 6259 after Model Entity Transactions Act (2007) (Last Amended 2013) § 405. Subsection 6260 (b)(1)(iv) is patterned after 6 Del. Code § 18-214(c)(1). 6261

6262 The filing of a statement of conversion makes the transaction a matter of public record. 6263

The mandatory requirements for a statement of conversion are set forth in subsection (b) and 6264 are similar to the requirements for a statement of merger in 15 Pa.C.S. § 335. 6265 6266

A plan of conversion can be used as a substitute for the statement of conversion so long 6267 as the plan satisfies the requirements in subsection (e). 6268 6269

A conversion of a regulated entity may require approval of a government agency before 6270 it can become effective. See 15 Pa.C.S. § 103. 6271 6272

ACTIVE/ 6744855.14 141

Rules on what constitutes delivery of documents to and by the Department of State are 6273 set forth in 15 Pa.C.S. § 113. 6274

6275 The following terms used in this section are defined in 15 Pa.C.S. § 312: 6276 6277 “conversion” 6278 “converted association” 6279 “converting association” 6280 6281 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6282 6283 “department” 6284 “domestic association” 6285 “domestic banking institution” 6286 “domestic filing association” 6287 “domestic filing entity” 6288 “electing partnership” 6289 “foreign association” 6290 “jurisdiction of formation” 6291 “limited liability company” 6292 “limited liability partnership” 6293 “limited liabililty limited partnership” 6294 “nonregistered foreign association” 6295 “organic law” 6296 “principal office” 6297 “public organic record” 6298 “registered foreign association” 6299 “sign” 6300 “type” 6301

6302 6303 § 356. Effect of conversion. 6304 6305

(a) General rule.—When a conversion becomes effective, all of the following apply: 6306 6307

(1) The converted association is: 6308 6309

(i) Organized under and subject to the organic law of the converted 6310 association. 6311

6312 (ii) The same association without interruption as the converting 6313

association. 6314 6315 (iii) Deemed to have commenced its existence on the date the converting 6316

association commenced its existence in the jurisdiction in which the converting 6317 association was first created, incorporated, formed or otherwise came into 6318

ACTIVE/ 6744855.14 142

existence, except for purposes of determining how the converted association is 6319 taxed. 6320 6321 (2) All property of the converting association continues to be vested in the 6322

converted association without reversion or impairment, and the conversion shall not 6323 constitute a transfer of any of that property. 6324

6325 (3) All debts, obligations and other liabilities of the converting association 6326

continue as debts, obligations and other liabilities of the converted association. 6327 6328

(4) Except as provided by law, all of the rights, privileges, immunities and 6329 powers of the converting association continue to be vested without change in the 6330 converted association. 6331

6332 (5) Liens on the property of the converting association shall not be impaired by 6333

the conversion. 6334 6335 (6) A claim existing or an action or a proceeding pending by or against the 6336

converting association may be prosecuted to judgment as if the conversion had not taken 6337 place, and the name of the converted association may be substituted for the name of the 6338 converting association in any pending action or proceeding. 6339

6340 (7) If the converted association is a filing association, its public organic record is 6341

effective. 6342 6343

(8) If the converted association is a limited liability partnership or a limited 6344 liability limited partnership that is not using the alternative procedure in section 8201(f) 6345 (relating to scope), its statement of registration is effective. 6346

6347 (9) If the converted association is an electing partnership, its statement of 6348

election is effective. 6349 6350 (10) Any private organic rules of the converted association that are to be in record 6351

form and were approved as part of the plan of conversion are effective. 6352 6353

(11) The interests in the converting association are converted or canceled in 6354 accordance with and as provided in the plan of conversion, and the interest holders of 6355 the converting association are entitled only to the rights provided to them under the plan 6356 and to any dissenters rights they have pursuant to section 317 (relating to contractual 6357 dissenters rights in entity transactions) or section 353(c) (relating to approval of 6358 conversion). 6359

6360 (12) Except as otherwise provided in the plan of conversion or organic rules 6361

pursuant to section 352(c) (relating to plan of conversion), the conversion does not 6362 constitute and shall not be deemed to result in a change of control of the converting 6363

ACTIVE/ 6744855.14 143

association, and the converted association shall remain under the control of the same 6364 persons that controlled the converting association immediately before the conversion. 6365 6366 (b) No other rights.—The conversion does not give rise to any rights: 6367 6368

(1) that a third party would have upon a transfer of assets, merger. dissolution, 6369 liquidation or winding up of the converting association, except as provided in subsection 6370 (a)(11); or 6371

6372 (2) that an interest holder or governor would have upon a dissolution, liquidation 6373

or winding up of the converting association, except as provided in the organic law or 6374 organic rules of the converting association. 6375

6376 (c) New interest holder liability.—When a conversion becomes effective, a person 6377

that becomes subject to interest holder liability with respect to a domestic association as a 6378 result of the conversion has interest holder liability only to the extent provided by the organic 6379 law of the association and only for those debts, obligations and other liabilities that arise after 6380 the conversion becomes effective. 6381 6382

(d) Prior interest holder liability.—When a conversion becomes effective, the interest 6383 holder liability of a person that ceases to hold an interest in a domestic converting association 6384 with respect to which the person had interest holder liability is as follows: 6385 6386

(1) The conversion does not discharge any interest holder liability under the 6387 organic law of the domestic converting association to the extent the interest holder 6388 liability arose before the conversion became effective. 6389

6390 (2) The person does not have interest holder liability under the organic law of 6391

the domestic converting association for any debt, obligation or other liability that arises 6392 after the conversion becomes effective. 6393

6394 (3) The organic law of the domestic converting association continues to apply to 6395

the release, collection or discharge of any interest holder liability preserved under 6396 paragraph (1) as if the conversion had not occurred. 6397

6398 (4) The person has whatever rights of contribution from any other person as are 6399

provided by other law or the organic law or organic rules of the domestic converting 6400 association with respect to any interest holder liability preserved under paragraph (1) as 6401 if the conversion had not occurred. 6402

6403 (e) Foreign converted association.—When a conversion becomes effective, a foreign 6404

association that is the converted association may be served with process in this 6405 Commonwealth for the collection and enforcement of any of its debts, obligations and other 6406 liabilities in accordance with applicable law. 6407 6408

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(f) Association not dissolved.—A conversion does not require a domestic converting 6409 association to liquidate, dissolve or wind up its affairs and does not constitute or cause the 6410 liquidation or dissolution of the association. 6411 6412

(g) Taxes.—Any taxes, interest, penalties and public accounts of the Commonwealth 6413 claimed against the converting association that are settled, assessed or determined prior to or 6414 after the conversion shall be the liability of the converted association and, together with 6415 interest thereon, shall be a lien against the franchises and property of the converted 6416 association. 6417

6418 (h) Cross references. – See sections 416 (relating to withdrawal deemed on certain 6419

transactions) and 417 (relating to required withdrawal on certain transactions). 6420 6421 Committee Comment (2014): 6422 6423

This section was added in 2014 by the Association Transactions Act and is patterned 6424 after Model Entity Transactions Act (2007) (Last Amended 2013) § 406. Subsection 6425 (a)(1)(iii) is patterned after 6 Del. Code § 18-214(d). Subsection (g) is a generalization of 6426 former 15 Pa.C.S. § 1929(c). 6427

6428 A converted association is the same association as it was before the conversion; it is just 6429

of a different legal type. The effects of this are set forth in subsection (a). The converted 6430 association remains the owner of all real and personal property and remains subject to all the 6431 binding agreements and liabilities, actual or contingent, of the converted association. A 6432 conversion is not a conveyance, transfer, or assignment of any property. It does not give rise 6433 to claims of reverter or impairment of title based on a prohibited conveyance or transfer. 6434

6435 The converted association remains a party to all of the contracts to which the converting 6436

association was a party without assignment. If a contract to which the converting association 6437 is a party provides that it is an event of default for a party to the contract to engage in a 6438 conversion; the converted association will nonetheless be a party to the contract but will be in 6439 breach. The contract rights that remain in the converted association include, without 6440 limitation, the right to enforce subscription agreements for interests and obligations to make 6441 capital contributions entered into or incurred before the conversion. 6442

6443 If a contract provides that a change in control of a person is an event of default under the 6444

contract or triggers other remedies or obligations, it will not be an event of default or trigger 6445 those remedies or obligations if the person converts to a different type of association unless 6446 the conversion also involves a change of control under 15 Pa.C.S. § 352(c)(1) or (2). 6447

6448 Consistent with the fact that the converted association is the same association as existed 6449

before the conversion, albeit in a different form, subsection (a)(1)(iii) provides that the 6450 existence of the converted association is deemed to have commenced when the existence of 6451 the converting association commenced. The exception to that rule recognizes that the 6452 converted association may be taxed in a different manner than the converting association was 6453 taxed. The fact that the converted association is deemed to have existed since the converting 6454

ACTIVE/ 6744855.14 145

association was formed does not mean that the tax status of the converting association should 6455 be recharacterized and its tax liabilities recomputed as if the converting association had 6456 existed throughout its life prior to the conversion in the form of the converted association. 6457 6458

When a conversion becomes effective, the internal affairs of the converting association 6459 are no longer governed by its former organic law but instead by the organic law of the 6460 converted association. Although the converted association is considered to have been in 6461 existence without interruption since the beginning of the existence of the converting 6462 association, there is an unavoidable change in the organic law that governs the internal affairs 6463 of the association at the time of the conversion. As a result, filings that may have been made 6464 under the organic law of the converting association, such as the following, will no longer be 6465 effective: a statement of registration as a limited liability partnership under 15 Pa.C.S. § 8201 6466 or a statement of authority under 15 Pa.C.S. § 9125. 6467 6468

When a conversion takes effect, the association continues to exist – simply as a different 6469 type. Subsection (f) thus makes clear that the conversion does not require the association to 6470 wind up its affairs and does not constitute or cause the dissolution of the association. 6471

6472 The term “transfer” is defined in 15 Pa.C.S. § 102 to include an assignment, and thus the 6473

statement in subsection (a)(2) that a conversion does not constitute a transfer means that 6474 property of the converting association continues to be vested after the conversion in the 6475 converted association without assignment. That result is consistent with the established 6476 Pennsylvania policy with respect to mergers that the surviving association in a merger 6477 succeeds to the property of the merging association without assignment or conveyance. See 6478 the Committee Comment to 15 Pa.C.S. § 336 and Sante Fe Energy Resources, Inc. v. 6479 Manners, 635 A.2d 648 (Pa. Super. 1993). 6480

6481 15 Pa.C.S. § 315 confirms that the doctrine of independent legal significance applies to 6482

conversions and that a conversion should not be recharacterized as a merger or other type of 6483 transaction. 6484 6485

The following terms used in this section are defined in 15 Pa.C.S. § 312: 6486 6487 “conversion” 6488 “converted association” 6489 “converting association” 6490 “interest holder liability” 6491 “merger” 6492 6493 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6494 6495 “association” 6496 “dissenters rights” 6497 “electing partnership” 6498 “filing association” 6499 “foreign association” 6500

ACTIVE/ 6744855.14 146

“governor” 6501 “interest holder” 6502 “interests” 6503 “limited liability partnership” 6504 “limited liability limited partnership” 6505 “obligations” 6506 “organic law” 6507 “organic rules” 6508 “private organic rules” 6509 “property” 6510 “public organic record” 6511 “record form” 6512 “transfer” 6513

6514 6515

Subchapter F 6516 Division 6517

6518 Section 6519 361. Division authorized. 6520 362. Plan of division. 6521 363. Approval of division. 6522 364. Division without interest holder approval. 6523 365. Amendment or abandonment of plan of division. 6524 366. Statement of division; effectiveness. 6525 367. Effect of division. 6526 368. Allocation of liabilities in division. 6527 6528 § 361. Division authorized. 6529 6530

(a) Domestic entities.—Except as provided in section 318 (relating to excluded 6531 entities and transactions) or this section, by complying with this subchapter, a domestic entity 6532 may divide into: 6533 6534

(1) the dividing association and one or more new associations that are either 6535 domestic entities or foreign associations; or 6536

6537 (2) two or more new associations that are either domestic entities or foreign 6538

associations. 6539 6540

(b) Foreign associations.— 6541 6542

(1) A foreign association may be created by the division of a domestic entity 6543 only if the division is authorized by the law of the jurisdiction of formation of the 6544 foreign association. 6545

6546

ACTIVE/ 6744855.14 147

(2) If the division is authorized by the law of the jurisdiction of formation of the 6547 foreign association, one or more of the resulting associations created in a division of a 6548 foreign association may be a domestic entity. 6549

6550 (c) Exception. – A domestic banking institution that is a domestic entity may be a 6551

dividing association only if all of the resulting associations are domestic banking institutions. 6552 6553

(d) Cross reference.— See section 314 (relating to regulatory conditions and required 6554 notices and approvals). 6555 6556 Committee Comment (2014): 6557 6558

This section was added in 2014 by the Association Transactions Act and is a 6559 generalization of former 15 Pa.C.S. § 1951. 6560

6561 The division transaction authorized by this subchapter is the reverse of a merger. 6562

Instead of two or more associations being merged into one association, in a division one 6563 existing association is divided into two or more resulting associations. The dividing 6564 association may or may not survive the division, and one or more of the resulting associations 6565 may be foreign associations if the laws of each resulting association’s jurisdiction of 6566 organization permit the division. As part of the division, the property and liabilities of the 6567 dividing association are allocated to the resulting associations as provided in the plan of 6568 division to the extent permitted by this subchapter. 6569

6570 This subchapter does not authorize a dividing association that is a domestic entity and 6571

survives the division to change its jurisdiction of organization as part of the division. That 6572 result may be accomplished, however, by subsequently domesticating the dividing entity in a 6573 new jurisdiction of organization if domestications are authorized by its organic law or by 6574 merging it into another association organized under the law of the foreign jurisdiction. 6575

6576 If the organic law of a foreign association authorizes a division of that association into 6577

one or more resulting associations incorporated or organized under the laws of another state, 6578 subsection (c) permits those resulting associations to be incorporated or organized in 6579 Pennsylvania. 6580

6581 It is not necessary to use this subchapter to accomplish a spin-off or similar transaction. 6582

Those types of transactions may continue to be conducted in the same manner as they were 6583 before this subchapter was enacted. Among other uses of this subchapter are situations in 6584 which this subchapter provides a more effective way to allocate property and liabilities. 6585 6586

The following terms used in this section are defined in 15 Pa.C.S. § 312: 6587 6588 “division” 6589 “dividing association” 6590 “new association” 6591 “resulting association” 6592

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6593 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6594 6595 “association” 6596 “domestic banking institution” 6597 “domestic entity” 6598 “foreign association” 6599 “jurisdiction of formation” 6600

6601 6602 § 362. Plan of division. 6603 6604

(a) General rule.—A domestic entity may become a dividing association under this 6605 chapter by approving a plan of division. The plan shall be in record form and contain all of 6606 the following: 6607

6608 (1) The name and type of the dividing association. 6609

6610 (2) A statement as to whether the dividing association will survive the division. 6611

6612 (3) The name, jurisdiction of formation and type of each new association. 6613

6614 (4) The manner of: 6615

6616 (i) If the dividing association survives the division and it is desired: 6617 6618

(A) Canceling some, but less than all, of the interests in the dividing 6619 association. 6620

6621 (B) Converting some, but less than all, of the interests in the dividing 6622

association into interests, securities, obligations, money, other property, 6623 rights to acquire interests or securities, or any combination of the foregoing. 6624 6625 (ii) If the dividing association does not survive the division, canceling or 6626

converting the interests in the dividing association into interests, securities, 6627 obligations, money, other property, rights to acquire interests or securities, or any 6628 combination of the foregoing. 6629

6630 (iii) Allocating between or among the resulting associations the property of 6631

the dividing association that will not be owned by all of the resulting associations 6632 as tenants in common pursuant to section 367(a)(4) (relating to effect of division) 6633 and those liabilities of the dividing association as to which not all of the resulting 6634 associations will be liable jointly and severally pursuant to section 368(a)(3) 6635 (relating to allocation of liabilities in division). 6636

6637 (iv) Distributing the interests of the new associations. 6638

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6639 (5) For each new association: 6640 6641

(i) its proposed public organic record if it will be a filing association; and 6642 6643 (ii) the full text of its private organic rules that will be in record form. 6644

6645 (6) If the dividing association will survive the division, any proposed 6646

amendments to its public organic record or private organic rules that are or will be in 6647 record form. 6648

6649 (7) Provisions, if any, providing special treatment of interests in the dividing 6650

association held by any interest holder or group of interest holders as authorized by and 6651 subject to section 329 (relating to special treatment of interest holders). 6652

6653 (8) The other terms and conditions of the division. 6654

6655 (9) Any other provision required by: 6656 6657

(i) the law of this Commonwealth; 6658 6659 (ii) the law of the jurisdiction of formation of any of the resulting 6660

associations; or 6661 6662 (iii) the organic rules of the dividing association. 6663

6664 (b) Optional contents.—In addition to the requirements of subsection (a), a plan of 6665

division may contain any other provision not prohibited by law. 6666 6667

(c) Description of property and liabilities.—It shall not be necessary for a plan of 6668 division to list each individual liability or item of property of the dividing association to be 6669 allocated to a resulting association so long as the liabilities and property are described in a 6670 reasonable manner. 6671 6672

(d) Cross reference.— See section 316(c) (relating to contents of plan). 6673 6674 Committee Comment (2014): 6675 6676

This section was added in 2014 by the Association Transactions Act. Subsections (a) 6677 and (b) are a generalization of former 15 Pa.C.S. § 1952(a) and (b). Subsection (c) is a 6678 generalization of former 15 Pa.C.S. § 1957(b)(3). 6679

6680 This section parallels analogous provisions in Subchapters C (mergers), D (interest 6681

exchanges), and E (conversions). Subsection (a)(4)(iii) is different from the other analogous 6682 provisions, however, because in a division some or all of the property and liabilities are 6683

ACTIVE/ 6744855.14 150

allocated between the dividing association and the resulting associations, which does not 6684 occur in the other types of transactions authorized by this chapter. 6685 6686

The following terms used in this section are defined in 15 Pa.C.S. § 312: 6687 6688 “division” 6689 “dividing association” 6690 “new association” 6691 “resulting association” 6692 6693 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6694 6695 “domestic entity” 6696 “filing association” 6697 “interest holder” 6698 “interests” 6699 “jurisdiction of formation” 6700 “obligations” 6701 “organic rules” 6702 “private organic rules” 6703 “property” 6704 “public organic record” 6705 “record form” 6706 “special treatment” 6707 “type” 6708

6709 6710 § 363. Approval of division. 6711 6712

(a) Approval by domestic entities.—Except as provided in section 364 (relating to 6713 division without interest holder approval) or subsection (d), a plan of division in which the 6714 dividing association is a domestic entity is not effective unless it has been approved in both of 6715 the following ways: 6716 6717

(1) The plan is approved by the domestic entity in accordance with the 6718 applicable provisions of Subchapter B (relating to approval of entity transactions). 6719

6720 (2) The plan is approved in record form by each interest holder, if any, of the 6721

domestic entity that will have interest holder liability for debts, obligations and other 6722 liabilities that arise after the division becomes effective, unless, as to an interest holder 6723 that does not approve the plan, both of the following apply: 6724

6725 (i) The organic rules of the domestic entity provide in record form for the 6726

approval of a division in which some or all of its interest holders become subject to 6727 interest holder liability by the vote or consent of fewer than all of the interest 6728 holders. 6729

ACTIVE/ 6744855.14 151

6730 (ii) The interest holder voted for or consented in record form to that 6731

provision of the organic rules or became an interest holder after the adoption of 6732 that provision. 6733

6734 (b) Approval by foreign associations.—A division of a foreign association in which 6735

one or more of the resulting associations is a domestic entity is not effective unless it is 6736 approved by the foreign association in accordance with the law of its jurisdiction of 6737 formation. 6738 6739

(c) Dissenters rights.—If a shareholder of a domestic business corporation that is to be 6740 a dividing association objects to the plan of division and complies with Subchapter D of 6741 Chapter 15 (relating to dissenters rights), the shareholder shall be entitled to dissenters rights 6742 to the extent provided in that subchapter. See sections 317 (relating to contractual dissenters 6743 rights in entity transactions) and 329 (relating to special treatment of interest holders). 6744

6745 (d) Transitional approval requirements.— 6746 6747

(1) If a provision of the organic rules of a dividing association that is a domestic 6748 entity of the type described was adopted before the date indicated and requires for the 6749 proposal or adoption of a plan of merger a specific number or percentage of votes of 6750 governors or interest holders or other special procedures, a plan of division shall not be 6751 proposed or adopted by the governors or interest holders without that number or 6752 percentage of votes or compliance with the other special procedures: 6753

6754 (i) For a dividing association that is a domestic business corporation, 6755

before October 1, 1989. 6756 6757 (ii) For a dividing association that is a general partnership, before July 1, 6758

2015. 6759 6760 (iii) For a dividing association that is a limited partnership, before February 6761

5, 1995. 6762 6763 (iv) For a dividing association that is an unincorporated nonprofit 6764

association, before July 1, 2015. 6765 6766

(2) If a provision of any debt securities, notes or similar evidences of 6767 indebtedness for money borrowed, whether secured or unsecured, indentures or other 6768 contracts that were issued, incurred or executed by a dividing association that is a 6769 domestic entity of the type described before the date indicated, and the provision 6770 requires the consent of the obligee to a merger of the dividing association or treats such 6771 a merger as a default, the provision shall apply to a division of the dividing association 6772 as if it were a merger: 6773

6774

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(i) For a dividing association that is a domestic business corporation, 6775 before August 21, 2001. 6776

6777 (ii) For a dividing association that is a general partnership, before July 1, 6778

2015. 6779 6780 (iii) For a dividing association that is a limited partnership, before July 1, 6781

2015. 6782 6783 (iv) For a dividing association that is an unincorporated nonprofit 6784

association, before July 1, 2015. 6785 6786

(3) When a provision described in paragraph (1) or (2) has been amended after 6787 the applicable date, the provision shall cease to be subject to the respective paragraph 6788 and shall thereafter apply only in accordance with its express terms. 6789

6790 Committee Comment (2014): 6791 6792

This section was added in 2014 by the Association Transactions Act and is a 6793 generalization of former 15 Pa.C.S. § 1952(c). Subsection (d) is derived in part from former 6794 15 Pa.C.S. § 1952(g) and (h) and 8577(f) and (g). 6795

6796 Where a foreign association is the dividing association, subsection (b) defers to the laws 6797

of the foreign association’s jurisdiction of formation for the requirements for approval of the 6798 division by the foreign association. Those laws will include the organic law of the foreign 6799 association and other applicable laws, such as this chapter (or any applicable regulatory law) 6800 if it has been adopted in the foreign jurisdiction. The laws of the foreign jurisdiction will also 6801 control the application of any special approval requirements found in the organic rules of the 6802 foreign association. 6803

6804 Subsection (c) is limited to providing dissenters rights for shareholders of a domestic 6805

business corporation. Dissenters rights have not been available under Pennsylvania law for 6806 interest holders of other types of entities, and the Committee decided that the adoption of 6807 Chapter 3 should not change that long-standing approach. A substitute for dissenters rights, 6808 however, may be available under 15 Pa.C.S. § 8933, which provides for the payment to a 6809 member of a limited liability company of the fair value of the member’s interest upon an 6810 event of dissociation. 6811 6812

The following terms used in this section are defined in 15 Pa.C.S. § 312: 6813 6814 “division” 6815 “dividing association” 6816 “interest holder liability” 6817 “merger” 6818 “plan” 6819 6820

ACTIVE/ 6744855.14 153

The following terms used in this section are defined in 15 Pa.C.S. § 102: 6821 6822 “business corporation” 6823 “dissenters rights” 6824 “domestic entity” 6825 “foreign association” 6826 “general partnership” 6827 “governor” 6828 “interest holder” 6829 “jurisdiction of formation” 6830 “limited partnership” 6831 “obligations” 6832 “organic rules” 6833 “private organic rules” 6834 “public organic record” 6835 “record form” 6836 “unincorporated nonprofit association” 6837 6838 6839

§ 364. Division without interest holder approval. 6840 6841

(a) General rule. – Unless otherwise restricted by its organic rules, a plan of division 6842 of a domestic dividing association shall not require the approval of the interest holders of the 6843 dividing association if: 6844

6845 (1) The plan does not do any of the following: 6846 6847

(i) alter the jurisdiction of formation of the dividing association; 6848 6849 (ii) provide for special treatment; or 6850 6851 (iii) amend in any respect the provisions of the public organic record of the 6852

dividing association, except amendments which may be made without the approval 6853 of the interest holders. 6854

6855 (2) Either: 6856 6857

(i) the dividing association survives the division and all the interests and 6858 other securities and obligations, if any, of all of the new associations are owned 6859 solely by the dividing association; or 6860 6861

(ii) the interests in each new association are distributed as provided in 6862 subsection (b). 6863

6864 (b) Distribution of interests. – The requirements for distributing interests in each new 6865

association referred to in subsection (a)(2)(ii) are as follows: 6866

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6867 (1) if the dividing association is not a limited partnership, the dividing 6868

association has only one class of interests outstanding and the interests and other 6869 securities and obligations, if any, of each new association are distributed pro rata to the 6870 interest holders of the dividing association; or 6871

6872 (2) if the dividing association is a limited partnership: 6873

6874 (i) it has only one class of general partners and one class of limited 6875

partners; 6876 6877 (ii) each new association is a limited partnership; and 6878 6879 (iii) all of the following apply: 6880

6881 (A) the general partner interests in each new association are 6882

distributed pro rata to the general partners of the dividing limited partnership; 6883 6884 (B) the limited partner interests in each new association are 6885

distributed pro rata to the limited partners of the dividing limited partnership; 6886 and 6887

6888 (C) no securities or obligations of any of the new associations are 6889

distributed to any of the interest holders of the dividing limited partnership. 6890 6891 Committee Comment (2014): 6892 6893

This section was added in 2014 by the Association Transactions Act and is a 6894 generalization of former 15 Pa.C.S. § 1953(a). Former 15 Pa.C.S. § 1953(b) is supplied by 15 6895 Pa.C.S. § 313. 6896

6897 The reference in subsection (b)(1) to one “class” is intended to refer to the substance of 6898

the interest rather than its label. For example, where a corporation has two series, one of 6899 which enjoys rights and preferences characteristic of a preferred stock, and the other of which 6900 is a residual security comparable to a common stock, the corporation has two “classes” of 6901 shares outstanding for the purposes of subsection (b)(1). 6902

6903 The following terms used in this section are defined in 15 Pa.C.S. § 312: 6904 6905 “dividing association” 6906 “division” 6907 “new association” 6908 “plan” 6909 6910 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6911 6912

ACTIVE/ 6744855.14 155

“interest” 6913 “interest holder” 6914 “jurisdiction of formation” 6915 “limited partnership” 6916 “obligation” 6917 “public organic record” 6918

6919 6920 § 365. Amendment or abandonment of plan of division. 6921 6922

(a) Approval of amendment.—A plan of division in which the dividing association is 6923 a domestic entity may be amended in one of the following ways: 6924 6925

(1) In the same manner as the plan was approved, if the plan does not provide for 6926 the manner in which it may be amended. 6927

6928 (2) By its governors or interest holders in the manner provided in the plan, but 6929

an interest holder that was entitled to vote on or consent to approval of the plan is 6930 entitled to vote on or consent to any amendment of the plan that will change any of the 6931 following: 6932

6933 (i) The amount or kind of interests, securities, obligations, money, other 6934

property, rights to acquire interests or securities, or any combination of the 6935 foregoing, to be received by any of the interest holders of the dividing association 6936 under the plan. 6937

6938 (ii) The public organic record, if any, or private organic rules of any of the 6939

resulting associations that will be in effect immediately after the division becomes 6940 effective, except for changes that do not require approval of the interest holders of 6941 the resulting association under its organic law or organic rules. 6942

6943 (iii) Any other terms or conditions of the plan, if the change would: 6944 6945

(A) increase the interest holder liability to which the interest holder 6946 will be subject; or 6947

6948 (B) otherwise adversely affect the interest holder in any material 6949

respect. 6950 6951

(b) Approval of abandonment.—After a plan of division has been approved by a 6952 domestic entity that is the dividing association and before a statement of division becomes 6953 effective, the plan may be abandoned as provided in the plan. Unless prohibited by the plan, a 6954 domestic entity that is the dividing association may abandon the plan in the same manner as 6955 the plan was approved. 6956 6957

ACTIVE/ 6744855.14 156

(c) Statement of abandonment.—If a plan of division is abandoned after a statement of 6958 division has been delivered to the department for filing and before the statement becomes 6959 effective, a statement of abandonment under section 141 (relating to abandonment of filing 6960 before effectiveness), signed by the dividing association, must be delivered to the department 6961 for filing before the time the statement of division becomes effective. 6962 6963 Committee Comment (2014): 6964 6965

This section was added in 2014 by the Association Transactions Act. It parallels 6966 analogous provisions in Subchapters C (merger), D (interest exchange), E (conversion), and G 6967 (domestication). 6968 6969

Rules on what constitutes delivery of documents to and by the Department of State are 6970 set forth in 15 Pa.C.S. § 113. 6971

6972 The following terms used in this section are defined in 15 Pa.C.S. § 312: 6973 6974 “division” 6975 “dividing association” 6976 “interest holder liability” 6977 “plan” 6978 “resulting association” 6979 6980 The following terms used in this section are defined in 15 Pa.C.S. § 102: 6981 6982 “department” 6983 “domestic entity” 6984 “governor” 6985 “interest holder” 6986 “interests” 6987 “obligations” 6988 “organic law” 6989 “organic rules” 6990 “private organic rules” 6991 “public organic record” 6992 “sign” 6993

6994 6995 § 366. Statement of division; effectiveness. 6996 6997

(a) General rule.—A statement of division shall be signed by the dividing association 6998 and delivered to the department for filing along with the certificates, if any, required by 6999 section 139 (relating to tax clearance of certain fundamental transactions). 7000 7001

(b) Contents.—A statement of division shall contain all of the following: 7002 7003

ACTIVE/ 6744855.14 157

(1) With respect to the dividing association: 7004 7005

(i) its name; 7006 7007 (ii) its jurisdiction of formation; 7008 7009 (iii) its type; 7010 7011 (iv) if it is a domestic filing association, domestic limited liability 7012

partnership or registered foreign association, the address of its registered office, 7013 including street and number, if any, in this Commonwealth, subject to section 109 7014 (relating to name of commercial registered office provider in lieu of registered 7015 address); 7016

7017 (v) if it is a domestic association that is not a domestic filing association or 7018

limited liability partnership, the address, including street and number, if any, of its 7019 principal office; and 7020

7021 (vi) if it is a nonregistered foreign association, the address, including street 7022

and number, if any, of: 7023 7024

(A) its registered or similar office, if any, required to be maintained 7025 by the law of its jurisdiction of formation; or 7026

7027 (B) it it is not required to maintain a registered or similar office, its 7028

principal office. 7029 7030

(2) A statement as to whether the dividing association will survive the division. 7031 7032 (3) With respect to each resulting association created by the division: 7033 7034

(i) its name; 7035 7036 (ii) its jurisdiction of formation; 7037 7038 (iii) its type; 7039 7040 (iv) if it is a domestic filing association, domestic limited liability 7041

partnership or registered foreign association, the address of its registered office, 7042 including street and number, if any, in this Commonwealth, subject to section 109; 7043

7044 (v) if it is a domestic association that is not a domestic filing association or 7045

limited liability partnership, the address, including street and number, if any, of its 7046 principal office; and 7047

7048

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(vi) if it is a nonregistered foreign association, the address, including street 7049 and number, if any, of: 7050

7051 (A) its registered or similar office, if any, required to be maintained 7052

by the law of its jurisdiction of formation; or 7053 7054 (B) it it is not required to maintain a registered or similar office, its 7055

principal office. 7056 7057

(4) If the statement of division is not to be effective on filing, the later date or 7058 date and time on which it will become effective. 7059

7060 (5) A statement that the division was approved in the following ways: 7061 7062

(i) By a dividing association that is a domestic entity, in accordance with 7063 this chapter. 7064

7065 (ii) By a dividing association that is a foreign association, in accordance 7066

with the law of its jurisdiction of formation. 7067 7068 (6) If the dividing association is a domestic filing entity and survives the 7069

division, any amendment to its public organic record approved as part of the plan of 7070 division. 7071

7072 (7) For each resulting association created by the division that is a domestic 7073

entity, its public organic record, if any, as an attachment. The public organic record 7074 does not need to state the name or address of an incorporator of a corporation, organizer 7075 of a limited liability company or similar person with respect to any other type of entity. 7076

7077 (8) For each new association that is a domestic limited liability partnership or a 7078

domestic limited liability limited partnership that is not using the alternative procedure 7079 in section 8201(f) (relating to scope), its statement of registration as an attachment. 7080

7081 (9) For each new association that is an electing partnership, its statement of 7082

election as an attachment. 7083 7084 (10) The property and liabilities of the dividing association that are to be allocated 7085

to each resulting association, but it shall not be necessary to list in the statement of 7086 division each individual liability or item of property of the dividing association to be 7087 allocated to a resulting association so long as the liabilities and property are described in 7088 a reasonable manner. 7089

7090 (c) Other provisions.—In addition to the requirements of subsection (b), a statement 7091

of division may contain any other provision not prohibited by law. 7092 7093

ACTIVE/ 6744855.14 159

(d) New domestic entity.—If a new association is a domestic entity, its public organic 7094 record, if any, must satisfy the requirements of the law of this Commonwealth, except that it 7095 does not need to be signed and may omit any provision that is not required to be included in a 7096 restatement of the public organic record. 7097 7098

(e) Filing of plan.—A plan of division that is signed by the dividing association and 7099 meets all of the requirements of subsection (b) may be delivered to the department for filing 7100 instead of a statement of division and on filing has the same effect. If a plan of division is 7101 filed as provided in this subsection, references in this chapter to a statement of division refer 7102 to the plan of division filed under this subsection. 7103 7104

(f) Effectiveness of statement of division.—A statement of division is effective as 7105 provided in section 136(c) (relating to processing of documents by Department of State). 7106

7107 (g) Effectiveness of division. – A division takes effect as follows: 7108 7109

(1) If the division is one in which all of the resulting associations are domestic 7110 associations, the division is effective when the statement of division is effective. 7111

7112 (2) If the division is one in which one or more of the resulting associations is a 7113

foreign association, the division is effective on the later of: 7114 7115

(i) the effectiveness of the statement of division; or 7116 7117 (ii) when the division is effective under the law of each of the jurisdictions 7118

of formation of the foreign resulting associations. 7119 7120 (h) Cross references.—See sections 134 (relating to docketing statement) and 135 7121

(relating to requirements to be met by filed documents). 7122 7123 Committee Comment (2014): 7124 7125

This section was added in 2014 by the Association Transactions Act and is a 7126 generalization of former 15 Pa.C.S. §§ 1954, 1955, and 1956. 7127

7128 The filing of a statement of division makes the transaction a matter of public record. 7129

The mandatory requirements for a statement of division are set forth in subsection (b). They 7130 are similar to the requirements for a statement of merger in 15 Pa.C.S. § 335. 7131 7132

A division involving a regulated entity may require approval of a government agency 7133 before it can become effective. See 15 Pa.C.S. § 103. 7134 7135

Rules on what constitutes delivery of documents to and by the Department of State are 7136 set forth in 15 Pa.C.S. § 113. 7137

7138 The following terms used in this section are defined in 15 Pa.C.S. § 312: 7139

ACTIVE/ 6744855.14 160

7140 “division” 7141 “dividing association” 7142 “new association” 7143 “resulting association” 7144 7145 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7146 7147 “department” 7148 “domestic association” 7149 “domestic entity” 7150 “domestic filing association” 7151 “domestic filing entity” 7152 “electing partnership” 7153 “entity” 7154 “foreign association” 7155 “jurisdiction of formation” 7156 “limited liability company” 7157 “limited liability limited partnership” 7158 “limited liability partnership” 7159 “nonregistered foreign association” 7160 “principal office” 7161 “property” 7162 “public organic record” 7163 “registered foreign association” 7164 “sign” 7165 “type” 7166

7167 7168 § 367. Effect of division. 7169 7170

(a) General rule. — When a division becomes effective, all of the following apply: 7171 7172 (1) If the dividing association is to survive the division: 7173 7174

(i) It continues to exist. 7175 7176 (ii) Its public organic record, if any, is amended as provided in the 7177

statement of division. 7178 7179 (iii) Its private organic rules that are to be in record form, if any, are 7180

amended to the extent provided in the plan of division. 7181 7182

(2) If the dividing association is not to survive the division, the dividing 7183 association ceases to exist. 7184

7185

ACTIVE/ 6744855.14 161

(3) With respect to each new association, all of the following apply: 7186 7187

(i) It comes into existence. 7188 7189 (ii) It holds any property allocated to it as the successor to the dividing 7190

association, and not by transfer, whether directly or indirectly, or by operation of 7191 law. 7192

7193 (iii) Its public organic record, if any, and private organic rules are effective. 7194 7195 (iv) If it is a limited liability partnership, its statement of registration is 7196

effective. 7197 7198 (v) If it is a limited liability limited partnership and is not using the 7199

alternative procedure in section 8201(f) (relating to scope) its statement of 7200 registration is effective. 7201

7202 (vi) If it is an electing partnership, its statement of election is effective. 7203

7204 (4) Property of the dividing association: 7205 7206

(i) That is allocated by the plan of division either: 7207 7208

(A) vests in the new associations as provided in the plan of division; 7209 or 7210

7211 (B) remains vested in the dividing association. 7212

7213 (ii) That is not allocated by the plan of division: 7214 7215

(A) remains vested in the dividing association, if the dividing 7216 association survives the division; or 7217 7218

(B) is allocated to and vests equally in the resulting associations as 7219 tenants in common, if the dividing association does not survive the division. 7220 7221 (iii) Vests as provided in this paragraph without transfer, reversion or 7222

impairment. 7223 7224 (5) A resulting association to which a cause of action is allocated as provided in 7225

paragraph (4) may be substituted or added in any pending action or proceeding to which 7226 the dividing association is a party at the effective time of the division. 7227

7228 (6) The liabilities of the dividing association are allocated between or among the 7229

resulting associations as provided in section 368 (relating to allocation of liabilities in 7230 division). 7231

ACTIVE/ 6744855.14 162

7232 (7) The interests in the dividing association that are to be converted or canceled 7233

in the division are converted or canceled, and the interest holders of those interests are 7234 entitled only to the rights provided to them under the plan of division and to any 7235 dissenters rights they may have pursuant to section 317 (relating to contractual 7236 dissenters rights in entity transactions) or section 363(c) (relating to approval of 7237 division). 7238

7239 (b) Dividing association not dissolved.—Except as provided in the organic law or 7240

organic rules of the dividing association, the division does not give rise to any rights that an 7241 interest holder, governor or third party would have upon a dissolution, liquidation or winding 7242 up of the dividing association. 7243

7244 (c) New interest holder liability.—When a division becomes effective, a person that 7245

did not have interest holder liability with respect to the dividing association and that becomes 7246 subject to interest holder liability with respect to an association as a result of the division has 7247 interest holder liability only to the extent provided by the organic law of the association and 7248 only for those liabilities that arise after the division becomes effective. 7249

7250 (d) Prior interest holder liability.—When a division becomes effective, the interest 7251

holder liability of a person that ceases to hold an interest in the dividing association that is a 7252 domestic entity with respect to which the person had interest holder liability is as follows: 7253

7254 (1) The division does not discharge any interest holder liability under the organic 7255

law of the domestic entity to the extent the interest holder liability arose before the 7256 division became effective. 7257

7258 (2) The person does not have interest holder liability under the organic law of 7259

the domestic entity for any debt, obligation or other liability that arises after the division 7260 becomes effective. 7261

7262 (3) The organic law of the domestic entity continues to apply to the release, 7263

collection or discharge of any interest holder liability preserved under paragraph (1) as if 7264 the division had not occurred. 7265

7266 (4) The person has whatever rights of contribution from any other person as are 7267

provided by other law or the organic law or organic rules of the domestic entity with 7268 respect to any interest holder liability preserved by paragraph (1) as if the division had 7269 not occurred. 7270

7271 (e) Registration of registered foreign association.—When a division of a registered 7272

foreign association in which at least one of the resulting associations is a domestic entity 7273 becomes effective, the registration to do business of the dividing association is canceled if it 7274 does not survive the division. 7275 7276

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(f) Real property.— Except with regard to the real property of a dividing association 7277 that is a domestic nonprofit corporation, the allocation of any fee or freehold interest or 7278 leasehold having a remaining term of 30 years or more in any tract or parcel of real property 7279 situate in this Commonwealth owned by a dividing association, including property owned by 7280 a foreign association dividing solely under the law of another jurisdiction, to a new 7281 association is not effective until one of the following documents is filed in the office for the 7282 recording of deeds of the county, or each of them, in which the tract or parcel is situated: 7283 7284

(1) A deed, lease or other instrument of confirmation describing the tract or 7285 parcel. 7286

7287 (2) A duly executed duplicate original copy of the statement of division. 7288 7289 (3) A copy of the statement of division certified by the department. 7290 7291 (4) A declaration of acquisition setting forth the value of real estate holdings in 7292

the county of the new association as an acquired association. 7293 7294

(g) Secured collateral.—The allocation to a new association of property that is 7295 collateral covered by an effective financing statement shall not be effective until a new 7296 financing statement naming the new association as a debtor is effective under Article 9 of the 7297 Uniform Commercial Code as enacted in the relevant jurisdiction. 7298

7299 (h) Vehicles.—The provisions of 75 Pa.C.S. § 1114 (relating to transfer of vehicle by 7300

operation of law) shall not be applicable to an allocation of ownership of any motor vehicle, 7301 trailer or semitrailer to a new association under this section or under a similar law of any other 7302 jurisdiction, but any such allocation shall be effective only upon compliance with the 7303 requirements of 75 Pa.C.S. § 1116 (relating to issuance of new certificate following transfer), 7304 unless the dividing association is a domestic nonprofit corporation. 7305 7306

(i) Disposition of interests.—Unless otherwise provided in the plan of division, the 7307 interests and any securities or obligations of each new association shall be distributed to: 7308 7309

(1) the dividing association, if it survives the division; or 7310 7311 (2) the holders of the common or other residuary interest of the dividing 7312

association that do not assert dissenters rights, pro rata, if the dividing association does 7313 not survive the division. 7314

7315 Committee Comment (2014): 7316 7317

This section was added in 2014 by the Association Transactions Act and is a 7318 generalization of former 15 Pa.C.S. § 1957. 7319

7320

ACTIVE/ 6744855.14 164

This section parallels analogous provisions in Subchapters C (merger), D (interest 7321 exchange), E (conversion), and G (domestication), except for provisions relating to the 7322 allocation of property and liabilities which reflect the unique nature of a division. 7323

7324 The term “transfer” is defined in 15 Pa.C.S. § 102 to include an assignment. Thus the 7325

statement in subsection (a)(4)(iii) that property vests in a division without transfer means that 7326 the allocation of property in a division does not involve an assignment of the property, 7327 including by operation of law. 7328

7329 If interests in property are allocated to a resulting association as part of a division 7330

governed by this subchapter, title to those interests automatically passes to the resulting 7331 association, as between the dividing association and the resulting association. Subsection (f) 7332 reflects this concept and also makes it clear that the filing of the statement of division in the 7333 Department of State is not constructive notice of the change of record title (as opposed to 7334 legal title) to the resulting association, except in the case of a nonprofit corporation. Failure 7335 to file a confirmatory instrument in the land records containing appropriate legal descriptions 7336 of the property, however, has no impact on the validity and enforceability of the division as 7337 between the dividing and the resulting associations. 7338

7339 In most cases, the resulting association will want to file a confirmatory instrument at the 7340

time the division is effective in order to protect itself from being trumped by a bona fide 7341 purchaser who obtains the real property from the dividing association. There may be 7342 situations, however, where the dividing association does not have legal descriptions available 7343 for all of its real property at the time of the division and the plan of division will simply state 7344 that the dividing association is transferring to the dividing association all of its real estate, 7345 e.g., “in the State of Arkansas” or “west of the Mississippi River.” 7346

7347 The following terms used in this section are defined in 15 Pa.C.S. § 312: 7348 7349 “division” 7350 “dividing association” 7351 “interest holder liability” 7352 “new association” 7353 “resulting association” 7354 7355 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7356 7357 “association” 7358 “dissenters rights” 7359 “domestic entity” 7360 “electing partnership” 7361 “foreign association” 7362 “governor” 7363 “interest holder” 7364 “interests” 7365 “limited liability limited partnership” 7366

ACTIVE/ 6744855.14 165

“limited liability partnership” 7367 “nonprofit corporation” 7368 “obligation” 7369 “organic law” 7370 “organic rules” 7371 “private organic rules” 7372 “property” 7373 “public organic record” 7374 “record form” 7375 “registered foreign association” 7376 “transfer” 7377

7378 7379 § 368. Allocation of liabilities in division. 7380

7381 (a) General rule.—Except as provided in this section, when a division becomes 7382

effective, a resulting association is responsible: 7383 7384 (1) Individually for the liabilities the resulting association undertakes or incurs in 7385

its own name after the division. 7386 7387 (2) Individually for the liabilities of the dividing association that are allocated to 7388

or remain the liability of that resulting association to the extent specified in the plan of 7389 division. 7390

7391 (3) Jointly and severally with the other resulting associations for the liabilities of 7392

the dividing association that are not allocated by the plan of division. 7393 7394

(b) Joint and several liability.— If an allocation of property or liabilities in a division 7395 is ineffective or voidable pursuant to fraudulent transfer or similar law, both of the following 7396 apply: 7397

7398 (1) The allocations of liabilities in the plan of division are ineffective and the 7399

liabilities of the dividing association becomes liabilities of all of the resulting 7400 associations, jointly and severally. 7401

7402 (2) The validity and effectiveness of the division are not affected thereby. 7403 7404

(c) Breach of an obligation.—If a division breaches an obligation of the dividing 7405 association, all of the resulting associations are liable, jointly and severally, for the breach, but 7406 the validity and effectiveness of the division are not affected thereby. 7407

7408 (d) Application of fraudulent transfer law.—In applying the law governing fraudulent 7409

transfers to a division: 7410 7411

(1) The law applies to the dividing association as follows: 7412

ACTIVE/ 6744855.14 166

7413 (i) If it does not survive the division, it is not subject to that law. 7414 7415 (ii) If it survives the division, it is subject to that law only in its capacity as 7416

a resulting association. 7417 7418

(2) The law applies to each resulting association as follows: 7419 7420 (i) The association is treated as a debtor. 7421 7422 (ii) The liabilities allocated to the association are treated as an obligation 7423

incurred by the debtor. 7424 7425 (iii) The association is treated as not having received a reasonably 7426

equivalent value in exchange for incurring the obligation. 7427 7428 (iv) The property allocated to the association is treated as remaining 7429

property. 7430 7431

(e) Distribution tests not applicable.—A direct or indirect allocation of property or 7432 liabilities in a division is not a distribution for purposes of the organic law of the dividing 7433 association or any of the resulting associations. 7434

7435 (f) Liens and other charges.—Liens, security interests and other charges on the 7436

property of the dividing association are not impaired by the division, notwithstanding any 7437 otherwise enforceable allocation of liabilities of the dividing association. 7438

7439 (g) Security agreements.—If the dividing association is bound by a security agreement 7440

governed by Article 9 of the Uniform Commercial Code as enacted in any jurisdiction and the 7441 security agreement provides that the security interest attaches to after-acquired collateral, each 7442 resulting association is bound by the security agreement. 7443 7444

(h) Creditors and guarantors.—An allocation of a liability does not: 7445 7446

(1) Affect the rights under other law of a creditor owed payment of the liability 7447 or performance of the obligation that creates the liability, except that those rights are 7448 available only against an association responsible for the liability or obligation under this 7449 section. 7450

7451 (2) Release or reduce the obligation of a surety or guarantor of the liability or 7452

obligation. 7453 7454 (i) Regulatory approvals.—The conditions in this section for freeing one or more of 7455

the resulting associations from the liabilities of the dividing association and for allocating 7456 some or all of the liabilities of the dividing association shall be conclusively deemed to have 7457 been satisfied if the plan of division has been approved by the Department of Banking and 7458

ACTIVE/ 6744855.14 167

Securities, the Insurance Department or the Pennsylvania Public Utility Commission in a final 7459 order issued after August 21, 2001, that is not subject to further appeal. 7460 7461

(j) Taxes.—Any taxes, interest, penalties and public accounts of the Commonwealth 7462 claimed against the dividing association that are settled, assessed or determined prior to or 7463 after the division shall be the liability of all of the resulting associations and, together with 7464 interest thereon, shall be a lien against the franchises and property of each resulting 7465 association. Upon the application of the dividing association, the Department of Revenue, 7466 with the concurrence of the Department of Labor and Industry, shall release one or more, but 7467 less than all, of the resulting associations from liability and liens for all taxes, interest, 7468 penalties and public accounts of the dividing association due the Commonwealth for periods 7469 prior to the effective date of the division if those departments are satisfied that the public 7470 revenues will be adequately secured. 7471 7472 Committee Comment (2014): 7473 7474

This section was added in 2014 by the Association Transactions Act and is a 7475 generalization of former 15 Pa.C.S. § 1957. 7476

7477 The purpose of this section is to set out in detail how liabilities of the dividing 7478

association are allocated in a division between the dividing and resulting associations and 7479 which of the associations are responsible for those liabilities. The basic rule is that a liability 7480 is the responsibility of the association to which it has been allocated, but the resulting 7481 associations are jointly and severally liable for any liabilities that are not specifically 7482 allocated. The resulting associations will also be jointly and severally liable for a liability, 7483 even if allocated in the plan, where: 7484 7485

(1) the liability arises from a breach of an obligation as a result of the division; 7486 or 7487

7488 (2) the allocation or property and liabilities is ineffective or voidable under 7489

fraudulent transfer statutes or other law. 7490 7491

If the resulting associations are jointly and severally liable under subsection (b) or (c) for a 7492 liability that has been allocated in the plan to less than all of them, the allocation in the plan 7493 will be binding on the resulting associations even though the third party may seek payment or 7494 performance from any or all of the resulting associations. 7495 7496

With respect to a liability incurred after the division is effective, only the association 7497 that undertakes or incurs the liability is liable for that liability, absent an agreement to the 7498 contrary. 7499

7500 Subsection (d) provides a set of rules that explain how fraudulent transfer law applies to 7501

a division. 7502 7503

ACTIVE/ 6744855.14 168

Subsection (e) provides that the limitations on distributions in the organic law of the 7504 dividing association do not apply to a division. That rule is consistent with established 7505 Pennsylvania policy under the definition of “distribution” in 15 Pa.C.S. § 1103. 7506

7507 Where a dividing association has granted a security interest in after-acquired property, 7508

the effect of subsection (g) is that the resulting associations will have the status of “debtors” 7509 under UCC Article 9. See 15 Pa.C.S. § 367(g). 7510 7511

The following terms used in this section are defined in 15 Pa.C.S. § 312: 7512 7513 “division” 7514 “dividing association” 7515 “resulting association” 7516 7517 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7518 7519 “association” 7520 “obligation” 7521 “organic law” 7522 “property” 7523

7524 7525

Subchapter G 7526 Domestication 7527

7528 Section 7529 371. Domestication authorized. 7530 372. Plan of domestication. 7531 373. Approval of domestication. 7532 374. Amendment or abandonment of plan of domestication. 7533 375. Statement of domestication; effectiveness. 7534 376. Effect of domestication. 7535 7536 § 371. Domestication authorized. 7537 7538

(a) Domestic entities.—Except as provided in section 318 (relating to excluded 7539 entities and transactions), by complying with this chapter a domestic entity may become a 7540 domestic entity of the same type in a foreign jurisdiction if the domestication is authorized by 7541 the law of the foreign jurisdiction. 7542 7543

(b) Foreign entities.—By complying with the applicable provisions of this subchapter, 7544 a foreign entity may become a domestic entity of the same type in this Commonwealth if this 7545 title provides for the formation of that type of entity. 7546 7547

(c) Cross reference.— See section 314 (relating to regulatory conditions and required 7548 notices and approvals). 7549

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7550 Committee Comment (2014): 7551 7552

This section was added in 2014 by the Association Transactions Act and is patterned 7553 after Model Entity Transactions Act (2007) (Last Amended 2013) § 501. 7554

7555 A domestication under this subchapter differs from a conversion under 15 Pa.C.S. 7556

Subch. 3E in that a domestication requires that the domesticating entity be the same type of 7557 entity as the domesticated entity. In a conversion, by contrast, the converting association 7558 changes its type. 7559 7560

As with a conversion, all rights and privileges, debts and liabilities, and actions or 7561 proceedings of a domesticating entity vest unimpaired in the domesticated entity. A 7562 domestication is not a sale, transfer, assignment, or conveyance and does not give rise to a 7563 claim of reverter or impairment of title. 7564 7565

This subchapter governs the legal effect of a foreign entity domesticating in 7566 Pennsylvania. On the other hand, the organic laws of the foreign jurisdiction, and not this 7567 subchapter, will govern the legal effect of a domestication of a domestic entity in that 7568 jurisdiction. In the latter scenario, this subchapter authorizes the domestication of the 7569 domestic entity in the foreign jurisdiction, but this subchapter does not create a right in the 7570 domestic entity to be received in the foreign jurisdiction. 7571

7572 Where a foreign entity is domesticating in Pennsylvania, this subchapter does not 7573

require that the transaction be authorized by the law of the foreign entity’s jurisdiction of 7574 formation. The foreign entity will be able to become a Pennsylvania domestic entity as 7575 provided in this subchapter, but the status of the entity in the foreign jurisdiction will be 7576 controlled by that laws of that jurisdiction. 7577

7578 Under the former domestication provisions in the Business Corporation Law, a 7579

domesticating corporation was not required to surrender its foreign charter, thus permitting it 7580 to be incorporated in both the foreign jurisdiction and Pennsylvania at the same time. That 7581 policy of permitting dual incorporation is continued in Chapter 4 and generalized to apply to 7582 all types of entities. See 15 Pa.C.S. § 375(b)(8). If the internal affairs of an entity are 7583 governed by the laws of more than one jurisdiction at the same time, it will no longer be a 7584 “registered organization” under the Uniform Commercial Code. See 13 Pa.C.S. § 9102. 7585

7586 The term “domestication” used in this section is defined in 15 Pa.C.S. § 312. 7587 7588 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7589 7590 “domestic entity” 7591 “foreign entity” 7592 “type” 7593

7594 7595

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§ 372. Plan of domestication. 7596 7597

(a) General rule.—A domestic entity may become a foreign entity of the same type by 7598 approving a plan of domestication. The plan shall be in record form and contain all of the 7599 following: 7600 7601

(1) The name and type of the domesticating entity. 7602 7603

(2) The name and jurisdiction of formation of the domesticated entity. 7604 7605

(3) The manner, if any, of canceling or converting those interests in the 7606 domesticating entity, if any, that are to receive special treatment as authorized by and 7607 subject to section 329 (relating to special treatment of interest holders); 7608

7609 (4) The proposed public organic record of the domesticated entity if it is a filing 7610

entity. 7611 7612

(5) The full text of the private organic rules of the domesticated entity that are 7613 proposed to be in record form. 7614

7615 (6) The other terms and conditions of the domestication. 7616

7617 (7) Any other provision required by: 7618 7619

(i) the law of this Commonwealth; 7620 7621 (ii) the law of the jurisdiction of formation of the foreign domesticated 7622

entity; or 7623 7624 (iii) the organic rules of the domesticating entity. 7625

7626 (b) Optional contents.—In addition to the requirements of subsection (a), a plan of 7627

domestication may contain any other provision not prohibited by law. 7628 7629 (c) Terms of interests.—Except as provided in the plan of domestication pursuant to 7630

section 329, the terms of the interests in the domesticated entity and the rights of the interest 7631 holders in the domesticated entity shall be substantially the same as the terms of the interests 7632 and the rights of the interest holders in the domesticating entity, except to the extent a 7633 different term or right is required by a provision of the organic law of the domesticated entity 7634 that cannot be varied in its organic rules. 7635 7636

(d) Cross reference.—See section 316(c) (relating to contents of plan). 7637 7638 Committee Comment (2014): 7639 7640

This section was added in 2014 by the Association Transactions Act and is patterned 7641

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after Model Entity Transactions Act (2007) (Last Amended 2013) § 502. 7642 7643 This section sets forth the requirements for the plan of domestication, which must be 7644

approved by the domesticating entity in accordance with 15 Pa.C.S. § 373. The content of a 7645 plan of domestication is similar to the content of a plan of merger. See 15 Pa.C.S. § 332. 7646 Subsection (a) lists the mandatory provisions that must be in the plan. Subsection (b) 7647 authorizes the plan to contain any other provision the parties wish to include, unless the 7648 provision is prohibited by law. 7649 7650

The plan of domestication, may be used as a substitute for the statement of 7651 domestication as provided in 15 Pa.C.S. § 375(e), so long as it contains all of the information 7652 required to be in the statement and is delivered to the Department of State for filing after the 7653 plan has been adopted and approved. 7654 7655

The following terms used in this section are defined in 15 Pa.C.S. § 312: 7656 7657 “domestication” 7658 “domesticated entity” 7659 “domesticating entity” 7660 “plan” 7661 7662 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7663 7664 “domestic entity” 7665 “filing entity” 7666 “foreign entity” 7667 “interest” 7668 “interest holder” 7669 “jurisdiction of formation” 7670 “organic law” 7671 “organic rules” 7672 “private organic rules” 7673 “public organic record” 7674 “record form” 7675 “special treatment” 7676 “type” 7677

7678 7679 § 373. Approval of domestication. 7680 7681

(a) Approval by domestic entities.—A plan of domestication in which the 7682 domesticating entity is a domestic entity is not effective unless it has been approved by the 7683 domestic entity in accordance with the applicable provisions of Subchapter B (relating to 7684 approval of entity transactions). 7685 7686

(b) Approval by foreign entities.— A plan of domestication in which the 7687

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domesticating entity is a foreign entity is not effective unless it has been approved in one of 7688 the following ways: 7689

7690 (1) In accordance with the law of the jurisdiction of formation of the foreign 7691

entity. 7692 7693 (2) By at least a majority of the votes cast with respect to approval of the 7694

domestication by all interest holders of the foreign entity entitled to vote generally on a 7695 merger to which the foreign entity is a party if the law of the foreign entity’s jurisdiction 7696 of formation does not provide for a domestication of the foreign entity. 7697 7698 (c) Cross references.—See sections 317 (relating to contractual dissenters rights in 7699

entity transactions) and 329 (relating to special treatment of interest holders). 7700 7701 Committee Comment (2014): 7702 7703

This section was added in 2014 by the Association Transactions Act and is patterned 7704 after Model Entity Transactions Act (2007) (Last Amended 2013) § 503. 7705

7706 If the law of a foreign entity’s jurisdiction of formation does not authorize a 7707

domestication, the foreign entity may nonetheless become a domestic Pennsylvania entity 7708 pursuant to this subchapter. In that event, the domestication must be approved as provided in 7709 subsection (b)(2). The status of the foreign entity in its jurisdiction of formation after the 7710 domestication will be determined by the law of the foreign jurisdiction, but for purposes of 7711 Pennsylvania law the entity will have the status of a domestic entity. 7712

7713 The following terms used in this section are defined in 15 Pa.C.S. § 312: 7714 7715 “domestication” 7716 “domesticating entity” 7717 7718 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7719 7720 “domestic entity” 7721 “foreign entity” 7722 “interest holder” 7723 “jurisdiction of formation” 7724 7725 7726

§ 374. Amendment or abandonment of plan of domestication. 7727 7728

(a) Approval of amendment.— A plan of domestication in which the domesticating 7729 entity is a domestic entity may be amended in one of the following ways: 7730 7731

(1) In the same manner as the plan was approved, if the plan does not provide for 7732 the manner in which it may be amended. 7733

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7734 (2) By the governors or interest holders of the domestic entity in the manner 7735

provided in the plan, but an interest holder that was entitled to vote on or consent to 7736 approval of the plan is entitled to vote on or consent to any amendment of the plan that 7737 will change any of the following: 7738

7739 (i) The amount or kind of interests, securities, obligations, money, other 7740

property, rights to acquire interests or securities, or any combination of the 7741 foregoing, to be received by any of the interest holders of the domesticating entity 7742 under the plan. 7743

7744 (ii) The public organic record, if any, or private organic rules of the 7745

domesticated entity that will be in effect immediately after the domestication 7746 becomes effective, except for changes that do not require approval of the interest 7747 holders of the domesticated entity under its organic law or organic rules. 7748

7749 (iii) Any other terms or conditions of the plan, if the change would 7750

adversely affect the interest holder in any material respect. 7751 7752

(b) Approval of abandonment.—After a plan of domestication has been approved by a 7753 domestic entity that is the domesticating entity and before a statement of domestication 7754 becomes effective, the plan may be abandoned as provided in the plan. Unless prohibited by 7755 the plan, a domestic entity that is the domesticating entity may abandon the plan in the same 7756 manner as the plan was approved. 7757 7758

(c) Statement of abandonment.—If a plan of domestication is abandoned after a 7759 statement of domestication has been delivered to the department for filing and before the 7760 statement becomes effective, a statement of abandonment under section 141 (relating to 7761 abandonment of filing before effectiveness), signed by the domesticating entity, must be 7762 delivered to the department for filing before the time the statement of domestication becomes 7763 effective. 7764 7765 Committee Comment (2014): 7766 7767

This section was added in 2014 by the Association Transactions Act and is patterned 7768 after Model Entity Transactions Act (2007) (Last Amended 2013) § 504. It parallels 7769 analogous provisions in Subchapters C (mergers), D (interest exchanges), E (conversions), 7770 and F (divisions). 7771 7772

Rules on what constitutes delivery of documents to and by the Department of State are 7773 set forth in 15 Pa.C.S. § 113. 7774

7775 The following terms used in this section are defined in 15 Pa.C.S. § 312: 7776 7777 “domestication” 7778 “domesticated entity” 7779

ACTIVE/ 6744855.14 174

“domesticating entity” 7780 “plan” 7781 7782 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7783 7784 “department” 7785 “domestic entity” 7786 “governor” 7787 “interest” 7788 “interest holder” 7789 “obligation” 7790 “organic law” 7791 “organic rules” 7792 “private organic rules” 7793 “property” 7794 “public organic record” 7795 “sign” 7796 “type” 7797

7798 7799 § 375. Statement of domestication; effectiveness. 7800 7801

(a) General rule.—A statement of domestication shall be signed by the domesticating 7802 entity and delivered to the department for filing along with the certificates, if any, required by 7803 section 139 (relating to tax clearance of certain fundamental transactions). 7804 7805

(b) Contents.—A statement of domestication shall contain all of the following: 7806 7807

(1) With respect to the domesticating entity: 7808 7809

(i) its name; 7810 7811 (ii) its jurisdiction of formation; 7812 7813 (iii) its type; 7814 7815 (iv) the date on which it was first created, incorporated, formed or 7816

otherwise came into existence; 7817 7818

(v) if it is a domestic filing entity, domestic limited liability partnership or 7819 registered foreign association, the address of its registered office, including street 7820 and number, if any, in this Commonwealth, subject to section 109 (relating to 7821 name of commercial registered office provider in lieu of registered address); 7822

7823

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(vi) if it is a domestic entity that is not a domestic filing entity or limited 7824 liability partnership, the address, including street and number, if any, of its 7825 principal office; and 7826

7827 (vii) if it is a nonregistered foreign association, the address, including street 7828

and number, if any, of: 7829 7830

(A) its registered or similar office, if any, required to be maintained 7831 by the law of its jurisdiction of formation; or 7832

7833 (B) it it is not required to maintain a registered or similar office, its 7834

principal office. 7835 7836

(2) With respect to the domesticated entity: 7837 7838

(i) its name; 7839 7840 (ii) its jurisdiction of formation; 7841 7842 (iii) its type; 7843 7844 (iv) if it is a domestic filing entity, domestic limited liability partnership or 7845

registered foreign association, the address of its registered office, including street 7846 and number, if any, in this Commonwealth, subject to section 109; 7847

7848 (v) if it is a domestic entity that is not a domestic filing entity or limited 7849

liability partnership, the address, including street and number, if any, of its 7850 principal office; and 7851

7852 (vi) if it is a nonregistered foreign association, the address, including street 7853

and number, if any, of: 7854 7855

(A) its registered or similar office, if any, required to be maintained 7856 by the law of its jurisdiction of formation; or 7857

7858 (B) it it is not required to maintain a registered or similar office, its 7859

principal office. 7860 7861

(3) If the statement of domestication is not to be effective on filing, the later date 7862 or date and time on which it will become effective. 7863

7864 (4) If the domesticating entity is a domestic entity, a statement that the plan of 7865

domestication was approved in accordance with Subchapter B (relating to approval of 7866 entity transactions) or, if the domesticating entity is a foreign entity, a statement that the 7867 domestication was approved in accordance with section 373(b) (relating to approval of 7868 domestication). 7869

ACTIVE/ 6744855.14 176

7870 (5) If the domesticated entity is a domestic filing entity, its public organic record 7871

as an attachment. The public organic record does not need to state the name or address 7872 of an incorporator of a corporation, organizer of a limited liability company or similar 7873 person with respect to any other type of entity. 7874

7875 (6) If the domesticated entity is a domestic limited liability partnership or a 7876

domestic limited liability limited partnership that is not using the alternative procedure 7877 in section 8201(f) (relating to scope), its statement of registration as an attachment. 7878

7879 (7) If the domesticated entity is an electing partnership, its statement of election 7880

as an attachment. 7881 7882

(8) If the domesticating entity is to be a domestic entity in both this 7883 Commonwealth and the foreign jurisdiction, a statement to that effect. 7884

7885 (c) Other provisions.—In addition to the requirements of subsection (b), a statement 7886

of domestication may contain any other provision not prohibited by law. 7887 7888

(d) Public organic record of new domestic entity.—If the domesticated entity is a 7889 domestic entity, its public organic record, if any, must satisfy the requirements of the law of 7890 this Commonwealth, except that it does not need to be signed and may omit any provision that 7891 is not required to be included in a restatement of the public organic record. 7892 7893

(e) Filing of plan.—A plan of domestication that is signed by a domesticating entity 7894 that is a domestic entity and meets all of the requirements of subsection (b) may be delivered 7895 to the department for filing instead of a statement of domestication and on filing has the same 7896 effect. If a plan of domestication is filed as provided in this subsection, references in this 7897 chapter to a statement of domestication refer to the plan of domestication filed under this 7898 subsection. 7899 7900

(f) Effectiveness of domestication.—A domestication in which the domesticated 7901 entity is a domestic entity is effective when the statement of domestication is effective under 7902 section 136(c) (relating to processing of documents by Department of State). A domestication 7903 in which the domesticated entity is a foreign entity is effective on the later of: 7904

7905 (1) the date and time provided by the organic law of the domesticated entity; or 7906 7907 (2) when the statement of domestication is effective. 7908

7909 (g) Cross references.—See sections 134 (relating to docketing statement) and 135 7910

(relating to requirements to be met by filed documents). 7911 7912 Committee Comment (2014): 7913 7914

This section was added in 2014 by the Association Transactions Act and is patterned 7915

ACTIVE/ 6744855.14 177

after Model Entity Transactions Act (2007) (Last Amended 2013) § 505. 7916 7917 The filing of a statement of domestication makes the transaction a matter of public 7918

record. 7919 7920

A plan of domestication can be used as a substitute for the statement of domestication so 7921 long as the plan satisfies the requirements in subsection (e). 7922 7923

A domestication involving a regulated entity may require approval of a government 7924 agency before it can become effective. See 15 Pa.C.S. § 103. 7925 7926

Rules on what constitutes delivery of documents to and by the Department of State are 7927 set forth in 15 Pa.C.S. § 113. 7928

7929 The following terms used in this section are defined in 15 Pa.C.S. § 312: 7930 7931 “domestication” 7932 “domesticated entity” 7933 “domesticating entity” 7934 7935 The following terms used in this section are defined in 15 Pa.C.S. § 102: 7936 7937 “department” 7938 “domestic entity” 7939 “domestic filing entity” 7940 “electing partnership 7941 “entity” 7942 “foreign entity” 7943 “jurisdiction of formation” 7944 “limited liability company” 7945 “limited liability limited partnership” 7946 “limited liability partnership” 7947 “nonregistered foreign association” 7948 “organic law” 7949 “principal office” 7950 “public organic record” 7951 “registered foreign association” 7952 “sign” 7953 “type” 7954

7955 7956 § 376. Effect of domestication. 7957 7958

(a) General rule.—When a domestication becomes effective, all of the following 7959 apply: 7960 7961

ACTIVE/ 6744855.14 178

(1) The domesticated entity is: 7962 7963

(i) organized under and subject to the organic law of the domesticated 7964 entity; 7965

7966 (ii) the same entity without interruption as the domesticating entity; 7967 7968 (iii) deemed to have commenced its existence on the date the domesticating 7969

entity commenced its existence in the jurisdiction in which the domesticating 7970 entity was first created, formed, incorporated or otherwise came into existence; 7971 and 7972

7973 (iv) also organized under and subject to the organic law of the 7974

domesticating entity if the statement of domestication includes the statement 7975 provided for in section 375(b)(8) (relating to statement of domestication; 7976 effectiveness). 7977

7978 (2) All property of the domesticating entity continues to be vested in the 7979

domesticated entity without transfer, reversion or impairment. 7980 7981

(3) All debts, obligations and other liabilities of the domesticating entity 7982 continue as debts, obligations and other liabilities of the domesticated entity. 7983

7984 (4) Except as provided by law, all of the rights, privileges, immunities and 7985

powers of the domesticating entity continue to be vested without change in the 7986 domesticated entity. 7987

7988 (5) The name of the domesticated entity may be substituted for the name of the 7989

domesticating entity in any pending action or proceeding. 7990 7991

(6) If the domesticated entity is a filing entity, its public organic record is 7992 effective and is binding on its interest holders. 7993

7994 (7) If the domesticated entity is a domestic limited liability partnership or a 7995

limited liability limited partnership that is not using the alternative procedure in section 7996 8201(f) (relating to scope), its statement of registration is effective. 7997

7998 (8) If the domesticated entity is an electing partnership, its statement of election 7999

is effective. 8000 8001

(9) The private organic rules of the domesticated entity that are to be in record 8002 form, if any, approved as part of the plan of domestication are effective. 8003

8004 (10) The interest holders in the domesticating entity are interest holders in the 8005

domesticated entity except to the extent that an interest holder does not receive interests 8006 in the domesticated entity pursuant to a provision in the plan of domestication for 8007

ACTIVE/ 6744855.14 179

special treatment pursuant to section 329 (relating to special treatment of interest 8008 holders). 8009

8010 (b) No dissolution rights.—Except as otherwise provided in the organic law or organic 8011

rules of a domestic domesticating entity, the domestication does not give rise to any rights 8012 that an interest holder, governor or third party would have upon a dissolution, liquidation or 8013 winding up of the domesticating entity. 8014 8015

(c) Collection of liabilities.—When a domestication becomes effective, a foreign 8016 domesticated entity may be served with process in this Commonwealth for the collection and 8017 enforcement of any of its debts, obligations and other liabilities in accordance with applicable 8018 law. 8019

8020 (d) New interest holder liability. – When a domestication becomes effective, a person 8021

that becomes subject to interest holder liability with respect to a domestic association as a 8022 result of the domestication has interest holder liability only to the extent provided by the 8023 organic law of the association and only for those debts, obligations and other liabilities that 8024 arise after the domestication is effective. 8025

8026 (e) Prior interest holder liability.— When a domestication becomes effective, the 8027

following rules apply: 8028 8029

(1) The domestication does not discharge any interest holder liability under the 8030 organic law of a domesticating domestic entity to the extent the interest holder liability 8031 arose before the domestication became effective. 8032

8033 (2) A person does not have interest holder liability under the organic law of a 8034

domestic domesticating entity for any debt, obligation or other liability that arises after 8035 the domestication becomes effective. 8036

8037 (3) The organic law of a domestic domesticating entity continues to apply to the 8038

release, collection or discharge of any interest holder liability preserved under paragraph 8039 (1) as if the domestication had not occurred. 8040

8041 (4) A person has whatever rights of contribution from any other person as are 8042

provided by other law or the organic rules of a domestic domesticating entity with 8043 respect to any interest holder liability preserved under paragraph (1) as if the 8044 domestication had not occurred. 8045 8046 (f) Service of process.— When a domestication becomes effective, a foreign 8047

domesticated entity may be served with process in this Commonwealth for the collection and 8048 enforcement of any of its debts, obligations and other liabilities in accordance with applicable 8049 law. 8050 8051

(g) No dissolution.—A domestication does not require a domestic domesticating 8052 entity to liquidate, dissolve or wind up its affairs and does not constitute or cause the 8053

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liquidation or dissolution of the entity. 8054 8055 (h) Taxes.—Any taxes, interest, penalties and public accounts of the Commonwealth 8056

claimed against the domesticating entity that are settled, assessed or determined prior to or 8057 after the domestication shall be the liability of the domesticated entity and, together with 8058 interest thereon, shall be a lien against the franchises and property of the domesticated entity. 8059

8060 (i) Cross references. – See sections 416 (relating to withdrawal deemed on certain 8061

transactions) and 417 (relating to required withdrawal on certain transactions). 8062 8063 Committee Comment (2014): 8064 8065

This section was added in 2014 by the Association Transactions Act and is patterned 8066 after Model Entity Transactions Act (2007) (Last Amended 2013) § 506. Subsection (h) is a 8067 generalization of former 15 Pa.C.S. § 1929(c). 8068

8069 The domesticated entity is the same entity as the domesticating entity; it has merely 8070

changed the organic law to which it is subject. Thus a domestication is not a sale, 8071 conveyance, transfer, or assignment and does not give rise to claims of reverter or impairment 8072 of title that may be based on a prohibition on transfer, assignment, or conveyance. 8073 8074

All pending proceedings involving the domesticating entity are continued. The name of 8075 the domesticated entity may be, but need not be, substituted in any pending proceeding for the 8076 name of the domesticating entity. 8077 8078

Subsection (d) provides the rule for future interest holder liability and parallels 8079 analogous provisions in Subchapters C (mergers), D (interest exchanges), E (conversions), 8080 and F (divisions). Subsection (e) similarly provides the rule for past interest holder liability 8081 and parallels analogous provisions in this chapter. 8082 8083

When a domestication takes effect, the entity continues to exist – simply as a domestic 8084 entity under the laws of a different state. Subsection (g) thus makes clear that the 8085 domestication does not require the entity to wind up its affairs and does not constitute or 8086 cause the dissolution of the entity. 8087

8088 A domestication of an insurance corporation requires compliance with Section 357 of 8089

The Insurance Company Law of 1921, 40 P.S. § 477e. See 15 Pa.C.S. § 103. 8090 8091

The following terms used in this section are defined in 15 Pa.C.S. § 312: 8092 8093 “domestication” 8094 “domesticated entity” 8095 “domesticating entity” 8096 “interest holder liability” 8097 8098 The following terms used in this section are defined in 15 Pa.C.S. § 102: 8099

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8100 “domestic association” 8101 “filing entity” 8102 “governor” 8103 “interest holder” 8104 “interests” 8105 “electing partnership” 8106 “limited liability limited partnership” 8107 “limited liability partnership” 8108 “obligations” 8109 “organic law” 8110 “organic rules” 8111 “private organic rules” 8112 “property” 8113 “public organic record” 8114 “record form” 8115 “transfer” 8116

8117 8118

Chapter 4 8119 Foreign Associations 8120

8121 Subchapter 8122 A. General Provisions 8123 B. Registration 8124 8125

Subchapter A 8126 General Provisions 8127

8128 Section 8129 401. Application of chapter. 8130 402. Governing law. 8131 403. Activities not constituting doing business. 8132 8133 § 401. Application of chapter. 8134 8135

(a) General rule.—Except as otherwise provided in this section or in subsequent 8136 provisions of this chapter, this chapter shall apply to all foreign associations. 8137

8138 (b) Application to foreign banking institutions. – The words "foreign filing 8139

association" or "foreign association" in this chapter include an association that, if a domestic 8140 association, would be a banking institution or credit union, but do not include an interstate 8141 bank as defined in section 102 of the act of November 30, 1965 (P.L. 847, No. 356), known as 8142 the Banking Code of 1965. 8143 8144

(c) Domestic Federal financial association exclusion.—Except as permitted by act of 8145

ACTIVE/ 6744855.14 182

Congress, this chapter shall not apply to: 8146 8147

(1) Any of the following institutions or similar federally chartered institutions 8148 engaged in this Commonwealth in activities similar to those conducted by banking 8149 institutions or credit unions: 8150

8151 (i) National banking associations organized under The National Bank Act 8152

(13 Stat. 99, 12 U.S.C. § 1 et seq.). 8153 8154 (ii) Federal savings and loan associations and Federal mutual savings banks 8155

organized under the Home Owners' Loan Act (48 Stat. 128, 12 U.S.C. § 1461 et 8156 seq.). 8157

8158 (iii) Federal credit unions organized under the Federal Credit Union Act (48 8159

Stat. 1216, 12 U.S.C. § 1751 et seq.). 8160 8161

(2) Any other Federal association intended by the Congress to be treated for 8162 State law purposes as a domestic association of this Commonwealth. 8163

8164 (d) Foreign insurance corporations. – A foreign insurance corporation shall be subject 8165

to this chapter, except as provided in section 402(e) (relating to governing law) or 411(g) 8166 (relating to registration to do business in this Commonwealth). 8167

8168 (e) Government entities. – This chapter shall apply to and the words “association” and 8169

“foreign association” shall include a government or other sovereign, other than the 8170 Commonwealth or any of its political subdivisions, and any governmental corporation, agency 8171 or other entity thereof. 8172

8173 (f) Admitted foreign fraternal benefit society exclusion. – This chapter shall not apply 8174

to any foreign corporation not-for-profit licensed to transact business in this Commonwealth 8175 under section 2455 of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance 8176 Company Law of 1921. 8177

8178 Committee Comment (2014): 8179 8180

This section was added in 2014 by the Association Transactions Act. Subsections (a) 8181 through (c) are substantially a reenactment of former 15 Pa.C.S. § 4101, except for the 8182 provision on interstate banks in subsection (b) which is new. Subsections (e) and (f) are 8183 substantially a reenactment of former 15 Pa.C.S. § 6101(b) and (c). 8184

8185 A financial institution organized under the law of another jurisdiction is subject to this 8186

chapter unless it is an interstate bank or Federal financial institution described in subsection 8187 (b). An interstate bank is defined in section 102 of the Banking Code of 1965 as: 8188

8189 … a banking institution existing under the laws of another state, the District of 8190 Columbia or a territory or possession of the United States and authorized to engage in 8191

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the business of receiving demand deposits or a national bank having a head office in 8192 another state, the District of Columbia or a territory or possession of the United States 8193 and authorized to engage in the business of receiving demand deposits, which lawfully 8194 maintains one or more branch offices in this Commonwealth. 8195

8196 7 P.S. § 102 (“interstate bank”). Thus, a foreign bank that does not have a branch office in 8197 Pennsylvania and is not a Federal financial institution is treated for purposes of this chapter 8198 the same as a foreign association that is not a financial institution. For example, a state-8199 chartered bank that does not have a branch office in Pennsylvania will be required to register 8200 under this chapter if its activities in Pennsylvania are such that if they were conducted by a 8201 regular business corporation would require that corporation to register. 8202 8203

Subsection (d) provides as a general rule that foreign insurance corporations are subject 8204 to this chapter, but the effect of the other provisions cited in subsection (d) is to limit the 8205 application of this chapter to foreign insurance corporations as follows: 8206

1. All foreign insurance corporations are subject to 15 Pa.C.S. § 402(a), (e), and (f). 8207 2. A foreign insurance corporation, insofar as it is engaged in the business of writing 8208

insurance or reinsurance as principal in Pennsylvania, is subject to Pennsylvania 8209 law regulating the conduct of the business of insurance by a foreign insurance 8210 corporation in lieu of 15 Pa.C.S. § 402(d). 8211

3. A foreign insurance corporation that is not engaged in the business of writing 8212 insurance or reinsurance as principal in Pennsylvania, is not subject to 8213 Pennsylvania law regulating the conduct of the business of insurance by a foreign 8214 insurance corporation and is subject to 15 Pa.C.S. § 402(d). 8215

4. All foreign insurance corporations are exempt from the provisions relating to 8216 registration to do business in Pennsylvania (15 Pa.C.S. §§ 402(b) and (c), and 411 8217 through 419) pursuant to 15 Pa.C.S. § 411(g). 8218

Foreign insurance corporations are also subject to 15 Pa.C.S. § 4146. 8219 8220

The statute cited in subsection (f) is found at 40 P.S. § 991.2455. 8221 8222

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8223 8224 “association” 8225 “banking institution” 8226 “credit union” 8227 “domestic association” 8228 “foreign association” 8229 “foreign corporation not-for-profit” 8230 “foreign filing association” 8231 “insurance corporation” 8232

8233 8234 § 402. Governing law. 8235 8236

(a) General rule. – The law of the jurisdiction of formation of a foreign association 8237

ACTIVE/ 6744855.14 184

governs the following: 8238 8239

(1) The internal affairs of the association. 8240 8241 (2) The liability that a person has as an interest holder or governor for a debt, 8242

obligation or other liability of the association. 8243 8244 (3) The liability of a series or protected cell of a foreign association. 8245

8246 (b) Effect of differences in law. – A foreign association is not precluded from 8247

registering to do business in this Commonwealth because of any difference between the law 8248 of the jurisdiction of formation of the foreign association and the law of this Commonwealth. 8249 8250

(c) Limitations on domestic associations applicable. – Registration of a foreign 8251 association to do business in this Commonwealth does not authorize the foreign association to 8252 engage in any activities and affairs or exercise any power that a domestic association of the 8253 same type may not engage in or exercise in this Commonwealth. 8254

8255 (d) Equal rights and privileges of registered foreign associations. – Except as 8256

otherwise provided by law, a registered foreign association, so long as its registration to do 8257 business is not terminated or canceled, shall enjoy the same rights and privileges as a 8258 domestic entity and shall be subject to the same liabilities, restrictions, duties and penalties 8259 now in force or hereafter imposed on domestic entities, to the same extent as if it had been 8260 formed under this title. A foreign insurance corporation shall be deemed a registered foreign 8261 association except as provided in subsection (e). 8262 8263

(e) Foreign insurance corporations.—A foreign insurance corporation shall, insofar as 8264 it is engaged in the business of writing insurance or reinsurance as principal, be subject to the 8265 law of this Commonwealth regulating the conduct of the business of insurance by a foreign 8266 insurance corporation in lieu of the provisions of subsection (d) regarding its rights, 8267 privileges, liabilities, restrictions and duties and the penalties to which it may be subject. 8268 8269

(f) Agricultural lands. – Interests in agricultural land shall be subject to the 8270 restrictions of, and escheatable as provided by, the act of April 6, 1980 (P.L. 102, No. 39), 8271 referred to as the Agricultural Land Acquisition by Aliens Law. 8272 8273 Committee Comment (2014): 8274 8275

This section was added in 2014 by the Association Transactions Act. Subsections (a) – 8276 (c) are patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 8277 1-501. Subsections (d) – (f) are substantially a reenactment of former 15 Pa.C.S. § 4142. 8278

8279 Subsection (a) provides that the law of the jurisdiction of formation of a foreign 8280

association, rather than the law of Pennsylvania, governs both the internal affairs of the 8281 association and the liability of its interest holders and governors for the obligations of the 8282 association. 8283

ACTIVE/ 6744855.14 185

8284 Unincorporated associations of certain types are authorized by the law of some states to 8285

create series. If series are properly created, a debt, obligation, or liability associated with the 8286 property of a particular series is enforceable only against property of that series, and not 8287 against the property of the trust generally or any other series thereof. Subsection (a)(3) 8288 respects that type of internal shield in any form of unincorporated association that is 8289 authorized to create series. 8290 8291

Subsections (b) and (c) together make clear that although a foreign association may not 8292 be denied registration simply because of a difference between the laws of its jurisdiction of 8293 formation and the laws of Pennsylvania, the foreign association may not engage in any 8294 activity or exercise any power in Pennsylvania that a domestic entity of the same type may 8295 not engage in or exercise. Thus subsection (c) puts a registered foreign association on the 8296 same, but no better, footing as a domestic entity. 8297

8298 The effect of qualification in Pennsylvania of a foreign association is, in effect, to 8299

domesticate the association under Pennsylvania law with respect to external matters (as 8300 opposed to internal affairs). Thus the association acquires the privileges of a domestic 8301 association vis a vis third parties, even in such an exceptional area as the acquisition of the 8302 power of eminent domain. See, e.g. Warren Silica Company's Petition, 21 Pa.Dist. 367 8303 (1911), Lindsay v. Keystone State Tel. & Tel. Co., 9 Del.Co. 295 (1904), In re Ohio Valley 8304 Gas Co., 6 Pa.Dist. 200 (1897), Gralapp v. Mississippi Power Co., 194 So.2d 527 (Ala.1967), 8305 29A C.J.S. Eminent Domain § 25 at pp. 242-43 (1965). And the association is subject to the 8306 burdens of domestic status, e.g. process may be served on it under 42 Pa.C.S. § 5301(a)(2)(i) 8307 with respect to any cause of action, including a cause of action not qualifying for service of 8308 process under 42 Pa.C.S. § 5322 or another similar long arm statute. Of course, this concept 8309 of equality can be superseded by express statutory provision, e.g., in the area of state 8310 corporate taxation. Registration under this chapter has no effect on the application of 8311 Pennsylvania law to the internal affairs of a foreign association. But see 15 Pa.C.S. §§ 4145 8312 and 4146. 8313 8314

It is the intention of this section to equalize the rights of licensed foreign insurers to hold 8315 and invest in real estate and other property with the rights of nonlicensed foreign insurers, 8316 which for many years have had the same investment and property owning powers in 8317 Pennsylvania as business corporations generally. Subsection (e), in reverting to the law of 8318 insurance regulation, is not intended to make licensed foreign insurers subject to investment 8319 restrictions expressly applicable under Pennsylvania insurance regulatory law to domestic 8320 insurers. 8321 8322

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8323 8324 “association” 8325 “domestic association” 8326 “domestic entity” 8327 “foreign association” 8328 “governor” 8329

ACTIVE/ 6744855.14 186

“insurance corporation” 8330 “interest holder” 8331 “jurisdiction of formation” 8332 “obligations” 8333 “registered foreign association” 8334 “type” 8335

8336 8337 § 403. Activities not constituting doing business. 8338 8339

(a) General rule. – Activities of a foreign filing association or foreign limited liability 8340 partnership that do not constitute doing business in this Commonwealth under this chapter 8341 shall include the following: 8342

8343 (1) Maintaining, defending, mediating, arbitrating or settling an action or 8344

proceeding; 8345 8346 (2) Carrying on any activity concerning its internal affairs, including holding 8347

meetings of its interest holders or governors. 8348 8349 (3) Maintaining accounts in financial institutions. 8350 8351 (4) Maintaining offices or agencies for the transfer, exchange and registration of 8352

securities of the association or maintaining trustees or depositories with respect to the 8353 securities. 8354

8355 (5) Selling through independent contractors. 8356 8357 (6) Soliciting or obtaining orders by any means if the orders require acceptance 8358

outside of this Commonwealth before the orders become contracts. 8359 8360 (7) Creating or acquiring indebtedness, mortgages or security interests in 8361

property. 8362 8363 (8) Securing or collecting debts or enforcing mortgages or security interests in 8364

property securing the debts and holding, protecting or maintaining property so acquired. 8365 8366 (9) Conducting an isolated transaction that is not in the course of similar 8367

transactions. 8368 8369 (10) Owning, without more, property. 8370 8371 (11) Doing business in interstate or foreign commerce. 8372

8373 (b) Participation in other associations. – Being an interest holder or governor of a 8374

foreign association that does business in this Commonwealth shall not by itself constitute 8375

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doing business in this Commonwealth. 8376 8377 (c) Applicability. – This section does not apply in determining the contacts or 8378

activities that may subject a foreign filing association or foreign limited liability partnership to 8379 service of process, taxation or regulation under law of this Commonwealth other than this 8380 title. 8381 8382 Committee Comment (2014): 8383

8384 This section was added in 2014 by the Association Transactions Act and is patterned 8385

after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-505. 8386 8387 This section does not attempt to formulate an inclusive definition of what constitutes 8388

doing business in Pennsylvania. Rather, the concept is defined in a negative fashion by 8389 subsections (a) and (b), which state that certain activities do not constitute doing business. In 8390 general terms, any conduct more regular, systematic, or extensive than that described in 8391 subsection (a) constitutes doing business and requires the foreign association to register to do 8392 business. Typical conduct requiring registration includes maintaining an office to conduct 8393 local intrastate business, selling personal property not in interstate commerce, entering into 8394 contracts relating to the local business or sales, and owning or using real estate for general 8395 purposes. But the passive owning of real estate for investment purposes does not constitute 8396 doing business. See subsection (a)(10). 8397

8398 The test of “doing business” defined in a negative way in subsections (a) and (b) applies 8399

only to the question whether the association’s contacts with Pennsylvania are such that it must 8400 register under this chapter. It is not applicable to other questions such as whether the 8401 association is amenable to service of process or liable for state or local taxes. An association 8402 that has registered (or is required to register) will generally be subject to suit and state 8403 taxation, while an association that is subject to service of process or state taxation will not 8404 necessarily be required to register. 8405

8406 The list of activities set forth in subsection (a) is not exhaustive. 8407 8408

1. Engaging in Litigation 8409 8410

A foreign association is not “doing business” solely because it resorts to the courts of 8411 Pennsylvania to recover an indebtedness, enforce an obligation, recover possession of 8412 personal property, obtain the appointment of a receiver, intervene in a pending proceeding, 8413 bring a petition to compel arbitration, file an appeal bond, or pursue appellate remedies. 8414 Similarly, a foreign association is not required to register merely because it files a complaint 8415 with a governmental agency or participates in an administrative proceeding within 8416 Pennsylvania. 8417 8418 2. Internal Affairs of the Corporation 8419

8420

ACTIVE/ 6744855.14 188

A foreign association does not “do business” within Pennsylvania under this section 8421 merely because some of its internal affairs occur within Pennsylvania. Thus, an association 8422 may hold meetings of its governors or interest holders in Pennsylvania without first 8423 registering. It also may maintain offices or agencies within Pennsylvania relating solely to the 8424 transfer, exchange, or registration of its interests without registering. Other activities relating 8425 to the internal affairs of the association that do not constitute doing business under this section 8426 include having officers or representatives who reside within or are physically present in 8427 Pennsylvania; while there, the officers or representatives may make executive decisions 8428 relating to the internal affairs of the association without imposing on the association the 8429 requirement that it register, if these activities are not so regular and systematic as to cause the 8430 residence to be viewed as a business office. 8431 8432 3. Sales through Independent Contractors 8433

8434 Under subsection (a)(5), a foreign association does not need to register if it sells goods 8435

in Pennsylvania through independent contractors. These transactions are viewed as 8436 transactions by the independent contractors, not by the association itself even though the 8437 association sets some limits or ground rules for its contractors. If these controls are 8438 sufficiently pervasive, however, the association may be deemed to be selling for itself in 8439 intrastate commerce, and not through the independent contractors and therefore engaged in 8440 doing business in Pennsylvania. 8441 8442 4. Creating, Acquiring, or Collecting Debts 8443

8444 The mere act of making a loan in Pennsylvania by a foreign association that is not in the 8445

business of making loans does not constitute doing business in Pennsylvania. On the same 8446 theory a foreign association may obtain security for the repayment of a loan, and foreclose or 8447 enforce the lien or security interest to collect the loan, without being deemed to be doing 8448 business. Similarly, a refunding or “roll over” of a loan or its adjustment or compromise does 8449 not involve doing business. 8450

8451 5. Isolated Transactions 8452

8453 The concept of “doing business” involves regular, repeated, and continuing business 8454

contacts of a local nature. 8455 8456 Former 15 Pa.C.S. § 4122(a)(10) included the limitation found in Section 15.01(b)(10) 8457

of the Model Business Corporation Act that an isolated transaction be completed within 30 8458 days. The Committee decided to eliminate that requirement and follow the approach of the 8459 Uniform Business Organizations Code which does not require a foreign association to register 8460 simply because it engages in an isolated transaction that takes longer than 30 days to 8461 complete. 8462 8463 6. Interstate Transactions 8464

8465

ACTIVE/ 6744855.14 189

A foreign association is not “doing business” within the meaning of this section if it is 8466 transacting business in interstate commerce (subsection (a)(11)) or soliciting or obtaining 8467 orders that must be accepted outside Pennsylvania before they become contracts (subsection 8468 (a)(6)). These limitations reflect the provisions of the United States Constitution that grant to 8469 the United States Congress exclusive power over interstate commerce, and preclude states 8470 from imposing restrictions or conditions upon this commerce. These sections should be 8471 construed in a manner consistent with judicial decisions under the United States Constitution. 8472 Under these decisions, a foreign association is not required to register even though it sells 8473 goods within Pennsylvania if they are shipped to the purchasers in interstate commerce. An 8474 association need not register even if it also does work and performs acts within Pennsylvania 8475 incidental to the interstate business, e.g., if it takes or enforces a security interest incidental to 8476 these transactions. Nor is it required to register merely because it sends traveling salesmen or 8477 solicitors into Pennsylvania so long as contracts are not made within Pennsylvania. Similarly, 8478 an office may be maintained by an association in Pennsylvania without registering if the 8479 office’s functions relate solely to interstate commerce. 8480

8481 Purchases of goods may of course be in interstate commerce as readily as sales. Thus, 8482

the purchase of personal property by a foreign association for shipment in interstate 8483 commerce out of Pennsylvania does not require the association to register. 8484 8485

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8486 8487 “association” 8488 “foreign association” 8489 “foreign filing association” 8490 “governor” 8491 “interest holder” 8492 “limited liability partnership” 8493 “property” 8494 “transfer” 8495

8496 8497

Subchapter B 8498 Registration 8499

8500 Section 8501 411. Registration to do business in this Commonwealth. 8502 412. Foreign registration statement. 8503 413. Amendment of foreign registration statement. 8504 414. Noncomplying name of foreign association. 8505 415. Voluntary withdrawal of registration. 8506 416. Withdrawal deemed on certain transactions. 8507 417. Required withdrawal on certain transactions. 8508 418. Transfer of registration. 8509 419. Termination of registration. 8510 8511

ACTIVE/ 6744855.14 190

§ 411. Registration to do business in this Commonwealth. 8512 8513

(a) Registration required. – Except as provided in section 401 (relating to application 8514 of chapter) or subsection (g), a foreign filing association or foreign limited liability 8515 partnership may not do business in this Commonwealth until it registers with the department 8516 under this chapter. 8517

8518 (b) Penalty for failure to register. – A foreign filing association or foreign limited 8519

liability partnership doing business in this Commonwealth may not maintain an action or 8520 proceeding in this Commonwealth unless it is registered to do business under this chapter. 8521

8522 (c) Contracts and acts not impaired by failure to register. – The failure of a foreign 8523

filing association or foreign limited liability partnership to register to do business in this 8524 Commonwealth does not impair the validity of a contract or act of the foreign filing 8525 association or foreign limited liability partnership or preclude it from defending an action or 8526 proceeding in this Commonwealth. 8527

8528 (d) Limitations on liability preserved. – A limitation on the liability of an interest 8529

holder or governor of a foreign filing association or of a partner of a foreign limited liability 8530 partnership is not waived solely because the foreign filing association or foreign limited 8531 liability partnership does business in this Commonwealth without registering. 8532

8533 (e) Governing law not affected. – Section 402 (relating to governing law) applies even 8534

if a foreign association fails to register under this chapter. 8535 8536 (f) Registered office. – Subject to section 109 (relating to name of commercial 8537

registered office provider in lieu of registered address), every registered foreign association 8538 shall have, and continuously maintain, in this Commonwealth a registered office, which may 8539 but need not be the same as its place of business in this Commonwealth. 8540 8541

(g) Foreign insurance corporations.--A foreign insurance corporation is not required to 8542 register under this chapter. 8543 8544 Committee Comment (2014): 8545

8546 This section was added in 2014 by the Association Transactions Act. Subsections (a) – 8547

(e) are patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 8548 1-502. Subsection (f) is a generalization of former 15 Pa.C.S. § 4144. Subsection (g) is a 8549 reenactment of former 15 Pa.C.S. § 4121(c). 8550

8551 The purpose of subsection (b) is to induce foreign associations to register without 8552

imposing harsh or erratic sanctions. Often the failure to register is a result of inadvertence or 8553 bona fide disagreement as to the scope of 15 Pa.C.S. § 403 which is necessarily imprecise; 8554 and the imposition of harsh sanctions in those situations is inappropriate. 8555 8556

The sanction in subsection (b) of closing Pennsylvania courts to suits brought by foreign 8557

ACTIVE/ 6744855.14 191

associations that should have registered is not a punitive one. Subsection (c) makes clear that 8558 the failure to register does not impair the validity of an association’s acts and subsection (d) 8559 preserves the effectiveness of any liability shields applicable under the association’s organic 8560 law. If an association should have registered and failed to do so, it may still enforce its 8561 contracts simply by registering. 8562 8563

Subsection (b) does not prevent a foreign association that has failed to register from 8564 “defending” an action or proceeding. The distinction between “maintaining” and “defending” 8565 an action or proceeding under subsection (b) is determined on the basis of whether affirmative 8566 relief is sought. A nonregistered foreign association may interpose any defense or permissive 8567 or mandatory counterclaim to defeat a claimed recovery, but may not obtain an affirmative 8568 judgment based on the counterclaim unless it has registered. 8569

8570 Subsection (g) exempts all foreign insurance corporations from the requirement to 8571

register under this chapter. If a foreign insurance corporation conducts an insurance business 8572 in Pennsylvania, it must obtain a certificate of authority from the Insurance Department under 8573 Section 208 of The Insurance Department Act of 1921, 40 P.S. § 46. Although not required to 8574 register under this chapter, a foreign insurance corporation is otherwise subject to this chapter 8575 with respect to activities that do not involve the writing of insurance or reinsurance as 8576 principal. See 15 Pa.C.S. § 402(e). 8577 8578

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8579 8580 “department” 8581 “foreign association” 8582 “foreign filing association” 8583 “governor” 8584 “insurance corporation” 8585 “interest holder” 8586 “limited liability partnership” 8587 “registered foreign association” 8588

8589 8590 § 412. Foreign registration statement. 8591 8592

(a) General rule. – To register to do business in this Commonwealth, a foreign filing 8593 association or foreign limited liability partnership must deliver a foreign registration statement 8594 to the department for filing. The statement must be signed by the association and state all of 8595 the following: 8596 8597

(1) Both: 8598 8599

(i) The name of the foreign filing association or foreign limited liability 8600 partnership. 8601

8602 (ii) If that name does not comply with section 202 (relating to requirements 8603

ACTIVE/ 6744855.14 192

for names generally), an alternate name adopted pursuant to section 414(a) 8604 (relating to noncomplying name of foreign association). 8605 8606 (2) The type of association and, if it is a foreign limited partnership, whether it is 8607

a foreign limited liability limited partnership. 8608 8609 (3) The association’s jurisdiction of formation. 8610 8611 (4) The street and mailing addresses of the association’s principal office and, if 8612

the law of the association’s jurisdiction of formation requires the association to maintain 8613 an office in that jurisdiction, the street and mailing addresses of the office. 8614

8615 (5) Subject to section 109 (relating to name of commercial registered office 8616

provider in lieu of registered address), the address, including street and number, if any, 8617 of its registered office in this Commonwealth. 8618

8619 (6) If the association may have one or more series, a statement to that effect. 8620

8621 (b) Qualification or registration under former statutes.—The effect of a foreign 8622

association qualifying or registering to do business under prior provisions of law shall be as 8623 follows: 8624

8625 (1) With respect to corporations for profit, the following apply: 8626 8627

(i) If a foreign corporation for profit was admitted to do business in this 8628 Commonwealth by the filing of a power of attorney and statement under the act of 8629 June 8, 1911 (P.L. 710, No. 283) on July 1, 2015, the power of attorney and 8630 statement shall be deemed a filed registration statement under this chapter. The 8631 corporation shall include in its first amended registration statement under this 8632 chapter the information required by this chapter to be set forth in a registration 8633 statement. 8634

8635 (ii) A certificate of authority issued under the former provisions of the 8636

Business Corporation Law of 1933 or the Business Corporation Law of 1988 that 8637 is in effect on July 1, 2015, shall be deemed to be a registration statement under 8638 this chapter and shall be deemed not to contain any reference to the kind of 8639 business that the corporation proposes to do in this Commonwealth. 8640

8641 (iii) A certificate of authority issued under former 15 Pa.C.S. Subchapter 8642

41B that is in effect on July 1, 2015, shall be deemed to be a registration statement 8643 under this chapter. 8644

8645 (2) With respect to corporations not-for-profit, the following apply: 8646 8647

(i) If a foreign corporation not-for-profit was admitted to do business in 8648 this Commonwealth by the filing of a power of attorney and statement under the 8649

ACTIVE/ 6744855.14 193

act of June 8, 1911 (P.L. 710, No. 283) on July 1, 2015, the power of attorney and 8650 statement shall be deemed a filed registration statement under this chapter. The 8651 corporation shall include in its first amended registration statement under this 8652 chapter the information required by this chapter to be set forth in a registration 8653 statement. 8654

8655 (ii) A certificate of authority issued under the former provisions of the 8656

Nonprofit Corporation Law of 1933 or former 15 Pa.C.S. Pt. III Art. B, known as 8657 the Nonprofit Corporation Law of 1972 that is in effect on July 1, 2015, shall be 8658 deemed to be a registration statement under this chapter and shall be deemed not to 8659 contain any reference to the kind of business that the corporation proposes to do in 8660 this Commonwealth. 8661

8662 (iii) A certificate of authority issued under former 15 Pa.C.S. Subchapter 8663

61B that is in effect on July 1, 2015, shall be deemed to be a registration statement 8664 under this chapter. 8665

8666 (3) With respect to limited partnerships, the following apply: 8667 8668

(i) An application for registration filed under former 59 Pa.C.S. § 563 8669 (relating to registration) that is in effect on July 1, 2015, shall be deemed to be a 8670 registration statement under this chapter and shall be deemed not to contain any 8671 reference to: 8672

8673 (A) the general character of the business the limited partnership 8674

proposes to transact in this Commonwealth; or 8675 8676 (B) the names and addresses of the limited partners. 8677

8678 (ii) An application for registration filed under former 15 Pa.C.S. § 8582 8679

(relating to registration) that is in effect on July 1, 2015, shall be deemed to be a 8680 registration statement under this chapter and shall be deemed not to contain: 8681

8682 (A) any reference to the address of the office at which is kept a list of 8683

the names and addresses of the limited partners and their capital 8684 contributions; or 8685

8686 (B) an undertaking to the keep those records until the registration of 8687

the limited partnership in this Commonwealth is canceled or withdrawn. 8688 8689

(4) An application for registration filed by a limited liability company under 8690 former 15 Pa.C.S. § 8981 (relating to foreign limited liability companies) that is in effect 8691 on July 1, 2015, shall be deemed to be a registration statement under this chapter. 8692

8693 (5) A certificate of authority issued to a business trust under former 15 Pa.C.S. § 8694

9507 that is in effect on July 1, 2015, shall be deemed to be a registration statement 8695

ACTIVE/ 6744855.14 194

under this chapter. 8696 8697

(c) Cross references. – See: 8698 8699 Section 134 (relating to docketing statement). 8700 Section 135 (relating to requirements to be met by filed documents). 8701 Section 4124 (relating to advertisement of registration to do business). 8702 Section 6124 (relating to advertisement of registration to do business). 8703

8704 Committee Comment (2014): 8705 8706

This section was added in 2014 by the Association Transactions Act. Subsection (a) is 8707 patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-503. 8708 Subsection (b)(1)(i) and (ii) and (b)(2)(i) and (ii) are substantially a reenactment of former 15 8709 Pa.C.S. §§ 4121(b) and 6121(b), respectively. 8710 8711

The foreign registration statement provides certain basic information about the foreign 8712 association to ensure that citizens of Pennsylvania have access to that information in their 8713 dealings with the foreign association. The statement also facilitates the subjection of the 8714 association to the courts of Pennsylvania. 8715 8716

Since 1978, Pennsylvania has not required express consent to service of process, relying 8717 instead on 42 Pa.C.S. Ch. 53B, the Uniform Interstate and International Procedure Act, and 42 8718 Pa.C.S. § 5301(a)(2)(i). 8719 8720

Rules on what constitutes delivery of documents to and by the Department of State are 8721 set forth in 15 Pa.C.S. § 113. 8722

8723 The following terms used in this section are defined in 15 Pa.C.S. § 102: 8724 8725 “association” 8726 “business trust” 8727 “corporation for profit” 8728 “corporation not-for-profit” 8729 “department” 8730 “foreign association” 8731 “foreign corporation for profit” 8732 “foreign corporation not-for-profit” 8733 “foreign filing association” 8734 “jurisdiction of formation” 8735 “limited liability company” 8736 “limited liability limited partnership” 8737 “limited liability partnership” 8738 “limited partnership” 8739 “principal office” 8740 “sign” 8741

ACTIVE/ 6744855.14 195

8742 8743

§ 413. Amendment of foreign registration statement. 8744 8745

(a) General rule. – A registered foreign association shall deliver to the department for 8746 filing an amendment to its foreign registration statement if there is a change in any of the 8747 following: 8748

8749 (1) The name of the association. 8750 8751 (2) The type of association, including, if it is a foreign limited partnership, 8752

whether the association became or ceased to be a foreign limited liability limited 8753 partnership. 8754

8755 (3) The association’s jurisdiction of formation. 8756 8757 (4) An address required by section 412(a)(4) (relating to foreign registration 8758

statement). 8759 8760 (5) Its registered office. 8761

8762 (6) The authority of the association to have one or more series. 8763

8764 (b) Contents of amendment. – An amendment of a foreign registration statement shall 8765

be signed by the registered foreign association and state all of the following: 8766 8767

(1) The name under which the registered foreign association is registered to do 8768 business in this Commonwealth. 8769

8770 (2) Subject to section 109 (relating to name of commercial registered office 8771

provider in lieu to registered address), the address, including street and number, if any, 8772 of its registered office in this Commonwealth. 8773

8774 (3) If the amendment is not to be effective on filing, the later date or date and 8775

time on which it will become effective. 8776 8777 (4) The information that is to be changed. 8778

8779 (c) Cross references. – See sections 134 (relating to docketing statement) and 135 8780

(relating to requirements to be met by filed documents). 8781 8782

Committee Comment (2014): 8783 8784 This section was added in 2014 by the Association Transactions Act. Subsection (a) is 8785

patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-504. 8786 8787

ACTIVE/ 6744855.14 196

Subsection (a)(6) requires a foreign association to amend its registration (i) to delete the 8788 statement that it may have one or more series if the association ceases to have that authority or 8789 (ii) to add a statement that it may have one or more series if the association acquires that 8790 authority. 8791

8792 Rules on what constitutes delivery of documents to and by the Department of State are 8793

set forth in 15 Pa.C.S. § 113. 8794 8795 The following terms used in this section are defined in 15 Pa.C.S. § 102: 8796 8797 “association” 8798 “department” 8799 “jurisdiction of formation” 8800 “limited liability limited partnership” 8801 “limited partnership” 8802 “registered foreign association” 8803 “sign” 8804 “type” 8805

8806 8807 § 414. Noncomplying name of foreign association. 8808 8809

(a) General rule. – A foreign filing association or foreign limited liability partnership 8810 whose name does not comply with Subchapter A of Chapter 2 (relating to names) may not 8811 register to do business in this Commonwealth until it adopts, for the purpose of doing 8812 business in this Commonwealth, an alternate name that complies with Subchapter A of 8813 Chapter 2. A foreign association that registers under an alternate name under this subsection 8814 is not required to comply with 54 Pa.C.S. Ch. 3 (relating to fictitious names) with respect to 8815 the alternate name. After registering to do business in this Commonwealth under an alternate 8816 name, a foreign association shall do business in this Commonwealth under any of the 8817 following: 8818 8819

(1) The alternate name. 8820 8821 (2) Its proper name under the laws of its jurisdiction of formation, with the 8822

addition of the name of its jurisdiction of formation. 8823 8824 (3) A name the foreign association is authorized to use under 54 Pa.C.S. Ch. 3. 8825

8826 (b) Change of name. – If a registered foreign association changes its name to one that 8827

does not comply with Subchapter A of Chapter 2, it may not do business in this 8828 Commonwealth until it complies with subsection (a) by amending its registration to adopt an 8829 alternate name that complies with Subchapter A of Chapter 2. 8830

8831 (c) Filed documents. – If a registered foreign association adopts an alternate name 8832

under subsection (a), the association shall use the alternate name in response to a requirement 8833

ACTIVE/ 6744855.14 197

in this title that a document delivered to the department for filing state the name of the 8834 association. 8835 8836 Committee Comment (2014): 8837

8838 This section was added in 2014 by the Association Transactions Act and is patterned 8839

after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-506. 8840 8841 A foreign association must register under its proper name under the laws of its 8842

jurisdiction of formation if that name satisfies the requirements of 15 Pa.C.S. § 202. If the 8843 proper name is unavailable because it is not distinguishable on the records of the Department 8844 of State from a name already in use or reserved or registered, the association may use an 8845 alternate name. 8846

8847 Subsection (a)(2) permits a foreign association to do business in Pennsylvania under its 8848

proper name, even if the association has registered under an alternate name, if the association 8849 adds its jurisdiction of formation whenever it uses its proper name. For example, if the name 8850 of a Delaware corporation is “XYZ, Inc.” in its Delaware certificate of incorporation, and that 8851 name is not available in Pennsylvania, the corporation may register under the alternate name 8852 “XYZ-1, Inc.” if that name is available. After registering, the corporation will have three 8853 choices for the name under which it does business in Pennsylvania: (i) the alternate name 8854 “XYZ-1, Inc.”; (ii) “XYZ, Inc., Delaware”; or (iii) a fictitious name that the corporation 8855 registers under Title 54. 8856 8857

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8858 8859 “foreign association” 8860 “foreign filing association” 8861 “jurisdiction of formation” 8862 “limited liability partnership” 8863 “registered foreign association” 8864

8865 8866 § 415. Voluntary withdrawal of registration. 8867 8868

(a) General rule. – A registered foreign association may withdraw its registration by 8869 delivering a statement of withdrawal to the department for filing. The statement of withdrawal 8870 shall be signed by the association and state all of the following: 8871 8872

(1) The name of the association and its jurisdiction of formation. 8873 8874 (2) Subject to section 109 (relating to name of commercial registered office 8875

provider in lieu of registered address), the address, including street and number, if any, 8876 of its registered office in this Commonwealth. 8877

8878 (3) That the association is not doing business in this Commonwealth. 8879

ACTIVE/ 6744855.14 198

8880 (4) That the association withdraws its registration to do business in this 8881

Commonwealth. 8882 8883

(b) Filing. – The statement of withdrawal and the certificates required by section 139 8884 (relating to tax clearance of certain fundamental transactions) shall be delivered to the 8885 department for filing and shall take effect on filing. 8886

8887 (c) Cross references. – See sections 134 (relating to docketing statement) and 135 8888

(relating to requirements to be met by filed documents). 8889 8890 Committee Comment (2014): 8891

8892 This section was added in 2014 by the Association Transactions Act. Subsection (a) is 8893

patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-8894 507(a). 8895

8896 Rules on what constitutes delivery of documents to and by the Department of State are 8897

set forth in 15 Pa.C.S. § 113. 8898 8899 The following terms used in this section are defined in 15 Pa.C.S. § 102: 8900 8901 “association” 8902 “department” 8903 “jurisdiction of formation” 8904 “registered foreign association” 8905 “sign” 8906 8907 8908

§ 416. Withdrawal deemed on certain transactions. 8909 8910

(a) Merger. – A registered foreign association that merges into a domestic filing entity 8911 or domestic limited liability partnership shall be deemed to have withdrawn its registration on 8912 the effective date of the merger. 8913

8914 (b) Conversion. – A registered foreign association that converts to any type of 8915

domestic filing entity or to a domestic limited liability partnership shall be deemed to have 8916 withdrawn its registration on the effective date of the conversion. 8917

8918 (c) Domestication. – A registered foreign association that domesticates in this 8919

Commonwealth as a domestic filing entity or a domestic limited liability partnership shall be 8920 deemed to have withdrawn its registration on the effective date of the domestication. 8921 8922 Committee Comment (2014): 8923

8924 This section was added in 2014 by the Association Transactions Act. Subsection (a) is 8925

ACTIVE/ 6744855.14 199

patterned after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-508. 8926 8927

When a registered foreign association has converted to or domesticated as a domestic 8928 filing entity or domestic limited liability partnership, information about the entity in its 8929 capacity as a domestic entity will continue to be of record in the department. At that point, 8930 there is no further reason for it to be registered and this section automatically treats its prior 8931 registration as withdrawn. 8932

8933 If a conversion or domestication results in a domestic nonfiling entity, a filing must be 8934

made by the converted or domesticated entity under 15 Pa.C.S. § 413 or 417 to update the 8935 records in the department relating to the entity. 8936

8937 Tax clearance certificates are not required in connection with a transaction subject to 8938

this section. 8939 8940

The following terms used in this section are defined in 15 Pa.C.S. § 102: 8941 8942 “domestic filing entity” 8943 “limited liability partnership” 8944 “registered foreign association” 8945 8946 8947

§ 417. Required withdrawal on certain transactions. 8948 8949

(a) Application of section. – This section shall apply to a registered foreign 8950 association that has been: 8951

8952 (1) a nonsurvivng party to a merger in which the survivor is a nonregistered 8953

foreign association; 8954 8955 (2) a dividing association which did not survive the division; 8956 8957 (3) dissolved and completed winding up; 8958 8959 (4) converted to a domestic or foreign nonfiling association other than a limited 8960

liability partnership; or 8961 8962 (5) the domesticating entity in a domestication in which the domesticated entity 8963

is a domestic or foreign nonfiling association other than a limited liability partnership. 8964 8965 (b) Statement of withdrawal. – A registered foreign association described in 8966

subsection (a) shall deliver a statement of withdrawal and the certificates required by section 8967 139 (relating to tax clearance of certain fundamental transactions) to the department for filing. 8968 The statement shall be signed by the dissolved or converted association and state as follows: 8969

8970 (1) In the case of a foreign association that has completed winding up, all of the 8971

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following: 8972 8973

(i) The name under which the association is registered to do business in 8974 this Commonwealth and its jurisdiction of formation. 8975

8976 (ii) That the association withdraws its registration to do business in this 8977

Commonwealth. 8978 8979

(2) In the case of a foreign association that has converted to a domestic or 8980 foreign nonfiling association other than a limited liability partnership, all of the 8981 following: 8982

8983 (i) The name under which the association is registered to do business in 8984

this Commonwealth and its jurisdiction of formation. 8985 8986 (ii) The type of nonfiling association to which the association has 8987

converted and its jurisdiction of formation. 8988 8989 (iii) That the association withdraws its registration to do business in this 8990

Commonwealth. 8991 8992

(3) In the case of a foreign association that has domesticated as a domestic or 8993 foreign nonfiling association other than a limited liability partnership in a jurisdiction 8994 other than this Commonwealth, all of the following: 8995

8996 (i) The name under which the association is registered to do business in 8997

this Commonwealth and its jurisdiction of formation. 8998 8999 (ii) The jurisdiction of formation of the domesticated association. 9000 9001 (iii) That the association withdraws its registration to do business in this 9002

Commonwealth. 9003 9004

(c) Cross references. – See sections 134 (relating to docketing statement) and 135 9005 (relating to requirements to be met by filed documents). 9006 9007 Committee Comment (2014): 9008

9009 This section was added in 2014 by the Association Transactions Act and is patterned 9010

after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-509. 9011 9012

When a registered foreign association has dissolved and completed winding up, or has 9013 converted to a nonfiling association other than a limited liability partnership, there is no 9014 further reason for information about it to appear in the records of the department. This section 9015 thus requires delivery of a statement of withdrawal for the purpose of removing the 9016 association from the rolls of active associations. 9017

ACTIVE/ 6744855.14 201

9018 Rules on what constitutes delivery of documents to and by the Department of State are 9019

set forth in 15 Pa.C.S. § 113. 9020 9021 The following terms used in this section are defined in 15 Pa.C.S. § 102: 9022 9023 “association” 9024 “department” 9025 “foreign association” 9026 “jurisdiction of formation” 9027 “limited liability partnership” 9028 “nonfiling association” 9029 “registered foreign association” 9030 “sign” 9031 “type” 9032 9033 9034

§ 418. Transfer of registration. 9035 9036

(a) General rule. – If a registered foreign association merges into a nonregistered 9037 foreign association or converts to a foreign association required to register with the 9038 department to do business in this Commonwealth, the association shall deliver to the 9039 department for filing an application for transfer of registration. The application shall be 9040 signed by the surviving or converted association and state all of the following: 9041 9042

(1) The name of the association before the merger or conversion. 9043 9044 (2) The type of association it was before the merger or conversion. 9045 9046 (3) The name of the applicant association and, if the name does not comply with 9047

section 202 (relating to requirements for names generally), an alternate name adopted in 9048 accordance with section 414(a) (relating to noncomplying name of foreign association). 9049

9050 (4) The type of association of the applicant association and its jurisdiction of 9051

formation. 9052 9053 (5) If different than the information for the foreign association before the merger 9054

or conversion, all of the following information regarding the applicant association: 9055 9056

(i) The street and mailing addresses of the principal office of the 9057 association and, if the law of the association’s jurisdiction of formation requires it 9058 to maintain an office in that jurisdiction, the street and mailing addresses of that 9059 office. 9060

9061 (ii) Subject to section 109 (relating to name of commercial registered office 9062

provide in lieu of registered address), the address of its registered office in this 9063

ACTIVE/ 6744855.14 202

Commonwealth. 9064 9065

(b) Effect of application. – When an application for transfer of registration takes 9066 effect, the registration of the registered foreign association to do business in this 9067 Commonwealth is transferred without interruption to the association into which it has merged 9068 or to which it has been converted. 9069 9070

(c) Cross references. – See sections 134 (relating to docketing statement) and 135 9071 (relating to requirements to be met by filed documents). 9072 9073 Committee Comment (2014): 9074

9075 This section was added in 2014 by the Association Transactions Act and is patterned 9076

after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-510. 9077 9078 The purpose of this section is to clarify the status of the registered foreign association in 9079

the public records of the Department of State. A filing under this section has the two-fold 9080 effect of canceling the authority of the foreign association to do business in Pennsylvania 9081 while at the same time reregistering it as the new type of foreign association. If the 9082 reregistered foreign association subsequently wishes to terminate its registration to do 9083 business, it may do so under 15 Pa.C.S. § 419. 9084 9085

Rules on what constitutes delivery of documents to and by the Department of State are 9086 set forth in 15 Pa.C.S. § 113. 9087

9088 The following terms used in this section are defined in 15 Pa.C.S. § 102: 9089 9090 “association” 9091 “department” 9092 “foreign association” 9093 “jurisdiction of formation” 9094 “nonregistered foreign association” 9095 “principal office” 9096 “registered foreign association” 9097 “sign” 9098 “type” 9099

9100 9101 § 419. Termination of registration. 9102 9103

(a) General rule. – The department may terminate the registration of a registered 9104 foreign association in the manner provided in subsections (b) and (c) if the department finds 9105 that the association: 9106 9107

(1) has not amended its registration when required by section 413 (relating to 9108 amendment of foreign registration statement); or 9109

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9110 (2) has been administratively, voluntarily or involuntarily dissolved under the 9111

law of its jurisdiction of formation. 9112 9113

(b) Notice by department. – The department may terminate the registration of a 9114 registered foreign association by taking both of the following actions: 9115 9116

(1) Filing a notice of termination or noting the termination in the records of the 9117 department. 9118

9119 (2) Delivering a copy of the notice or the information in the notation to the 9120

association’s registered office or, if the association does not have a registered office, to 9121 the association’s principal office. 9122

9123 (c) Contents. – The notice shall state, or the information in the notation under 9124

subsection (b) shall include, both of the following: 9125 9126

(1) The effective date of the termination, which shall be no less than 60 days 9127 after the date the department delivers the copy. 9128

9129 (2) The grounds for termination under subsection (a). 9130

9131 (d) Effectiveness or cure. – The registration of a registered foreign association to do 9132

business in this Commonwealth shall cease on the effective date of the notice of termination 9133 or notation under subsection (b), unless before that date the association cures each ground for 9134 termination stated in the notice or notation. If the association cures each ground, the 9135 department shall file a record stating as such. 9136 9137 Committee Comment (2014): 9138

9139 This section was added in 2014 by the Association Transactions Act and is patterned 9140

after Uniform Business Organizations Code (2011) (Last Amended 2013) § 1-511. 9141 9142

Rules on what constitutes delivery of documents to and by the Department of State are 9143 set forth in 15 Pa.C.S. § 113. 9144

9145 The following terms used in this section are defined in 15 Pa.C.S. § 102: 9146 9147 “association” 9148 “department” 9149 “jurisdiction of formation” 9150 “principal office” 9151 “registered foreign association” 9152

9153 9154

Subpart B. 9155

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Business Corporations 9156 9157

Chapter 11 9158 General Provisions 9159

9160 § 1103. Definitions. 9161 9162

(a) General definitions. – Subject to additional definitions contained in subsequent 9163 provisions of this subpart that are applicable to specific provisions of this subpart, the 9164 following words and phrases when used in Part I (relating to preliminary provisions) or in this 9165 subpart shall have the meanings given to them in this section unless the context clearly 9166 indicates otherwise: 9167

9168 * * * 9169 9170 “Articles.” The original articles of incorporation, all amendments thereof and any other 9171

articles, statements or certificates permitted or required to be filed in the Department of State 9172 by sections 108 (relating to change in location or status of registered office provided by agent) 9173 and 138 (relating to statement of correction), Chapter 3 (relating to entity transactions) or this 9174 subpart and including what have heretofore been designated by law as certificates of 9175 incorporation or charters. If an amendment of the articles or [articles of merger or division 9176 made in the manner permitted by this subpart] a statement filed under Chapter 3 restates 9177 articles in their entirety [or if there are articles of consolidation, conversion or 9178 domestication], thenceforth the “articles” shall not include any prior documents and any 9179 certificate issued by the department with respect thereto shall so state. 9180

9181 * * * 9182 9183 [“Dissenters rights.” The rights and remedies provided by Subchapter D of 9184

Chapter 15 (relating to dissenters rights).] 9185 9186 * * * 9187 9188 “Distribution.” A direct or indirect transfer of money or other property (except its own 9189

shares or options, rights or warrants to acquire its own shares) or incurrence of indebtedness 9190 by a corporation to or for the benefit of any or all of its shareholders in respect of any of its 9191 shares whether by dividend or by purchase, redemption or other acquisition of its shares or 9192 otherwise. Neither the making of, nor payment or performance upon, a guaranty or similar 9193 arrangement by a corporation for the benefit of any or all of its shareholders nor a direct or 9194 indirect transfer or allocation of assets or liabilities effected under Chapter 3 (relating to entity 9195 transactions) or 19 (relating to fundamental changes) with the approval of the shareholders 9196 shall constitute a distribution for the purposes of this subpart. 9197

9198 * * * 9199 9200

“Foreign business corporation.” A foreign corporation for profit subject to Chapter [41] 4 9201

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(relating to foreign [business corporations] associations), whether or not required to qualify 9202 thereunder. 9203

9204 * * * 9205 9206 [“Nonqualified foreign business corporation.” A foreign business corporation that 9207

is not a qualified foreign business corporation as defined in this section.] 9208 9209 * * * 9210 9211 [“Plan.” A plan of reclassification, merger, consolidation, exchange, asset transfer, 9212

division or conversion.] 9213 9214 * * * 9215 9216 [“Qualified foreign business corporation.” A foreign business corporation that is: 9217

9218 (1) authorized under Chapter 41 (relating to foreign business corporations) 9219

to do business in this Commonwealth; or 9220 9221 (2) a foreign insurance corporation.] 9222

9223 * * * 9224 9225 ["Registered corporation." A corporation defined in section 2502 (relating to 9226

registered corporation status).] 9227 9228

* * * 9229 9230

Amended Committee Comment (2014): 9231 9232

As the introductory paragraph to this section states, it is necessary to consider the 9233 context in which a defined term is used in the 1988 BCL. Subsection (b) was added by the 9234 GAA Amendments Act of 2013 which also transferred the listed definitions to 15 Pa.C.S. § 9235 102 so that they would be more generally applicable. 9236 9237

“Articles.” Because the docketing statement required by 15 Pa.C.S. § 134 is not listed 9238 in this definition along with documents filed under 15 Pa.C.S. §§ 108 and 138, the docketing 9239 statement does not become part of the articles. The “articles” include any filing with respect 9240 to a corporation authorized by any provision of “this subpart” (i.e., the 1988 BCL) and thus 9241 the “articles” include, for example, a statement of change of registered office under 15 Pa.C.S. 9242 § 1507. The articles also include any statements filed under 15 Pa.C.S. Ch. 3 with respect to a 9243 transaction under that chapter (i.e., a merger, interest exchange, conversion, division, or 9244 domestication). A statement with respect to continuation of procedure filed under Section 107 9245 of the General Association Act of 1988 (15 P.S. § 20107) is made part of the “articles” as 9246 defined in this section by Section 107(c) (15 P.S. § 20107(c)). 9247 9248

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“Board of directors.” Under 15 Pa.C.S. § 1731(c), references in the 1988 BCL to the 9249 board of directors include committees of the board. Subject to the provisions of 15 Pa.C.S. 9250 § 1731(a) restricting the powers and authority of committees of the board, any action that may 9251 be taken by the full board may be taken by a duly authorized committee, subject to 9252 compliance by the committee with any procedure applicable to action by the full board. 9253 9254

“Closely held corporation.” The reference in this definition to shares “held jointly” is 9255 intended to include ownership as either joint tenants with right of survivorship or tenants by 9256 the entireties. See the Committee Comment to the definition of “statutory close corporation,” 9257 below. 9258 9259

“Dissolve.” The public policy underlying this definition is that the status of a 9260 corporation as validly existing may always be determined from the public record. Until the 9261 public record indicates that its corporate existence has been terminated (either by a provision 9262 in its articles limiting its period of existence or the filing of another document), a corporation 9263 is conclusively presumed to be validly existing. 9264 9265

Although this definition provides that the existence of a corporation terminates upon the 9266 occurrence of any of the listed events, the existence of a corporation continues in a limited 9267 sense beyond that point for purposes of the enforcement of certain rights and claims under 15 9268 Pa.C.S. § 1979. That is a different approach from the law with respect to unincorporated 9269 entities. The statutory paradigm for unincorporated entities as developed by the Uniform Law 9270 Commission is to view the existence of the entity as never formally terminating even though 9271 its activities have ceased, and thus the statutes governing those entities do not provide 9272 expressly for a final filing that terminates the existence of the entity. 9273 9274

“Distribution.” The term is intended to include all transfers by a corporation of money, 9275 indebtedness of the corporation or other property to a shareholder in respect of any shares of 9276 the corporation, except for those actions expressly excluded by this definition. 9277 9278

When used as a noun, the term is defined in this section in a restrictive sense for 9279 purposes of limitations on distributions. See, e.g., 15 Pa.C.S. § 1551. When used as a verb, 9280 however, the term is intended to be used in its broadest sense and includes a transaction 9281 involving the shares of the corporation. See, e.g., the usage in the definition of 9282 “reclassification” in this section. See generally the Committee Comment to 15 Pa.C.S. 9283 § 1551. See 15 Pa.C.S. § 7112 which exempts patronage rebates and similar payments by a 9284 cooperative corporation from treatment as a distribution. 9285 9286

The last sentence of this definition makes clear that an upstream guarantee will not be 9287 deemed a “distribution” for purposes of the 1988 BCL and, thus, among other things, will not 9288 be subject to the tests in 15 Pa.C.S. § 1551. This definition, however, is not intended to affect 9289 the status or treatment of upstream guaranties under laws other than the 1988 BCL, such as 9290 fraudulent transfer statutes. 9291 9292

The last sentence also makes clear that a transfer of property or other action taken in 9293 connection with a fundamental change effected under 15 Pa.C.S. Ch. 3 or 19 with the 9294

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approval of the shareholders will not be deemed a “distribution.” As in the case of an 9295 upstream guarantee, this definition will not affect the application of laws other than the 1988 9296 BCL to transactions effected under Chapter 3 or 19. The GAA Amendments Act of 2013 9297 added the phrase “or allocation of assets or liabilities” in recognition of the fact that some 9298 transactions that affect the ownership of assets or responsibility for liabilities of a corporation 9299 do not involve a transfer of those assets or liabilities. See 15 Pa.C.S. § 367 and the related 9300 Committee Comment. 9301 9302

“Entitled to vote.” It is not intended that this term implicate procedural, as opposed to 9303 substantive, requirements. For example, a shareholder would ordinarily be “entitled to vote” 9304 at a meeting of shareholders even if not present in person or by proxy. 9305 9306

“Fair value.” A separate definition of this term applies to its usage in 15 Pa.C.S. Subch. 9307 25E. See 15 Pa.C.S. § 2542. 9308 9309

“Foreign registered corporation.” There is no such defined term. The term “registered 9310 corporation” is defined in 15 Pa.C.S. § 2502 to be a subclass of the term domestic business 9311 corporation, and it was thought that to introduce the term “foreign registered corporation” 9312 would lead to the misapprehension that provisions applicable to “registered corporations” are 9313 applicable to “foreign registered corporations.” Instead the phrase “corporation described in 9314 section 4102(b)(1)” is used in the 1988 BCL to describe a foreign corporation that, if a 9315 domestic business corporation, would be a registered corporation. 9316 9317

“Officer.” If a corporation is in the hands of a custodian, receiver, etc., that official or 9318 any person appointed by the official constitutes an “officer” of the corporation. 9319 9320

“Public utility corporation.” The provision of paragraph (2) is intended to accommodate 9321 existing and potential deregulation. For example, if the Federal Communications 9322 Commission deregulates interexchange service, facilities for such service would still be 9323 entitled to the benefits of 15 Pa.C.S. § 1511. 9324 9325

“Qualified shareholder.” This term was defined in Section 107(f) of the General 9326 Association Act of 1988 (15 P.S. § 20107(f)) for purposes of that section, and has been 9327 omitted from this section in view of its transitional nature. 9328 9329

“Reclassification.” This definition was intended as a codification of existing law at the 9330 time of its enactment in 1988. 9331 9332

“Registered office.” Under 15 Pa.C.S. § 135(c)(1), only an actual street address or rural 9333 route box number, and not a post office box number, is acceptable as a registered office 9334 address. Whenever a registered office is required to be stated in a filing, 15 Pa.C.S. 9335 § 135(c)(2) also requires the filing to state the county in which the registered office is located. 9336 9337

“Shareholder.” In contrast to the prior law, the term as used in the 1988 BCL includes a 9338 subscriber to shares. Under 15 Pa.C.S. § 1524(d), a subscriber automatically has all the 9339 voting and other rights of the shares for which he or she subscribes unless a subscription 9340

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agreement defers such rights to a later date, for instance, until the shares are issued and paid 9341 for. The status of “shareholder” is generally limited to record owners, but see the definition of 9342 “shareholder” in 15 Pa.C.S. § 1572. See 15 Pa.C.S. § 1763(c) for a procedure under which 9343 beneficial owners may be treated as record owners. 9344 9345

“Shares.” A separate definition of this term applies to its usage in 15 Pa.C.S. Subch. 9346 25F. See 15 Pa.C.S. § 2552. 9347 9348

“Statutory close corporation.” In order to reduce the confusion between closely held 9349 corporations and corporations that formally elect “close corporation” status under the 9350 corporation law, the term “statutory close corporation” has been introduced to identify the 9351 latter class of corporations. All statutory close corporations are “closely held corporations” 9352 within the meaning of the latter term, regardless of their number of shareholders, but not all 9353 “closely held corporations” are statutory close corporations. 9354 9355

“Voting” or “casting a vote.” Normally in the 1988 BCL, only those persons who 9356 indicate an affirmative or negative decision on a matter are treated as voting, so that 9357 abstention or a mere absence or failure to vote is not equivalent to a negative decision. This 9358 concept is intended to be generally applicable, including cases where the terms “voting” or 9359 “casting a vote” do not specifically appear. 9360 9361 9362 § 1105. Restriction on equitable relief. 9363 9364

A shareholder of a business corporation shall not have any right to obtain, in the absence 9365 of fraud or fundamental unfairness, an injunction against any proposed plan or amendment of 9366 articles authorized under any provision of this [subpart] title, nor any right to claim the right 9367 to valuation and payment of the fair value of his shares because of the plan or amendment, 9368 except that he may dissent and claim such payment if and to the extent provided in 9369 Subchapter D of Chapter 15 (relating to dissenters rights) where this [subpart] title expressly 9370 provides that dissenting shareholders shall have the rights and remedies provided in that 9371 subchapter. Absent fraud or fundamental unfairness, the rights and remedies so provided shall 9372 be exclusive. Structuring a plan or transaction for the purpose or with the effect of 9373 eliminating or avoiding the application of dissenters rights is not fraud or fundamental 9374 unfairness within the meaning of this section. 9375

9376 Amended Committee Comment (2014): 9377 9378

The last sentence, together with 15 Pa.C.S. §§ 315 (nature of transactions) and 1904 (de 9379 facto transaction doctrine abolished), are intended to make Pennsylvania an attractive situs for 9380 business organization by assuring the incorporators and shareholders that the Pennsylvania 9381 courts will not be authorized to recharacterize a transaction on a form-over-substance basis. 9382 The goal of the 1988 BCL is to reject as emphatically as possible that practice of the 1940's 9383 and 1950's, which gave Pennsylvania law a reputation of unpredictability and which was 9384 incompatible with modern business and financial practices. 9385 9386

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The following terms used in this section are defined in 15 Pa.C.S. § 1103: 9387 9388

“amendment” 9389 “articles” 9390 “business corporation” 9391 “dissenters rights” 9392 “shareholder” 9393 “shares” 9394

9395 9396 § 1106. Uniform application of subpart. 9397 9398

(a) General rule.—Except as provided in subsection (b), Part I (relating to preliminary 9399 provisions) and this subpart [and its amendments] are intended to provide uniform rules for 9400 the government and regulation of the affairs of business corporations and of their officers, 9401 directors and shareholders regardless of the date or manner of incorporation or qualification, 9402 or of the issuance of any shares thereof. 9403 9404

(b) Exceptions.— 9405 9406

(1) Unless expressly provided otherwise in any amendment to this subpart, the 9407 amendment shall take effect only prospectively. 9408

9409 (2) An existing corporation lawfully using a name or, as part of its name, a word 9410

that could not be used as or included in the name of a corporation subsequently 9411 incorporated or qualified under this subpart may continue to use the name or word as 9412 part of its name if the use or inclusion of the word or name was lawful when first 9413 adopted by the corporation in this Commonwealth. 9414

9415 (3) Subsection (a) shall not adversely affect the rights specifically provided for 9416

or saved in this [subpart] title. See: 9417 9418

The provisions of section 341(c) (relating to interest exchange authorized). 9419 9420 The provisions of section 351(c) (relating to conversion authorized). 9421 9422 The transitional approval requirements set forth in section 363(d) (relating to 9423

approval of division). 9424 9425 The provisions of section 1524(e) (relating to transitional provision). 9426 9427 The provisions of section 1554(c) (relating to transitional provision). 9428 9429 The cumulative voting rights set forth in section 1758(c)(2) (relating to 9430

cumulative voting). 9431 9432

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[The special voting requirements specified in section 1931(h) (relating to 9433 special requirements). 9434

9435 The provisions of section 1952(g) and (h) (relating to proposal and 9436

adoption of plan of division).] 9437 9438 The provisions of section 2301(d) (relating to transitional provisions). 9439 9440 The provisions of section 2541(a)(2) and (3) and (c) (relating to application 9441

and effect of subchapter). 9442 9443 The provisions of section 2543(b)(1) and (2) (relating to exceptions 9444

generally). 9445 9446 The provisions of section 2551(b)(3)(i), (5) and (6) (relating to exceptions). 9447 9448 The provisions of section 2553(b)(2) (relating to exception). 9449

9450 (4) Except as otherwise expressly provided in the articles, a domestic 9451

corporation for profit that, on September 30, 1989, was not subject to the Business 9452 Corporation Law of 1933 and that thereafter becomes subject to this subpart by 9453 operation of law shall be deemed to have in effect articles that provide that the following 9454 provisions of this subpart shall not be applicable to the corporation: 9455

9456 (i) Section 1726(a)(1) (relating to removal by the shareholders) insofar as 9457

it provides a statutory right on the part of shareholders to remove directors from 9458 office without assigning any cause. 9459

9460 (ii) Section 1755(b)(2) (relating to special meetings). 9461 9462 (iii) Section 1912(a)(2) (relating to proposal of amendments). 9463

9464 Amended Committee Comment (2014): 9465 9466

Under the prior statutory law an argument could be made that corporate rights had a 9467 vintage concept, related to the statutory law in effect at the time the shares were issued. The 9468 application of such a practice in the real world is wholly impractical, and has seldom been 9469 seriously advanced. Section 3 of Article X of the Pennsylvania Constitution of 1968, 9470 originally adopted November 8, 1966, expressly authorizes the General Assembly to legislate 9471 in this area and this section seeks to exercise that authority to the fullest extent possible. Thus 9472 the currently-effective text of Title 15 will be applicable to a transaction affecting shares 9473 issued prior to the adoption of that text, subject only “to the constitutional requirements of due 9474 process, equal protection of the laws, and the prohibition against impairing contracts.” Report 9475 of Committee No. 13 on Corporations, 34 Pa. B.A.Q. 315, 319-20 (1963) (accompanying the 9476 proposed text of the 1966 constitutional amendment). 9477 9478

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The listing of a particular section in the table in subsection (b)(3) is not intended to have 9479 independent substantive effect. The table has been included in that subsection for purposes of 9480 reference and merely collects all those sections that at the time the list was last amended 9481 contained exceptions to the general rule of uniform application in subsection (a). 9482 9483

Paragraph (b)(4) is applicable to public utility corporations (which were made subject to 9484 the 1988 BCL by the General Association Act of 1988) and insurance corporations (which 9485 were made subject to the 1988 BCL by the GAA Amendments Act of 1990). See 15 Pa.C.S. § 9486 1102. 9487 9488

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 9489 9490

“articles” 9491 “business corporation” 9492 “directors” 9493 “domestic corporation for profit” 9494 “issuance” (see “issue”) 9495 “officer” 9496 “shareholder” 9497 “shares” 9498

9499 9500

Chapter 13 9501 Incorporation 9502

9503 Subchapter A 9504

Incorporation Generally 9505 9506 § 1303. Corporate name. (Repealed.) 9507 9508 § 1304. Required name changes by senior corporations. (Repealed.) 9509 9510 § 1305. Reservation of corporate name. (Repealed.) 9511 9512 § 1306. Articles of incorporation. 9513 9514

* * * 9515 9516

(b) Other provisions authorized.—A provision of the original articles or a provision of 9517 the articles approved by the shareholders, in either case adopted under subsection (a)(8)(ii), 9518 may relax or be inconsistent with and supersede any provision of Chapter 3 (relating to entity 9519 transactions), 13 (relating to incorporation), 15 (relating to corporate powers, duties and 9520 safeguards), 17 (relating to officers, directors and shareholders) or 19 (relating to fundamental 9521 changes) concerning the subjects specified in subsection (a)(8)(ii), except where a provision 9522 of those chapters expressly provides that the articles shall not relax or be inconsistent with any 9523

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provision on a specified subject. Notwithstanding the foregoing, the articles may provide 9524 greater rights for shareholders than are authorized by any provision of those chapters that 9525 otherwise provides that the articles shall not relax or be inconsistent with any provision on a 9526 specified subject. 9527 9528

* * * 9529 9530 Amended Committee Comment (2014): 9531 9532

New corporations are deemed to have all-purpose charters unless otherwise restricted by 9533 the terms of the articles. See 15 Pa.C.S. § 1301. Section 204A(3) of the prior law expressly 9534 authorized the articles to contain a purpose clause consisting of or including a statement that 9535 “the corporation shall have unlimited power to engage in and to do any lawful business for 9536 which corporations may be incorporated” under the 1933 BCL. It is intended that such a 9537 statement may be included in the articles of a 1988 BCL corporation under subsection 9538 (a)(8)(ii). 9539 9540

The only required reference to stock in original articles of incorporation is the maximum 9541 number of shares authorized to be issued (without designation or division between common 9542 stock, serial preferred stock, etc., and without statement as to par or no par status). All other 9543 terms may be added by statements filed pursuant to action by the board of directors if the 9544 board is authorized by the articles to fix those terms. It is intended that the articles may 9545 contain a statement that: 9546 9547

The board of directors shall have the full authority permitted by law to divide 9548 the authorized and unissued shares into classes or series, or both, and to 9549 determine for any such class or series its designation and the number of shares of 9550 the class or series and the voting rights, preferences, limitations and special 9551 rights, if any, of the shares of the class or series. 9552

9553 The duration of a corporation is perpetual in the absence of a provision in the articles 9554

setting forth a limited term, and the board of directors is authorized to amend the articles 9555 without shareholder action to provide for perpetual existence. See 15 Pa.C.S. § 1914(c)(2). 9556 9557

For rules on when articles of incorporation containing a delayed effective date will be 9558 effective, see 15 Pa.C.S. 136(c). 9559 9560

The elimination of any required statement as to par value or stated capital is not 9561 intended to make those concepts illegal. Corporations may continue to use those concepts, 9562 and the provisions of the 1988 BCL will not affect the presentation of such concepts in a 9563 corporation’s financial statements for purposes of financial reporting. The last sentence of 15 9564 Pa.C.S. § 1551(a) makes clear that the test of the legality of distributions in 15 Pa.C.S. § 1551 9565 applies without reference to what the articles of a corporation provide as to par value and 9566 stated capital. 9567 9568

See 15 Pa.C.S. §§ 329 and 1906 and the Committee Comment thereto regarding the 9569

ACTIVE/ 6744855.14 213

implementation of “black hat-white hat” provisions in an amendment of the articles or a plan. 9570 Although they would not constitute “special treatment” as defined in 15 Pa.C.S. § 1103, it is 9571 intended that similar provisions may be included in articles of incorporation under subsection 9572 (a)(8)(i). Such a provision, for example, might provide for disparate rights of redemption 9573 based upon the identities or permissible specified characteristics of the shareholders. 9574 9575

Subsection (a)(8)(ii) is intended to be applied broadly and to provide the shareholders 9576 with the greatest possible latitude in regulating the internal affairs of their corporation. It is 9577 specifically intended that subsection (a)(8)(ii) will be more flexible than the analogous 9578 provision of Delaware law which limits the inclusion of provisions in a Delaware certificate 9579 of incorporation to those that “are not contrary to the laws of this State.” Delaware GCL § 9580 102(b)(1). 9581 9582

Subsection (b) is intended as a “safe harbor” provision to make clear that the articles of 9583 a Pennsylvania corporation may include provisions that vary or are inconsistent with the 9584 otherwise applicable rule under Chapters 3 and 13 through 19. The effect is the same as if 9585 each provision of those chapters were introduced by the phrase: “Unless otherwise provided 9586 in the articles,…” As an historical matter, and for purposes of continuity of language and 9587 usage, the Committee chose to continue or insert in a limited number of sections an express 9588 reference to an alternative provision in the articles. However, that usage is not intended to 9589 undermine the general principle of subsection (a)(8)(ii) described above. 9590 9591

In the following instances, however, the articles are prohibited from superseding a 9592 provision of Chapters 13 through 19: 9593 9594

§ 1508 9595 § 1527(c) 9596 § 1528(g) 9597 § 1553 9598 § 1554 9599 Subchapter 15D (see § 1571(f)) 9600 Subchapter 17A (see § 1701(b)) 9601 Subchapter 17B (see § 1718) 9602 § 1726(a) 9603 § 1746 9604 § 1766(c) 9605 § 1767 9606

9607 The effect of limiting the rule of subsection (b) to Chapters 3 and 13 through 19 is to 9608

exclude article provisions varying the rules of Chapters 21 through 31 from the safe harbor. 9609 The Committee concluded that it would not be appropriate to authorize the articles to vary the 9610 provisions of Chapters 21 through 31 generally because those chapters are more regulatory in 9611 nature than Chapters 3 and 13 through 19. It is not intended, however, that the Delaware rule 9612 on the contents of the articles will apply to all the provisions of Chapter 21 through 31, and 9613 subsection (a)(8)(ii) refers specifically to “this subpart” (which encompasses Chapters 21 9614 through 31). For example, there should be nothing objectionable about an articles provision 9615

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that waives the application of 15 Pa.C.S. § 2324 to a statutory close corporation. See also 15 9616 Pa.C.S. §§ 2501(c) and 2701(c). 9617 9618

Subsection (e) was added by the GAA Amendments Act of 2013. It permits the articles 9619 of incorporation to be made dependent on extrinsic facts in the same way as plans adopted 9620 under Chapter 3. See 15 Pa.C.S. § 316(c). Section 102(d) of the Delaware General 9621 Corporation Law similarly permits the certificate of incorporation of a Delaware corporation 9622 to be made dependent on extrinsic facts. 9623 9624

Under 15 Pa.C.S. § 1504(c), where any provision of the 1988 BCL permits a rule to be 9625 set forth in the bylaws, including a bylaw adopted by the shareholders, a rule on the same 9626 subject may be set forth in the articles. 9627 9628

Under 15 Pa.C.S. § 135(c)(1), only an actual street address or rural route box number, 9629 and not a post office box number, is acceptable as a registered office address. Articles filed 9630 after the effective date of 15 Pa.C.S. § 135(c)(2) must also state the county in which the 9631 registered office is located. 9632 9633

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 9634 9635

“articles” 9636 “authorized shares” 9637 “board of directors” 9638 “business corporation” 9639 “bylaws” 9640 “directors” 9641 “incorporator” 9642 “issue” 9643 “officer” 9644 “preference” 9645 “registered office” 9646 “relax” 9647 “shareholders” 9648 “shares” 9649

9650 9651

Subchapter B 9652 Revival 9653

9654 § 1341. Statement of revival. 9655 9656

* * * 9657 9658

(b) Contents of statement.—The statement of revival shall be executed in the name of 9659 the forfeited or expired corporation and shall, subject to section 109 (relating to name of 9660 commercial registered office provider in lieu of registered address), set forth: 9661

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9662 * * * 9663 9664 (3) The name that the corporation adopts as its new name if the adoption of a 9665

new name is required by section [1304] 207 (relating to required name changes by 9666 senior [corporations] associations). 9667

9668 * * * 9669

9670 (d) Cross [reference] references.--See [section] sections 134 (relating to docketing 9671

statement) and 135 (relating to requirements to be met by filed documents). 9672 9673 [No change to Committee Comment (1988).] 9674 9675 9676

Chapter 15 9677 Corporate Powers, Duties and Safeguards 9678

9679 Subchapter D 9680

Dissenters Rights 9681 9682 § 1571. Application and effect of subchapter. 9683 9684

(a) General rule.—Except as otherwise provided in subsection (b), any shareholder (as 9685 defined in section 1572 (relating to definitions)) of a business corporation shall have the 9686 [right to dissent from, and to obtain payment of the fair value of his shares in the event 9687 of, any corporate action, or to otherwise obtain fair value for his shares,] rights and 9688 remedies provided in this subchapter in connection with a transaction under this title only 9689 where this [part] title expressly provides that a shareholder shall have the rights and remedies 9690 provided in this subchapter. See: 9691 9692

Section 329(c) (relating to special treatment of interest holders). 9693 9694 Section 333 (relating to approval of merger). 9695 9696 Section 343 (relating to approval of interest exchange). 9697 9698 Section 353 (relating to approval of conversion). 9699 9700 Section 363 (relating to approval of division). 9701 9702 Section 1906(c) (relating to dissenters rights upon special treatment). 9703 9704 [Section 1930 (relating to dissenters rights). 9705 9706 Section 1931(d) (relating to dissenters rights in share exchanges).] 9707

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9708 Section 1932(c) (relating to dissenters rights in asset transfers). 9709 9710 [Section 1952(d) (relating to dissenters rights in division). 9711 9712 Section 1962(c) (relating to dissenters rights in conversion).] 9713 9714 Section 2104(b) (relating to procedure). 9715 9716 Section 2324 (relating to corporation option where a restriction on transfer of a 9717

security is held invalid). 9718 9719 Section 2325(b) (relating to minimum vote requirement). 9720 9721 Section 2704(c) (relating to dissenters rights upon election). 9722 9723 Section 2705(d) (relating to dissenters rights upon renewal of election). 9724 9725 Section 2904(b) (relating to procedure). 9726 9727 Section 2907(a) (relating to proceedings to terminate breach of qualifying 9728

conditions). 9729 9730 Section 7104(b)(3) (relating to procedure). 9731

9732 (b) Exceptions.— 9733

9734 (1) Except as otherwise provided in paragraph (2), the holders of the shares of 9735

any class or series of shares shall not have the right to dissent and obtain payment of the 9736 fair value of the shares under this subchapter if, on the record date fixed to determine the 9737 shareholders entitled to notice of and to vote at the meeting at which a plan specified in 9738 any of section 333, 343, 353, 363 or [1930, 1931(d),] 1932(c) [or 1952(d)] is to be 9739 voted on or on the date of the first public announcement that such a plan has been 9740 approved by the shareholders by consent without a meeting, the shares are either: 9741

9742 (i) listed on a national securities exchange [or designated as a national 9743

market system security on an interdealer quotation system by the National 9744 Association of Securities Dealers, Inc.] registered under Section 6 of the 9745 Exchange Act; or 9746

9747 (ii) held beneficially or of record by more than 2,000 persons. 9748

9749 (2) Paragraph (1) shall not apply to and dissenters rights shall be available 9750

without regard to the exception provided in that paragraph in the case of: 9751 9752

(i) (Repealed.) 9753

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9754 (ii) Shares of any preferred or special class or series unless the articles, the 9755

plan or the terms of the transaction entitle all shareholders of the class or series to 9756 vote thereon and require for the adoption of the plan or the effectuation of the 9757 transaction the affirmative vote of a majority of the votes cast by all shareholders 9758 of the class or series. 9759

9760 (iii) Shares entitled to dissenters rights under section 329(d) or 1906(c) 9761

(relating to dissenters rights upon special treatment). 9762 9763

(3) The shareholders of a corporation that acquires by purchase, lease, exchange 9764 or other disposition all or substantially all of the shares, property or assets of another 9765 corporation by the issuance of shares, obligations or otherwise, with or without 9766 assuming the liabilities of the other corporation and with or without the intervention of 9767 another corporation or other person, shall not be entitled to the rights and remedies of 9768 dissenting shareholders provided in this subchapter regardless of the fact, if it be the 9769 case, that the acquisition was accomplished by the issuance of voting shares of the 9770 corporation to be outstanding immediately after the acquisition sufficient to elect a 9771 majority or more of the directors of the corporation. 9772

9773 (c) Grant of optional dissenters rights.—The bylaws or a resolution of the board of 9774

directors may direct that all or a part of the shareholders shall have dissenters rights in 9775 connection with any corporate action or other transaction that would otherwise not entitle 9776 such shareholders to dissenters rights. See section 317 (relating to contractual dissenters 9777 rights in entity transactions). 9778 9779

(d) Notice of dissenters rights.—Unless otherwise provided by statute, if a proposed 9780 corporate action that would give rise to dissenters rights under this subpart is submitted to a 9781 vote at a meeting of shareholders, there shall be included in or enclosed with the notice of 9782 meeting: 9783 9784

(1) a statement of the proposed action and a statement that the shareholders have 9785 a right to dissent and obtain payment of the fair value of their shares by complying with 9786 the terms of this subchapter; and 9787

9788 (2) a copy of this subchapter. 9789

9790 (e) Other statutes.—The procedures of this subchapter shall also be applicable to any 9791

transaction described in any statute other than this part that makes reference to this subchapter 9792 for the purpose of granting dissenters rights. 9793 9794

(f) Certain provisions of articles ineffective.—This subchapter may not be relaxed by 9795 any provision of the articles. 9796 9797

(g) Computation of beneficial ownership.—For purposes of subsection (b)(1)(ii), 9798 shares that are held beneficially as joint tenants, tenants by the entireties, tenants in common 9799

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or in trust by two or more persons, as fiduciaries or otherwise, shall be deemed to be held 9800 beneficially by one person. 9801 9802

(h) Cross references.—See [sections 1105 (relating to restriction on equitable 9803 relief), 1904 (relating to de facto transaction doctrine abolished), 1763(c) (relating to 9804 determination of shareholders of record) and 2512 (relating to dissenters rights 9805 procedure).]: 9806

9807 Section 315 (relating to nature of transactions). 9808 Section 1105 (relating to restriction on equitable relief). 9809 Section 1763(c) (relating to determination of shareholders of record). 9810 Section 2512 (relating to dissenters rights procedure). 9811

9812 Amended Committee Comment (2014): 9813 9814

The procedures for the exercise of dissenters rights in Subchapter 15D are patterned 9815 generally after the dissenters rights provisions of Chapter 13 of the Model Business 9816 Corporation Act. 9817 9818

The provision of the 1933 BCL regarding the elimination of dissenters rights with 9819 respect to listed or widely-held shares in certain fundamental transactions is continued with 9820 some modifications by subsection (b)(1). 9821 9822

The failure of a dissenter to institute court proceedings under this subchapter within a 9823 specified period continues to operate as an acceptance of the valuation proposed by the 9824 corporation. 9825 9826

The relationship with the savings provision of the statute (15 Pa.C.S. § 1105) is clarified 9827 by expressly providing that the existence of dissenters rights does not bar an injunction 9828 against a plan or amendment of articles if the court finds fraud or fundamental unfairness 9829 present. Cf., In re Jones & Laughlin Steel Corp., 488 Pa. 524, 412 A.2d 1099 (1980). 9830 9831

The table of sections in subsection (a) is not intended to have independent substantive 9832 effect. It has been included for purposes of reference and merely collects all those sections 9833 that at the time the list was last amended provided for dissenters rights. 9834 9835

The first sentence of subsection (a), however, is intended to have independent 9836 substantive effect. It is intended to be read with 15 Pa.C.S. § 1105 to say that statutory 9837 dissenters rights are available only where expressly conferred by another statutory provision, 9838 and in this sense is a limitation on the creation of additional dissenters rights. In addition, it 9839 operates as a limitation on the elimination of dissenters rights because subsection (f) protects 9840 it from being relaxed by a provision in the articles. An articles provision, for example, that 9841 purported to make 15 Pa.C.S. § 333 (which confers dissenters rights in the context of 9842 mergers) inapplicable to the corporation, although not prohibited by the express terms of 9843 § 333, would have been ineffective under subsection (f) as an attempt to relax subsection (a). 9844 9845

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The definition of "shareholder" in 15 Pa.C.S. § 1572 which is referred to in the first 9846 sentence of subsection (a) includes certain beneficial owners. Although that definition is not 9847 applicable outside of Subchapter 15D, the effect of the first sentence of subsection (a) is to 9848 confer dissenters rights on the beneficial owners included within the definition of 9849 "shareholder" in 15 Pa.C.S. § 1572 wherever the 1988 BCL expressly confers dissenters rights 9850 on shareholders. 9851 9852

The GAA Amendments Act of 2001 added the reference in the lead-in paragraph of 9853 subsection (b)(1) to the date of the first public announcement that a plan has been approved 9854 by written consent of the shareholders. Without that reference, the language of subsection 9855 (b)(1) could have been read incorrectly to suggest that the "market-out" in that subsection was 9856 applicable only when a formal shareholders meeting was held to approve a plan. 9857 9858

The GAA Amendments Act of 2001 also added the concept of beneficial ownership in 9859 subsection (b)(1)(ii) and the explanation in subsection (g) of how that concept is to be applied. 9860 The Committee concluded that, with the increasing use of central depositories that hold shares 9861 in "street name," the number of record owners is no longer a good indication of the liquidity 9862 of the market for a security. 15 Pa.C.S. § 1763(c) provides a procedure that can help a 9863 corporation to determine the number of beneficial owners of its shares. The list of 9864 nonobjecting beneficial owners that is required to be supplied under Rule 14b-1(b)(3) of the 9865 Securities and Exchange Commission will also help a corporation compute whether it has the 9866 requisite number of beneficial owners. 9867 9868

The GAA Amendments Act of 2001 repealed former subsection (b)(2)(i) which provided 9869 that the market out would not be applicable, and thus that holders of liquid shares would be 9870 entitled to dissenters rights, where shares were converted by a plan into something other than 9871 shares and money. Typically, shares of a public company not converted into shares or money 9872 will be converted into some form of debt security of the surviving acquired corporation or the 9873 acquiring corporation. The Committee concluded that the market for control of public 9874 companies is sufficiently liquid and efficient that it was not necessary to provide an exception 9875 to the market out in that instance. 9876 9877

The GAA Amendments Act of 2001 added the references to "series" of shares in 9878 subsection (b)(2)(ii) to avoid the possibility that the mere title by which a group of shares is 9879 designated will control the substantive result under that provision. Where there are three 9880 series of preferred shares, for example, each of the three series will be treated independently; 9881 so that if only two series are given class votes on a plan, the third series will have dissenters 9882 rights. Likewise, if a class of preferred shares is given a class vote, but the class includes 9883 separate series that are not given separate class votes, then the shares of each series will be 9884 entitled to dissenters rights; this will be the case even if a majority of the shares of each series 9885 votes in favor because the separate class votes of each series were not "required" for the 9886 adoption of the plan. 9887 9888

In subsection (b)(2)(ii) the statutory voting requirement is conformed to the general 9889 1988 BCL approach which excludes abstentions from the negative vote total. Subsection 9890 (b)(3) repeals the "mouse-swallows-the-lion" provision of Section 311F of the 1933 BCL and 9891

ACTIVE/ 6744855.14 220

is further intended to overrule the suggestion in footnote seven of Terry v. Penn Central 9892 Corp., 668 F.2d 188, 194 (3d Cir. 1981), that extra-statutory dissenters rights might be made 9893 available depending on the relative sizes of the parties to a fundamental transaction. It is 9894 intended that no common law dissenters rights of any type shall have survived the enactment 9895 of the 1988 BCL. See also the last sentence of 15 Pa.C.S. § 1105. 9896 9897

Subsection (c) permits the bylaws or the board of directors to confer dissenters rights 9898 even though they would not be required by the 1988 BCL. Under 15 Pa.C.S. § 1504(c), the 9899 provision of the bylaws conferring nonstatutory dissenters rights may also be set forth in the 9900 articles. Under 15 Pa.C.S. § 1731(a)(2), the grant of nonstatutory dissenters rights may be 9901 made by a duly authorized committee of the board of directors if the transaction is not to be 9902 submitted to the shareholders for action, subject to compliance by the committee with any 9903 procedure applicable to action by the full board. 9904 9905

The statutes referred to in subsection (e) include 7 P.S. § 1222 (banks). 9906 9907

In addition to its application in the context of subsection (a) discussed above, subsection 9908 (f) also protects the procedural provisions of Subchapter 15D from being relaxed in the 9909 articles. Cf. 15 Pa.C.S. § 1306(b). 9910 9911

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 9912 9913

"articles" 9914 "board of directors" 9915 "business corporation" 9916 "bylaws" 9917 "casting a vote" (see "voting") 9918 "dissenters rights" 9919 "entitled to vote" 9920 "issue" 9921 "obligations" 9922 "relax" 9923 "shareholder" 9924 "shares" 9925

9926 The following terms used in this section are defined in 15 Pa.C.S. § 1572: 9927

9928 "corporation" 9929 "fair value" 9930

9931 9932 § 1575. Notice to demand payment 9933 9934

(a) General rule. – If the proposed corporate action is approved by the required vote at 9935 a meeting of shareholders of a business corporation, the corporation shall [mail] deliver a 9936 further notice to all dissenters who gave due notice of intention to demand payment of the fair 9937

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value of their shares and who refrained from voting in favor of the proposed action. If the 9938 proposed corporate action is approved by the shareholders by less than unanimous consent 9939 without a meeting or is taken without the need for approval by the shareholders, the 9940 corporation shall [send] deliver to all shareholders who are entitled to dissent and demand 9941 payment of the fair value of their shares a notice of the adoption of the plan or other corporate 9942 action. In either case, the notice shall: 9943 9944

(1) State where and when a demand for payment must be sent and certificates for 9945 certificated shares must be deposited in order to obtain payment. 9946

9947 (2) Inform holders of uncertificated shares to what extent transfer of shares will 9948

be restricted from the time that demand for payment is received. 9949 9950 (3) Supply a form for demanding payment that includes a request for 9951

certification of the date on which the shareholder, or the person on whose behalf the 9952 shareholder dissents, acquired beneficial ownership of the shares. 9953

9954 (4) Be accompanied by a copy of this subchapter. 9955

9956 (b) Time for receipt of demand for payment. – The time set for receipt of the demand 9957

and deposit of certificated shares shall be not less than 30 days from the [mailing] delivery of 9958 the notice. 9959

9960 Amended Committee Comment (2014): 9961 9962

The basic purpose of this section is to require the corporation to tell all actual or 9963 potential dissenters what they must do in order to take advantage of their right to dissent. The 9964 requirements of what the notice must contain are spelled out in detail to ensure that the notice 9965 serves this basic purpose. 9966

9967 In the case of an action that is submitted to a vote of shareholders, the notice must be 9968

sent only to those persons who gave notice of their intention to dissent and who refrained 9969 from voting in favor of the proposed actions. In the case of a transaction not involving a vote 9970 by shareholders, the notice must be sent to all persons who are eligible to dissent and demand 9971 payment. 9972

9973 The notice must contain or be accompanied by a form which a person asserting 9974

dissenters rights may use to complete the demand for payment. The form must specify the 9975 date by which it must be received by the corporation, which date must be at least 30 days after 9976 the date of mailing of the notice of how to demand payment. 9977

9978 The notice must also specify where and when share certificates must be deposited, or, in 9979

the case of uncertificated shares, when restrictions on transfer will become effective. The date 9980 for deposit of share certificates may not be set at a date earlier than the date for receiving the 9981 demand for payment. 9982

9983

ACTIVE/ 6744855.14 222

This section contemplates the retention by the corporation of the share certificates (or 9984 prohibition of transfer in the case of uncertificated securities) rather than the notation of the 9985 claim of dissenters rights provided for in Section 515I of the prior law. 9986

9987 There is no requirement that the procedures mandated by this section be completed 9988

before the proposed corporate action can be consummated. It is intended rather that the 9989 proposed corporate action may be consummated as soon as it has been approved without the 9990 necessity of waiting until the dissenters rights procedures have been completed. 9991

9992 Prior to the 1988 BCL, dissenters rights were not available in a context where a meeting 9993

of shareholders was not to be held. The provision of subsection (a) relating to dissenters rights 9994 in the case of corporate action taken without a vote of shareholders opens the way for the 9995 introduction into Pennsylvania law of the short form merger (equivalent to the Delaware 9996 certificate of ownership and merger) procedure of 15 Pa.C.S. §§ 1924(b)(3) and 1926, and 9997 similar changes. 9998

9999 The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10000

10001 “business corporation” 10002 “plan” 10003 “share certificate” 10004 “shareholder” 10005 “shares” 10006 “voting” 10007

10008 The following terms used in this section are defined in 15 Pa.C.S. § 1572: 10009

10010 “corporation” 10011 “dissenter” 10012 “fair value” 10013

10014 10015

Chapter 17 10016 Officers, Directors and Shareholders 10017

10018 Subchapter A 10019

Notice and Meetings Generally 10020 10021 § 1704. Place and notice of meetings of shareholders. 10022 10023

(a) Place. – Meetings of shareholders may be held at such geographic location within 10024 or without this Commonwealth as may be provided in or fixed pursuant to the bylaws. Unless 10025 otherwise provided in or pursuant to the bylaws, all meetings of the shareholders shall be held 10026 at the executive office of the corporation wherever situated. If a meeting of the shareholders is 10027 held by means of the Internet or other electronic communications technology in a fashion 10028

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pursuant to which the shareholders have the opportunity to read or hear the proceedings 10029 substantially concurrently with their occurrence, vote on matters submitted to the 10030 shareholders, pose questions to the directors, make appropriate motions and comment on the 10031 business of the meeting, the meeting need not be held at a particular geographic location. 10032 10033

(b) Notice. – Notice in record form of every meeting of the shareholders shall be given 10034 by, or at the direction of, the secretary or other authorized person to each shareholder of 10035 record entitled to vote at the meeting at least: 10036 10037

(1) ten days prior to the day named for a meeting that will consider a transaction 10038 under Chapter 3 (relating to entity transactions) or a fundamental change under Chapter 10039 19 (relating to fundamental changes); or 10040

10041 (2) five days prior to the day named for the meeting in any other case. 10042

10043 (c) Contents. – In the case of a special meeting of shareholders, the notice shall 10044

specify the general nature of the business to be transacted, and in all cases the notice shall 10045 comply with the express requirements of this subpart. The corporation shall not have a duty to 10046 augment the notice. 10047

10048 (d) Alternative authority. – If the secretary or other authorized person neglects or 10049

refuses to give notice of a meeting, a person calling the meeting may do so. 10050 10051 (e) Cross reference. – See section 2528 (relating to notice of shareholder meetings). 10052

10053 Amended Committee Comment (2014): 10054 10055

The provisions of this section generally may be restricted in the bylaws. But note the use 10056 of the term “otherwise provided” in the second sentence of subsection (a). See the Committee 10057 Comment to 15 Pa.C.S. § 1701. 10058 10059

It is intended that the references to electronic communications technology in subsection 10060 (a) will be interpreted in a manner consistent with the definition of the term “electronic” in the 10061 act of December 16, 1999 (P.L. 971, No. 69), known as the Electronic Transactions Act, 73 10062 P.S. § 2260.101, et seq. Section 103 of that act defines “electronic” as “[r]elating to 10063 technology having electrical, digital, magnetic, wireless, optical, electromagnetic or similar 10064 capabilities.” 73 P.S. § 2260.103. 10065 10066

The requirement in subsection (b) that notice be “in record form” (which is defined in 10067 15 Pa.C.S. § 102) means that notice may be given by email, fax, and other forms of electronic 10068 communication, as well as in tangible written form. 10069 10070

If participation in a meeting by means of the Internet or other electronic 10071 communications technology is made available to the shareholders but the meeting is also held 10072 at a geographic location at which shareholders have the right to attend in person, the 10073 requirements in the last sentence of subsection (a) for electronic meetings will not apply. 10074

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10075 Under 15 Pa.C.S. § 1709, rules for the conduct of an electronic meeting may be 10076

established as provided in the bylaws or by the presiding officer of the meeting. Any such 10077 rules should be appropriate for an electronic meeting and need not be the same as rules for a 10078 meeting held in person. 10079 10080

Under 15 Pa.C.S. § 1504(c), the provisions that subsection (a) authorizes to be set forth 10081 in the bylaws may also be set forth in the articles. 10082 10083

As originally enacted in 1988, subsection (b)(1) applied to a meeting “called to 10084 consider” a fundamental change. The GAA Amendments Act of 1992 amended that provision 10085 to make clear that ten days notice is required for any meeting that will consider a fundamental 10086 change, including a regularly scheduled meeting. The transactions that may be conducted 10087 under Chapter 3 are mergers, interest exchanges, conversions, divisions, and domestications. 10088 The transactions that may be conducted under Chapter 19 are amendments to the articles, 10089 sales of all or substantially all assets, and dissolution. 10090 10091

The Official Source Note for the amendments to this section made by the GAA 10092 Amendments Act of 1990 states that: 10093 10094

“The second sentence of subsection (c) is new and is intended to make clear that 10095 State law does not duplicate the disclosure requirements of 18 [sic] CFR § 240.10b-10096 5. Compare Stroud v. Milliken Enterprises, Inc., 552 A.2d 476 (Del. 1989).” 10097

10098 1990 Laws of Pennsylvania at 1065. The Committee believes that the reference to Rule 10b-5 10099 in that Official Source Note was intended to be a generalized reference to the disclosure 10100 requirements of the Federal and state securities laws. There is nothing in the second sentence 10101 of subsection (c) that would limit it just to contexts in which Rule 10b-5 is applicable and 10102 such a limitation should not be implied from the Official Source Note. The proper 10103 interpretation of subsection (c) is that Title 15 does not duplicate any of the disclosure 10104 requirements of the Federal and state securities laws, including without limitation 17 CFR § 10105 240.14a-9 and 70 P.S. § 1-401. 10106 10107

The cross reference in subsection (e) is a reminder that the “householding” rules of the 10108 Securities and Exchange Commission apply to notices of shareholder meetings of registered 10109 corporations. 10110 10111

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10112 10113

“bylaws” 10114 “entitled to vote” 10115 “shareholders” 10116 “unless otherwise provided” 10117

10118 The term “record form” used in subsection (b) is defined in 15 Pa.C.S. § 102. 10119 10120

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10121 Subchapter E 10122 Shareholders 10123

10124 § 1757. Action by shareholders. 10125 10126

(a) General rule.—Except as otherwise provided in this [subpart] title or in a bylaw 10127 adopted by the shareholders, whenever any corporate action is to be taken by vote of the 10128 shareholders of a business corporation, it shall be authorized upon receiving the affirmative 10129 vote of a majority of the votes cast by all shareholders entitled to vote thereon and, if any 10130 shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a 10131 majority of the votes cast by the shareholders entitled to vote as a class. 10132 10133

(b) Changes in required vote.—Whenever a provision of this [subpart] title requires a 10134 specified number or percentage of votes of shareholders or of a class of shareholders for the 10135 taking of any action, a business corporation may prescribe in a bylaw adopted by the 10136 shareholders that a higher number or percentage of votes shall be required for the action. See 10137 sections 1504(d) (relating to amendment of voting provisions) and 1914(e) (relating to 10138 amendment of voting provisions). 10139 10140

(c) Expenses. – Unless otherwise restricted in the articles, the corporation shall pay the 10141 reasonable expenses of solicitation of votes, proxies or consents of shareholders by or on 10142 behalf of the board of directors or its nominees for election to the board, including solicitation 10143 by professional proxy solicitors and otherwise, and may pay the reasonable expenses of a 10144 solicitation by or on behalf of other persons. 10145

10146 (d) Cross reference. – See section 321 (relating to approval by business corporation). 10147 10148

Amended Committee Comment (2014): 10149 10150 Adoption of a bylaw under subsection (b) increasing the required vote for an action will 10151

require the minimum vote applicable at the time for an amendment of the bylaws and not the 10152 increased vote to be required in the bylaw. 10153

10154 Subsection (c) was intended as a codification of existing law and practice at the time it 10155

was adopted in 1988. 10156 10157 The definition of voting or “casting a vote” in 15 Pa.C.S. § 1103 provides that an 10158

abstention is not a vote. 10159 10160 Under 15 Pa.C.S. § 1504(c), the provisions that subsections (a) and (b) authorize to be 10161

set forth in the bylaws may also be set forth in the articles. 10162 10163 Subsection (d) is a reminder that rules for shareholder approval of fundamental 10164

transactions under Chapter 3 are found in 15 Pa.C.S. § 321. 10165 10166

ACTIVE/ 6744855.14 226

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10167 10168 “articles” 10169 “board of directors” 10170 “business corporation” 10171 “bylaws” 10172 “entitled to vote” 10173 “except as otherwise provided” (see “unless otherwise provided”) 10174 “shareholders” 10175 “shares” 10176 “unless otherwise restricted” 10177 10178 10179

§ 1766. Consent of shareholders in lieu of meeting. 10180 10181

(a) Unanimous consent. – Unless otherwise restricted in the bylaws, any action 10182 required or permitted to be taken at a meeting of the shareholders or of a class of shareholders 10183 of a business corporation may be taken without a meeting if a consent or consents to the 10184 action in record form are signed, before, on or after the effective date of the action, by all of 10185 the shareholders who would be entitled to vote at a meeting for such purpose. The consent or 10186 consents must be filed with the minutes of the proceedings of the shareholders. 10187 10188

(b) Partial consent. – If the bylaws so provide, any action required or permitted to be 10189 taken at a meeting of the shareholders or of a class of shareholders may be taken without a 10190 meeting upon the signed consent of shareholders who would have been entitled to cast the 10191 minimum number of votes that would be necessary to authorize the action at a meeting at 10192 which all shareholders entitled to vote thereon were present and voting. The consents shall be 10193 filed in record form with the minutes of the proceedings of the shareholders. 10194 10195

(c) Effectiveness of action by partial consent. – An action taken pursuant to subsection 10196 (b) to approve a transaction under Chapter 3 (relating to entity transactions) shall not become 10197 effective until after at least ten days' notice of the action has been given to each shareholder 10198 entitled to vote thereon who has not consented thereto. Any other action may become 10199 effective immediately, but prompt notice that the action has been taken shall be given to each 10200 shareholder entitled to vote thereon that has not consented. This subsection may not be 10201 relaxed by any provision of the articles. 10202 10203

(d) Cross references. – See sections 1702 (relating to manner of giving notice) and 10204 2524 (relating to consent of shareholders in lieu of meeting). 10205 10206 Amended Committee Comment (2014): 10207 10208

The “act” or “action” referred to in this section is the decision made by the shareholders, 10209 for example, to approve a merger. Thus, the notice that is required under subsection (c) is 10210 notice that the action has been taken (i.e., the corporate decision has been made). In the case 10211 of action approving a plan under 15 Pa.C.S. Ch. 3, the notice will provide the foundation for 10212

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an action in equity by a nonconsenting shareholder to enjoin consummation of the corporate 10213 decision. Notice that an action will be taken at a future date will not trigger the running of the 10214 ten-day period, because such an intention may be too speculative to support equitable review 10215 of the action. 10216

10217 The Association Transactions Act limited the circumstances in which notice under 10218

subsection (c) must be given ten days before an action is effective just to approval of 10219 transactions under 15 Pa.C.S. Ch. 3. Notice of other actions (such as election of directors or 10220 amendment of the articles or bylaws) is also required, but in those cases the notice may be 10221 given after the action has become effective. 10222 10223

The consent required by this section may be given by proxy under 15 Pa.C.S. § 1759. 10224 10225

Under 15 Pa.C.S. § 1504(c), the restrictions and provisions that this section authorizes to 10226 be set forth in the bylaws may also be set forth in the articles. 10227 10228

In the case of a registered corporation, action by partial consent must be authorized in 10229 the articles, rather than the bylaws, and the ten-day mandatory delay period of subsection (c) 10230 is not applicable. See 15 Pa.C.S. § 2524(b). 10231 10232

The corporation must keep a record of all consents under this section, regardless of their 10233 form, because they are required to be “filed” with the secretary of the corporation. 10234 10235

Subsection (a) was amended by the GAA Amendments Act of 2013 to clarify its 10236 wording with respect to when consents may be signed. The changes were patterned after 10237 similar changes made to 15 Pa.C.S. § 1727(b) and were intended as a codification of existing 10238 law and practice. 10239 10240

Under 15 Pa.C.S. § 1731(a)(2)(iii), any action that may be taken by the board of 10241 directors under this section with respect to the bylaws must be taken by the full board, and not 10242 by a committee thereof. 10243 10244

Section 304(a)(2) of the General Association Act of 1988 provided that this section and 10245 as much of the GAA as necessary to make this section operative was effective retroactive to 10246 January 27, 1987, insofar as relates to the implementation of former 42 Pa.C.S. Ch. 83F 10247 (relating to corporate directors' liability). See 15 P.S. § 20304(a)(2). 10248 10249

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10250 10251

“articles” 10252 “business corporation” 10253 “bylaws” 10254 “entitled to vote” 10255 “relax” 10256 “shareholders” 10257 “unless otherwise restricted” 10258

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“voting” 10259 10260

The following terms used in this section are defined in 15 Pa.C.S. § 102: 10261 10262

“action” 10263 “record form” 10264 “signed” 10265

10266 10267

Chapter 19 10268 [Fundamental Changes] 10269

Amendments, Sale of Assets and Dissolution 10270 10271

Subchapter A 10272 Preliminary Provisions 10273

10274 § 1901. Omission of certain provisions from filed plans. (Repealed.) 10275 10276 § 1902. Statement of termination. 10277 10278

(a) General rule. – If [a statement with respect to shares,] articles of amendment [or 10279 articles of merger, consolidation, exchange, division or conversion of a business 10280 corporation or to which it is a party] have been filed in the [Department of State] 10281 department prior to the termination of the amendment [or plan] pursuant to provisions 10282 therefor set forth in the resolution or petition relating to the amendment [or in the plan], the 10283 termination shall not be effective unless the corporation shall, prior to the time the amendment 10284 [or plan] is to become effective, file in the department a statement of termination. The 10285 statement of termination shall be [executed] signed by the corporation that filed the 10286 amendment [or by each corporation that is a party to the plan, unless the plan permits 10287 termination by less than all of the corporations, in which case the statement shall be 10288 executed on behalf of the corporation or corporations exercising the right to terminate,] 10289 and shall set forth: 10290

10291 (1) A copy of the [statement with respect to shares,] articles of amendment [or 10292

articles of merger, consolidation, exchange, division or conversion relating to the 10293 amendment or plan that is terminated]. 10294

10295 (2) A statement that the amendment [or plan] has been terminated in accordance 10296

with the provisions therefor set forth therein. 10297 10298

(b) Cross references.--See sections 134 (relating to docketing statement) and 138 10299 (relating to statement of correction). 10300 10301 Amended Committee Comment (2014): 10302 10303

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The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10304 10305 “amendment” 10306 “business corporation” 10307 “department” 10308

10309 10310 § 1904. De facto transaction doctrine abolished. 10311 10312

The doctrine of de facto mergers, consolidations and other fundamental transactions is 10313 abolished and the rules laid down by Bloch v. Baldwin Locomotive Works, 75 Pa. D. & C. 24 10314 (C.P. Del. Cty. 1950), and Marks v. The Autocar Co., 153 F.Supp. 768 (E.D. Pa. 1954), and 10315 similar cases are overruled. A transaction that in form satisfies the requirements of this 10316 [subpart] title may be challenged by reason of its substance only to the extent permitted by 10317 section 1105 (relating to restriction on equitable relief). 10318

10319 Amended Committee Comment (2014): 10320 10321

The prior abolition of the de facto merger doctrine is reaffirmed and expanded by this 10322 section which adopts the Delaware principle that a transaction that in form satisfies the 10323 requirements of the statute may be challenged by reason of its substance only if fraud or 10324 fundamental unfairness is shown. See 15 Pa.C.S. § 315. 10325 10326

No provision comparable to new 15 Pa.C.S. § 1904 is required with respect to nonprofit 10327 corporations since members of a nonprofit corporation, by reason of the absence of any 10328 expectation of gain from the activities of the corporation, have never been considered to enjoy 10329 the vested rights that triggered common law dissenters rights. 10330 10331 10332 § 1905. Proposal of fundamental transactions. 10333 10334

Where any provision of this chapter requires that an amendment of the articles[, a plan] 10335 or the dissolution of a business corporation be proposed or approved by action of the board of 10336 directors, that requirement shall be construed to authorize and be satisfied by the written 10337 agreement or consent of all of the shareholders of the corporation entitled to vote thereon. 10338 10339 Amended Committee Comment (2014): 10340 10341

This section makes it clear that a unanimous vote by the shareholders constitutes the 10342 only approval needed for a transaction under this chapter. If that vote is obtained, the separate 10343 approval by the board of directors that would otherwise be required under 15 Pa.C.S. §§ 10344 1914(a) (amendments) or 1974(a) (dissolution) is not required. 10345

10346 The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10347 10348 “articles” 10349

ACTIVE/ 6744855.14 230

“board of directors” 10350 “business corporation” 10351 “entitled to vote” 10352 “shareholders” 10353

10354 10355 § 1906. Special treatment of holders of shares of same class or series. 10356 10357

(a) General rule.—Except as otherwise restricted in the articles, a plan may contain a 10358 provision classifying the holders of shares of a class or series into one or more separate 10359 groups by reference to any facts or circumstances that are not manifestly unreasonable and 10360 providing mandatory treatment for shares of the class or series held by particular shareholders 10361 or groups of shareholders that differs materially from the treatment accorded other 10362 shareholders or groups of shareholders holding shares of the same class or series (including a 10363 provision modifying or rescinding rights previously created under this section) if: 10364 10365

(1) (i) [such provision is specifically authorized by a majority of the votes 10366 cast by all shareholders entitled to vote on the plan, as well as] the plan is 10367 approved by a majority of the votes cast by any class or series of shares any of the 10368 shares of which are so classified into groups, whether or not such class or series 10369 would otherwise be entitled to vote on the plan; and 10370

10371 (ii) the provision voted on specifically enumerates the type and extent of 10372

the special treatment authorized; or 10373 10374

(2) under all the facts and circumstances, a court of competent jurisdiction finds 10375 such special treatment is undertaken in good faith, after reasonable deliberation and is in 10376 the best interest of the corporation. 10377

10378 (b) Statutory voting rights upon special treatment.—Except as provided in subsection 10379

(c), if a plan contains a provision for special treatment, each group of holders of any 10380 outstanding shares of a class or series who are to receive the same special treatment under the 10381 plan shall be entitled to vote as a special class in respect to the plan regardless of any 10382 limitations stated in the articles or bylaws on the voting rights of any class or series. 10383

10384 (c) Dissenters rights upon special treatment.—If any plan contains a provision for 10385

special treatment without requiring for the adoption of the plan the statutory class vote 10386 required by subsection (b), the holder of any outstanding shares the statutory class voting 10387 rights of which are so denied, who objects to the plan and complies with Subchapter D of 10388 Chapter 15 (relating to dissenters rights), shall be entitled to the rights and remedies of 10389 dissenting shareholders provided in that subchapter. 10390

10391 (c.1) Determination of groups.—For purposes of applying subsections (a)(1) and (b), 10392

the determination of which shareholders are part of each group receiving special treatment 10393 shall be made as of the record date for shareholder action on the plan. 10394

10395

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(c.2) Notice to shareholders.—Any notice to shareholders of a meeting called to act on a 10396 plan that provides for special treatment must state that the plan provides for special treatment. 10397 The notice must identify those shareholders receiving special treatment unless the notice is 10398 accompanied by either a summary of the plan that includes that information or the full text of 10399 the plan. 10400 10401

(d) Exceptions.—This section shall not apply to: 10402 10403

(1) [The creation or issuance of securities, contracts, warrants or other 10404 instruments evidencing any shares, option rights, securities having conversion or 10405 option rights or obligations authorized by section 2513 (relating to disparate 10406 treatment of certain persons).] (Reserved.) 10407

10408 (2) A provision of a plan that offers to all holders of shares of a class or series 10409

the same option to elect certain treatment. 10410 10411 (3) A plan that contains an express provision that this section shall not apply or 10412

that fails to contain an express provision that this section shall apply. 10413 10414 (4) A provision of a plan that treats all of the holders of a particular class or 10415

series of shares differently from the holders of another class or series. A provision of a 10416 plan that treats the holders of a class or series of shares differently from the holders of 10417 another class or series of shares shall not constitute a violation of section 1521(d) 10418 (relating to authorized shares). 10419

10420 (e) Definition.—As used in this section, the term "plan" [includes] means: 10421

10422 (1) an amendment of the articles that effects a reclassification of shares, whether 10423

or not the amendment is accompanied by a separate plan of reclassification; [and] 10424 10425 (1.1) a plan of asset transfer adopted under section 1932(b) (relating to voluntary 10426

transfer of corporate assets); or 10427 10428 (2) a resolution recommending that the corporation dissolve voluntarily adopted 10429

under section 1972(a) (relating to proposal of voluntary dissolution). 10430 10431 Amended Committee Comment (2014): 10432 10433

This section applies only to a “plan” as defined in subsection (e), i.e., an amendment, 10434 plan of asset transfer, or resolution recommending dissolution. 15 Pa.C.S. § 329 is similar to 10435 this section and applies to the types of plans that may be adopted under Chapter 3, i.e., a plan 10436 of merger, interest exchange, conversion, division, or domestication. 10437

10438 This section authorizes “black hat – white hat” treatment of shareholders, and the facts 10439

or circumstances forming the basis for special treatment of shareholders are specifically 10440 intended to include the identity of the individual shareholders. Commonplace examples are 10441

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provisions providing marketable securities to non-management holders and earn-out securities 10442 to continuing management in connection with the acquisition of a corporation. Any 10443 classification of shareholders, however, is subject to the requirement that it not be “manifestly 10444 unreasonable,” which is intended to import the standard of 15 Pa.C.S. § 1529(c)(4) and to 10445 prohibit special treatment on the basis of race, sex, religion, etc. 10446 10447

No reference to this section or to the concept of special treatment has been included in 10448 15 Pa.C.S. § 1521 since the concept is intended by definition to be exogenous to the shares. A 10449 provision in the articles that distinguishes among the holders of a class or series of shares 10450 creates a de facto subclass or subseries which is analytically different from the concept of 10451 special treatment. The adoption of such a provision by amendment will involve special 10452 treatment if the persons for whom different treatment is prescribed are already shareholders, 10453 but after the differing treatment has been included in the articles it no longer constitutes 10454 special treatment. 10455 10456

If there is any group of holders of a class or series under subsection (b), then the entire 10457 class or series has a statutory class vote under subsection (a)(1)(i) (unless subsection (a)(2) is 10458 satisfied), in addition to the group votes under subsection (b) (unless one of the exemptions in 10459 subsections (c) and (d) is applicable). Where, for example, an amendment of the articles is 10460 proposed to reclassify the shares of a class or series so that the holders of shares of the class or 10461 series are allotted a new fixed rate preferred stock unless they are employees, in which case 10462 they may elect to receive instead an earn-out (variable face amount) security, there will be two 10463 groups within the meaning of subsection (b): (1) the employee holders and (2) all other 10464 holders of the class or series. Subsection (b) will be applicable separately to each group, and 10465 the board of directors could, for example, provide for a separate vote by group (1) (thus 10466 depriving them of dissenters rights) and no separate vote for group (2) (thus according them 10467 dissenters rights). Both group (1) and group (2) would, however, vote together as a single 10468 class under subsection (a)(1), unless the board of directors were willing to gamble that a court 10469 would agree that the standards of paragraph (a)(2) are satisfied. 10470 10471

In the case of a merger or other transaction in which dissenters rights will be available 10472 even if the plan does not provide for special treatment, the decision to use that form of 10473 transaction is effectively a choice to provide dissenters rights under subsection (c). If a class 10474 vote is provided under subsection (b) in such a situation, that class vote will not deprive the 10475 shareholders of the dissenters rights granted independently by another provision of the 1988 10476 BCL. 10477 10478

The use of the term “court of competent jurisdiction” rather than “court” in paragraph 10479 (a)(2) implies that the requirement of paragraph (a)(2) is not a condition precedent, but may 10480 be satisfied, e.g., by a finding of a court which has been asked to enjoin the transaction as 10481 unauthorized under subsection (a). Paragraph (a)(2), of course, is applicable only if paragraph 10482 (a)(1) is not satisfied. If the procedures in paragraph (a)(1) are followed, the transaction will 10483 be subject to challenge only under 15 Pa.C.S. § 1105. 10484 10485

The procedures of this section will apply only if an amendment or plan expressly 10486 provides that this section is to apply. If this section does not apply, the statutory requirements 10487

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relating to fraud or fundamental unfairness (as modified by 15 Pa.C.S. § 1521(b)(1)(i)) will be 10488 exclusively applicable. See 15 Pa.C.S. §§ 1105 and 1521(d). 10489 10490

Subsection (c.1) was added by the GAA Amendments Act of 2013 to confirm that the 10491 record date provisions in 15 Pa.C.S. § 1763 will apply under this section in the usual way. 10492 The fact that the identity of the shareholders receiving a certain form of special treatment 10493 changes between the record date and the effective date of a plan will not invalidate an 10494 otherwise valid approval of the plan. 10495 10496

The GAA Amendments Act of 2013 deleted the former last sentence of paragraph (d)(3) 10497 which provided that “The shareholders of a corporation that proposes a plan to which this 10498 section is not applicable by reason of this paragraph shall have the remedies contemplated by 10499 section 1105 (relating to restriction on equitable relief).” The Committee was concerned that 10500 the quoted sentence could be read to provide that remedies might be available under 15 10501 Pa.C.S. § 1105 without regard to whether the tests in section 1105 would otherwise justify the 10502 grant of a remedy. Deletion of the quoted sentence will have no substantive effect because 15 10503 Pa.C.S. § 1105 applies in any event to all plans. 10504 10505

If this section is applicable to a plan, it is within the discretion of the board of directors 10506 to choose whether statutory class voting rights under subsection (b) or dissenters rights under 10507 subsection (c) will be available. The dissenters rights granted by subsection (c) are not 10508 subject to the “statutory market” exceptions of 15 Pa.C.S. § 1571(b)(1). 10509 10510

A group may be created that consists of only a single shareholder, since under 1 Pa.C.S. 10511 § 1902 (relating to number; gender; tense) words in the singular include the plural and vice 10512 versa. 10513 10514

The GAA Amendments Act of 1990 added both the reference in subsection (a) to a 10515 provision of the articles restricting the use of special treatment and also subsection (d)(2) and 10516 (3). The GAA Amendments Act of 1990 also clarified the references to groups in subsection 10517 (a)(1)(i) and (b). Those amendments were effective retroactive to October 1, 1989 which was 10518 the general effective date of the 1988 BCL and thus also the date that special treatment was 10519 first authorized under Pennsylvania law. See 15 P.S. § 21404(a)(2). 10520 10521

Subsection (d)(4) was added by the GAA Amendments Act of 2001 and was intended as 10522 a codification of existing law and practice. 10523 10524

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10525 10526

“amendment” 10527 “articles” 10528 “bylaws” 10529 “entitled to vote” 10530 “except as otherwise restricted” (see “unless otherwise restricted”) 10531 “issue” 10532 “plan” 10533

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“reclassification” 10534 “shareholders” 10535 “shares” 10536 “special treatment” 10537

10538 See also the definition of “voting” in 15 Pa.C.S. § 1103. 10539

10540 Subsection (e) supplements the definition of “plan” in 15 Pa.C.S. § 1103 just for 10541

purposes of this section. 10542 10543

The term “obligation” used in this section is defined in 15 Pa.C.S. § 102. 10544 10545 10546 § 1908. Submission of matters to shareholders. 10547 10548

A business corporation may agree, in record form, to submit an amendment [or plan] or 10549 other matter to its shareholders whether or not the board determines, at any time after 10550 approving the matter, that the matter is no longer advisable and recommends that the 10551 shareholders reject or vote against it, regardless of whether the board of directors changes its 10552 recommendation. If a corporation so agrees to submit a matter to its shareholders, the matter 10553 is deemed to have been validly adopted by the corporation when it has been approved by the 10554 shareholders. 10555 10556 Amended Committee Comment (2014): 10557 10558

This section adopts the Delaware approach of permitting a corporation to agree to a 10559 “force the vote” provision. Under this section directors can agree to submit an amendment of 10560 the articles or other matter to the shareholders for approval even if they later determine that 10561 they no longer recommend it. 10562 10563

In Smith v. Van Gorkom, 488 A.2d 858, the Delaware Supreme Court interpreted 6 Del. 10564 Code § 251(b) to mean that a board considering a merger agreement “had but two options: (1) 10565 to proceed with the merger and the stockholder meeting, with the Board’s approval; or (2) to 10566 rescind its agreement …, withdraw its approval of the merger, and notify its stockholders.” 10567 Id. at 888. The court also stated that “in the merger context, a director may not … leav[e] to 10568 the shareholders alone the decision to approve or disapprove the [merger] agreement.” Id. at 10569 873 (citing Beard v. Elster, 160 A.2d 731, 737 (1960)). 10570 10571

In response to the quoted language from Smith v. Van Gorkom, Delaware amended 6 10572 Del. Code § 251(c) in 1998 to allow a merger agreement to be submitted to the stockholders 10573 without a recommendation of the board. Delaware subsequently deleted that language from § 10574 251(c) in 2003 and adopted a new section 146 which is not specific to mergers and permits 10575 any matter to be submitted to the stockholders without a recommendation of the board. 10576 10577

The first sentence is patterned after 6 Del. Code § 146. The second sentence has been 10578 added to the Delaware provision to make clear how this section relates to the “two house” 10579

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requirement of 15 Pa.C.S. § 1924(a) and similar sections. 10580 10581

This section is not intended to relieve the board of directors of its duty to consider 10582 carefully a proposed transaction and the interests of the shareholders. 10583

10584 This section is similar to 15 Pa.C.S. § 320 which applies to the submission to interest 10585

holders for approval of plans relating to transactions under Chapter 3. This section is not 10586 limited to plans relating to fundamental transactions and includes any matter that is submitted 10587 to shareholders for approval. It includes, for example, approval by the shareholders of the 10588 issuance of new shares when required by stock exchange rules such as Section 312.03 of the 10589 NYSE Listed Company Manual. 10590 10591

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10592 10593

“amendment” 10594 “board of directors” 10595 “business corporation” 10596 “shareholders” 10597

10598 The term “record form” used in this section is defined in 15 Pa.C.S. § 102. 10599

10600 10601

Subchapter C 10602 Merger[, Consolidation, Share Exchanges] Liabilities and Sale of Assets 10603

10604 § 1921. Merger and consolidation authorized. (Repealed.) 10605 10606 § 1922. Plan of merger or consolidation. (Repealed.) 10607 10608 § 1923. Notice of meeting of shareholders. (Repealed.) 10609 10610 § 1924. Adoption of plan. (Repealed.) 10611 10612 § 1925. Authorization by foreign corporations. (Repealed.) 10613 10614 § 1926. Articles of merger or consolidation. (Repealed.) 10615 10616 § 1927. Filing of articles of merger or consolidation. (Repealed.) 10617 10618 § 1928. Effective date of merger or consolidation. (Repealed.) 10619 10620 § 1929. Effect of merger or consolidation. (Repealed.) 10621 10622 § 1930. Dissenters rights. (Repealed.) 10623

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10624 § 1931. Share exchanges. (Repealed.) 10625 10626 § 1932. Voluntary transfer of corporate assets 10627 10628

(a) Shareholder approval not required.—The sale, lease, exchange or other disposition 10629 of all, or substantially all, the property and assets of a business corporation, when made in the 10630 usual and regular course of the business of the corporation, or for the purpose of relocating 10631 all, or substantially all, of the business of the corporation, may be made upon such terms and 10632 conditions, and for such consideration, as shall be authorized by its board of directors. Except 10633 as otherwise restricted by the bylaws, authorization or consent of the shareholders shall not be 10634 required for such a transaction. 10635 10636

(b) Shareholder approval required.— 10637 10638

(1) A sale, lease, exchange or other disposition of all, or substantially all, the 10639 property and assets, with or without the goodwill, of a business corporation, if not made 10640 pursuant to subsection (a) or (d) or to section 1551 (relating to distributions to 10641 shareholders) or Subchapter [D] F of Chapter 3 (relating to division), may be made only 10642 pursuant to a plan of asset transfer in the manner provided in this subsection. A 10643 corporation selling, leasing or otherwise disposing of all, or substantially all, its property 10644 and assets is referred to in this subsection and in subsection (c) as the "transferring 10645 corporation." 10646

10647 (2) The property or assets of a direct or indirect subsidiary corporation that is 10648

controlled by a parent corporation shall also be deemed the property or assets of the 10649 parent corporation for the purposes of this subsection and of subsection (c). A merger 10650 [or consolidation] to which such a subsidiary corporation is a party and in which a third 10651 party acquires direct or indirect ownership of the property or assets of the subsidiary 10652 corporation constitutes an "other disposition" of the property or assets of the parent 10653 corporation within the meaning of that term as used in this section. 10654

10655 (3) The plan of asset transfer shall set forth the terms and conditions of the sale, 10656

lease, exchange or other disposition or may authorize the board of directors to fix any or 10657 all of the terms and conditions, including the consideration to be received by the 10658 corporation therefor. The plan may provide for the distribution to the shareholders of 10659 some or all of the consideration to be received by the corporation, including provisions 10660 for special treatment of shares held by any shareholder or group of shareholders as 10661 authorized by, and subject to the provisions of, section 1906 (relating to special 10662 treatment of holders of shares of same class or series). It shall not be necessary for the 10663 person acquiring the property or assets of the transferring corporation to be a party to the 10664 plan. Any of the terms of the plan may be made dependent upon facts ascertainable 10665 outside of the plan if the manner in which the facts will operate upon the terms of the 10666 plan is set forth in the plan. Such facts may include, without limitation, actions or 10667 events within the control of or determinations made by the corporation or a 10668 representative of the corporation. 10669

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10670 (4) The plan of asset transfer shall be proposed and adopted, and may be 10671

amended after its adoption and terminated, by the transferring corporation in the manner 10672 provided in [this subchapter] Chapter 3 (relating to entity transactions) for the 10673 proposal, adoption, amendment and termination of a plan of merger, except section 10674 [1924(b) (relating to adoption by board of directors)] 321(d) (relating to approval by 10675 business corporation). The procedures of [this subchapter] Chapter 3 shall not be 10676 applicable to the person acquiring the property or assets of the transferring corporation. 10677 There shall be included in, or enclosed with, the notice of the meeting of the 10678 shareholders of the transferring corporation to act on the plan a copy or a summary of 10679 the plan and, if Subchapter D of Chapter 15 (relating to dissenters rights) is applicable, a 10680 copy of the subchapter and of subsection (c). 10681

10682 (5) In order to make effective the plan of asset transfer so adopted, it shall not be 10683

necessary to file any articles or other documents in the Department of State. 10684 10685

(c) Dissenters rights in asset transfers.— 10686 10687

(1) If a shareholder of a transferring corporation that adopts a plan of asset 10688 transfer objects to the plan and complies with Subchapter D of Chapter 15, the 10689 shareholder shall be entitled to the rights and remedies of dissenting shareholders therein 10690 provided, if any. 10691

10692 (2) Paragraph (1) shall not apply to a sale pursuant to an order of court having 10693

jurisdiction in the premises or a sale pursuant to a plan of asset transfer that requires that 10694 all or substantially all of the net proceeds of sale be distributed to the shareholders in 10695 accordance with their respective interests within one year after the date of sale or to a 10696 liquidating trust. 10697

10698 (3) See sections 1906(c) (relating to dissenters rights upon special treatment) and 10699

2537 (relating to dissenters rights in asset transfers). 10700 10701

(d) Exceptions.—Subsections (b) and (c)(1) shall not apply to a sale, lease, exchange 10702 or other disposition of all, or substantially all, of the property and assets of a business 10703 corporation: 10704 10705

(1) that directly or indirectly owns all of the outstanding shares of another 10706 corporation to the other corporation if the voting rights, preferences, limitations or 10707 relative rights, granted to or imposed upon the shares of any class of the parent 10708 corporation are not altered by the sale, lease, exchange or other disposition; 10709

10710 (2) when made in connection with the dissolution or liquidation of the 10711

corporation, which transaction shall be governed by the provisions of Subchapter F 10712 (relating to voluntary dissolution and winding up) or G (relating to involuntary 10713 liquidation and dissolution), as the case may be; or 10714

10715

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(3) when made in connection with a transaction pursuant to which all the assets 10716 sold, leased, exchanged or otherwise disposed of are simultaneously leased back to the 10717 corporation. 10718

10719 (e) Mortgage.—A mortgage, pledge, grant of a security interest or dedication of 10720

property to the repayment of indebtedness (with or without recourse) shall not be deemed a 10721 sale, lease, exchange or other disposition for the purposes of this section. 10722 10723

(f) Restrictions.—This section shall not be construed to authorize the conversion or 10724 exchange of property or assets in fraud of corporate creditors or in violation of law. 10725 10726

(g) Presumption.—A corporation will conclusively be deemed not to have sold, 10727 leased, exchanged or otherwise disposed of all, or substantially all, of its property and assets, 10728 with or without goodwill, if the corporation or any direct or indirect subsidiary controlled by 10729 the corporation retains a business activity that represented at the end of its most recently 10730 completed fiscal year, on a consolidated basis, at least: 10731 10732

(1) 25% of total assets; and 10733 10734 (2) 25% of either: 10735

10736 (i) income from continuing operations before taxes; or 10737 10738 (ii) revenues from continuing operations. 10739

10740 (h) Cross reference. – See section 315 (relating to nature of transactions). 10741

10742 Amended Committee Comment (2014): 10743 10744

The application of the sale of asset procedures and restrictions to parent-subsidiary 10745 systems is clarified in subsection (b)(2). 10746 10747

Because the term “action” is defined in 15 Pa.C.S. § 1103 to include failure to act, the 10748 outside facts that subsection (b)(3) provides may be referred to in a plan will include the fact 10749 of a failure to act. For example, a provision in a plan might require that a regulatory agency 10750 fail to object before the plan becomes operative. 10751 10752

The reference in subsection (b)(4) to the merger procedures of Chapter 3is intended to 10753 incorporate also the procedural provisions of Title 15 applicable to a transaction governed by 10754 the merger provisions of Chapter 3. Because subsection (b)(4) makes the merger provisions 10755 of Chapter 3 applicable only to the transferring corporation, no notice is required by Title 15 10756 to be given to the shareholders of the party to an asset transfer that is the acquiror. 10757 10758

As subsection (b)(5) makes clear, it is not necessary to file the plan of asset transfer in 10759 the Department of State. That provision, of course, does not affect the need to make other 10760 types of filings, such as amendments to UCC financing statements, deeds conveying real 10761

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property, etc. 10762 10763

In sales of assets, dissenters rights are not provided for in transactions that (i) are on 10764 terms requiring that the net proceeds of the sale be distributed to the shareholders within one 10765 year, or (ii) are made in connection with a dissolution or liquidation of the corporation 10766 governed by 15 Pa.C.S. Subchs. F or G. Dissenters rights conferred by subsection (c)(1) are 10767 subject to the “statutory market” exception of 15 Pa.C.S. § 1571(b)(1), as was the case under 10768 prior law. Subsection (c)(1) is not applicable to a registered corporation. See 15 Pa.C.S. § 10769 2537. The cross reference to 15 Pa.C.S. § 1906(c) in subsection (c)(3) is a reminder that 10770 dissenters rights may also be available in a transaction that involves special treatment. 10771 10772

References in subsection (e) to the treatment of security interests and the dedication of 10773 property to the repayment of indebtedness are intended as a codification of existing law. 10774 10775

Subsection (g) was added by the GAA Amendments Act of 2001 and was patterned after 10776 Model Business Corporation Act § 12.02(a). The application of this bright-line safe-harbor 10777 test should, in most cases, produce a clear result substantially in conformity with the better 10778 case law. 10779 10780

If a corporation disposes of assets for the purpose of reinvesting the proceeds of the 10781 disposition in substantially the same business in a somewhat different form (for example, by 10782 selling the corporation's only plant for the purpose of buying or building a replacement plant), 10783 the disposition and reinvestment should be treated together, so that the transaction should not 10784 be deemed to leave the corporation without a significant continuing business activity. 10785 10786

The reference in subsection (g) to a direct or indirect subsidiary controlled by the 10787 corporation has been added to the Model Act to conform to the existing policy in subsection 10788 (b)(2) of treating a disposition of assets by such a subsidiary as a disposition by the 10789 corporation. 10790 10791

If all or a large part of a corporation's assets are held for investment, the corporation 10792 actively manages those assets, and it has no other significant business, for purposes of 10793 subsection (g) the corporation should be considered to be in the business of investing in such 10794 assets, so that a sale of most of those assets without a reinvestment should be considered a 10795 sale that would leave the corporation without a significant continuing business activity. In 10796 applying the 25% tests of subsection (g), an issue could arise if a corporation had more than 10797 one business activity, one or more of which might be traditional operating activities such as 10798 manufacturing or distribution, and another of which might be considered managing 10799 investments in other securities or enterprises. If the activity constituting the management of 10800 investments is to be a continuing business activity as a result of the active engagement of the 10801 management of the corporation in that process, and the 25% tests were met upon the 10802 disposition of the other businesses, shareholder approval would not be required. 10803 10804

It is intended that a determination as to whether the tests in subsection (g) have been met 10805 may be based on financial statements prepared in accordance with 15 Pa.C.S. § 1551(c). 10806 10807

ACTIVE/ 6744855.14 240

Subsection (g) is not intended to imply that a transaction that does not meet all of the 10808 tests in subsection (g) will necessarily require shareholder approval. 10809 10810

Under 15 Pa.C.S. § 1731(a)(2)(i), any action that may be taken by the board of directors 10811 under this section that does not involve the submission of a plan to the shareholders may be 10812 taken by a duly authorized committee of the board, subject to compliance by the committee 10813 with any procedure applicable to action by the full board. 10814 10815

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10816 10817

“action” 10818 “board of directors” 10819 “business corporation” 10820 “bylaws” 10821 “except as otherwise restricted” (see “unless otherwise restricted”) 10822 “preferences” 10823 “representative” 10824 “shareholder” 10825 “shares” 10826 “special treatment” 10827

10828 The term “court” used in this section is intended to be broader than the “court” as 10829

defined in 15 Pa.C.S. § 1103. 10830 Subchapter D 10831

[Division] (Reserved) 10832 10833 § 1951. Division authorized. (Repealed.) 10834 10835 § 1952. Proposal and adoption of plan of division. (Repealed.) 10836 10837 § 1953. Division without shareholder approval. (Repealed.) 10838 10839 § 1954. Articles of division. (Repealed.) 10840 10841 § 1955. Filing of articles of division. (Repealed.) 10842 10843 § 1956. Effective date of division. (Repealed.) 10844 10845 § 1957. Effect of division. (Repealed.) 10846 10847

Subchapter E 10848 [Conversion] (Reserved) 10849

10850 § 1961. Conversion authorized. (Repealed.) 10851

ACTIVE/ 6744855.14 241

10852 § 1962. Proposal and adoption of plan of conversion. (Repealed.) 10853 10854 § 1963. Articles of conversion. (Repealed.) 10855 10856 § 1964. Filing of articles of conversion. (Repealed.) 10857 10858 § 1965. Effective date of conversion. (Repealed.) 10859 10860 § 1966. Effect of conversion. (Repealed.) 10861 10862

Subchapter F 10863 Voluntary Dissolution and Winding Up 10864

10865 § 1980. Dissolution by domestication. (Repealed.) 10866 10867 10868

Chapter 21 10869 Nonstock Corporations 10870

10871 Subchapter A 10872

Preliminary Provisions 10873 10874 § 2101. Application and effect of chapter. 10875 10876

(a) General rule. – This chapter shall be applicable to: 10877 10878

(1) A business corporation that elects to become a nonstock corporation in the 10879 manner provided by this chapter. 10880

10881 (2) A domestic corporation for profit subject to Subpart D (relating to 10882

cooperative corporations) organized on a nonstock basis. 10883 10884 (3) A domestic insurance corporation that is a mutual insurance company. 10885

10886 (b) Application to business corporations generally. – The existence of a provision of 10887

this chapter shall not of itself create any implication that a contrary or different rule of law is 10888 or would be applicable to a business corporation that is not a nonstock corporation. This 10889 chapter shall not affect any statute or rule of law that is or would be applicable to a business 10890 corporation that is not a nonstock corporation. 10891 10892

(c) Laws applicable to nonstock corporations. – Except as otherwise provided in this 10893 chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 10894 applicable to all nonstock corporations. The specific provisions of this chapter shall control 10895

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over the general provisions of Part I and this subpart. In the case of a nonstock corporation, 10896 references in this part to “shares,” “shareholder,” “share register,” “share ledger,” “transfer 10897 book for shares,” “number of shares entitled to vote” or “class of shares” shall mean 10898 memberships, member, membership register, membership ledger, membership transfer book, 10899 number of votes entitled to be cast or class of members, respectively. Except as otherwise 10900 provided in this article, a nonstock corporation may be simultaneously subject to this chapter 10901 and one or more other chapters of this article. 10902 10903 Amended Committee Comment (2014): 10904 10905

In addition to its required application to mutual insurance companies under subsection 10906 (a)(3), this chapter authorizes generally the organization of domestic corporations for profit on 10907 a nonstock basis. The chapter is also needed to support Chapter 71, which provides, inter 10908 alia, for incorporation of for profit cooperative corporations on a nonstock basis. 10909 10910

Because subsection (c) provides that the provisions of this chapter control over the 10911 provisions of Part I, this chapter will control over the provisions of Chapter 3 regarding entity 10912 transactions. 10913 10914

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 10915 10916

“business corporation” 10917 “domestic corporation for profit” 10918 “domestic insurance corporation” (see “insurance corporation”) 10919 “mutual insurance company” 10920 “nonstock corporation” 10921

10922 10923

Subchapter B 10924 Powers, Duties and Safeguards 10925

10926 § 2121. Corporate name of nonstock corporations. 10927 10928

(a) General rule.—The corporate name of a nonstock corporation may contain the 10929 word "mutual." 10930 10931

(b) Insurance names.—See section [1303(c)(1)(iii) (relating to corporate name)] 10932 202(c)(1)(iii) (relating to requirements for names generally). 10933 10934 10935

Chapter 23 10936 Statutory Close Corporations 10937

10938 Subchapter A 10939

Preliminary Provisions 10940

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10941 § 2301. Application and effect of chapter. 10942 10943

(a) General rule. – This chapter shall be applicable to a business corporation, other 10944 than a management corporation, that: 10945 10946

(1) had elected to become a close corporation subject to Chapter B of Article III 10947 of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation Law 10948 of 1933 (relating to close corporations), and that, as of the effective date of this chapter, 10949 had not terminated that election in the manner prescribed by statute; or 10950

10951 (2) elects to become a statutory close corporation in the manner provided by this 10952

chapter. 10953 10954

(b) Application of business corporation law generally. – The existence of a provision of 10955 this chapter shall not of itself create any implication that a contrary or different rule of law is 10956 or would be applicable to a business corporation that is not a statutory close corporation. This 10957 chapter shall not affect any statute or rule of law that is or would be applicable to a business 10958 corporation that is not a statutory close corporation. 10959 10960

(c) Laws applicable to statutory close corporations. – Except as otherwise provided in 10961 this chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 10962 applicable to all statutory close corporations. The specific provisions of this chapter shall 10963 control over the general provisions of Part I and this subpart. Except as otherwise provided in 10964 this article, a statutory close corporation may be simultaneously subject to this chapter and 10965 one or more other chapters of this article. 10966 10967

(d) Transitional provisions. – The following provisions of this chapter shall not apply 10968 to a statutory close corporation existing on September 30, 1989, unless otherwise provided in 10969 a bylaw adopted in the manner provided by section 2332(b) (relating to procedure): 10970 10971

Section 2321(b) (relating to preemptive rights) insofar as such provision authorizes 10972 the shareholders to adopt a bylaw eliminating or limiting the preemptive rights provided 10973 in that subsection. 10974

Section 2322 (relating to share transfer restrictions). 10975 Section 2323 (relating to transfer of shares in breach of transfer restrictions). If 10976

section 2323 is not applicable to the corporation, transfer restrictions (including a 10977 restriction that is held not to be authorized by section 1529 (relating to transfer of 10978 securities; restrictions)) shall be enforced in the same manner as if this article had not 10979 been enacted. 10980

Section 2325 (relating to sale option of estate of shareholder). 10981 Section 2336 (relating to fundamental changes). 10982

10983 (e) Cross reference. – See the definition of “closely held corporation” in section 1103 10984

(relating to definitions). 10985 10986

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Amended Committee Comment (2014): 10987 10988

In order to reduce the confusion between closely held corporations and corporations that 10989 formally elect “close corporation” status under the corporation law, the term “statutory close 10990 corporation” has been introduced to identify the latter class of corporations. All statutory 10991 close corporations are “closely held corporations” within the meaning of 15 Pa.C.S. § 1103, 10992 regardless of their number of shareholders, but not all “closely held corporations” are 10993 statutory close corporations. 10994 10995

A number of nonconforming amendments are made to the close corporation provisions 10996 of the prior law, e.g., preserving preemptive rights and the issuance of stock certificates, each 10997 of which would have otherwise automatically disappeared in view of the changes made to the 10998 applicable provisions of other chapters of this subpart. This chapter is revised generally along 10999 the lines of the Statutory Close Corporation Supplement to the Model Business Corporation 11000 Act (1982). A definition of “minimum vote” is added (§ 2302), a statutory form of notice of 11001 technical close corporation status is required on share certificates which supersedes the 11002 various notices heretofore required (§§ 2308, 2321, 2332, 2337), shares of a close corporation 11003 are subject to a right of first refusal in the corporation or its shareholders, unless otherwise 11004 provided in the bylaws (§§ 2322, 2323), the estate of a deceased shareholder has a put at fair 11005 value to the corporation and the other shareholders (unless otherwise provided in the bylaws 11006 (§ 2325)), and any merger, consolidated or other fundamental change may not be effected 11007 unless approved by the statutory minimum vote (§ 2336). 11008 11009

Because subsection (c) provides that the provisions of this chapter control over the 11010 provisions of Part I, this chapter will control over the provisions of Chapter 3 regarding entity 11011 transactions. For example, the requirement of approval of certain actions by a “minimum 11012 vote” will control over the provisions in 15 Pa.C.S. Subch. 3B for approving transactions 11013 under Chapter 3. 11014 11015

As to subsection (d), see 15 Pa.C.S. § 1106(b)(3). 11016 11017

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11018 11019

“business corporation” 11020 “bylaw” 11021 “management corporation” 11022 “shareholders” 11023 “statutory close corporation” 11024 “unless otherwise provided” 11025

11026 11027

Chapter 25 11028 Registered Corporations 11029

11030 Subchapter A 11031

Preliminary Provisions 11032

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11033 § 2501. Application and effect of chapter. 11034 11035

(a) General rule.--Except as otherwise provided in the scope provisions of subsequent 11036 subchapters of this chapter, this chapter shall be applicable to any business corporation that is 11037 a registered corporation as defined in section 2502 (relating to registered corporation status). 11038 11039

(b) Laws applicable to registered corporations. – Except as otherwise provided in this 11040 chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 11041 applicable to all registered corporations. The specific provisions of this chapter shall control 11042 over the general provisions of Part I and this subpart. Except as otherwise provided in this 11043 article, a registered corporation may be simultaneously subject to this chapter and one or more 11044 other chapters of this article. 11045 11046

(c) Effect of a contrary provision of the articles. – 11047 11048

(1) [The] Except as provided in section 2521 (relating to call of special meetings 11049 of shareholders), the articles of a registered corporation may provide either expressly or 11050 by necessary implication that any one or more of the provisions of Subchapters B 11051 (relating to powers, duties and safeguards), C (relating to directors and shareholders) 11052 and D (relating to fundamental changes generally) shall not be applicable in whole or in 11053 part to the corporation. 11054

11055 (2) The articles of a registered corporation may provide that any one or more of 11056

the provisions of Subchapter E (relating to control transactions) and following of this 11057 chapter shall not be applicable in whole or in part to the corporation only if, to the extent 11058 and in the manner, expressly permitted by the subchapter the applicability of which is so 11059 affected. Where any provision of Subchapter E and following of this chapter permits the 11060 applicability of a subchapter to be varied by a provision of the articles, the applicability 11061 may be varied by an amendment of the articles only if, to the extent and in the manner, 11062 expressly permitted by the subchapter the applicability of which is so affected. 11063

11064 (d) Rights cumulative. – The rights, remedies, prohibitions and requirements provided 11065

in Subchapter E and following of this chapter shall be in addition to and not in lieu of any 11066 other rights, remedies, prohibitions or requirements provided by this subpart, the articles or 11067 bylaws of the corporation, any securities, option rights or obligations of the corporation or 11068 otherwise. 11069

11070 Amended Committee Comment (2014): 11071 11072

This chapter sets forth special rules applicable to business corporations having a class or 11073 series of voting shares registered under the Securities Exchange Act of 1934 or otherwise 11074 subject to the reporting obligations of Section 13 of the 1934 Act. The provisions of 11075 Subchapters B, C and D are designed to reduce the regulatory burden of state law on those 11076 companies, since they are already subject to substantial regulatory and disclosure 11077 requirements imposed by federal law and the demands of the capital markets, by providing 11078 that certain provisions of the 1988 BCL that are designed to protect and inform shareholders 11079

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are not applicable to registered corporations. This chapter also collects the provisions of 11080 Pennsylvania law relating to changes in control of certain registered corporations. See 11081 Subchapters E through J. A corporation not required to be registered under the 1934 Act may 11082 elect the flexibility and protections provided by this chapter by voluntarily registering under 11083 the 1934 Act. 11084 11085

As an alternative to amending the articles to opt out of some or all of the provisions of 11086 Subchapters B, C and D as authorized by subsection (c)(1), Section 107 of the General 11087 Association Act of 1988 (15 P.S. § 20107) provided an alternative procedure for continuing as 11088 to a registered corporation certain rights of shareholders under the prior law that are not 11089 continued in Chapter 25. Section 107 provided for the filing of a statement with respect to 11090 continuation of procedure by either the corporation or certain shareholders owning 20% or 11091 more of its outstanding shares, which would have the effect of superseding some or all of the 11092 provisions of 15 Pa.C.S. §§ 1726(a), 2521, and 2535. 11093 11094

When Section 107 became effective on October 1, 1989 (the general effective date of 11095 the General Association Act of 1988), Section 107(c) provided that the articles of a registered 11096 corporation for which a statement with respect to continuation of procedure had been 11097 previously filed would be amended effective October 1, 1989 by adding the text set forth in 11098 the statement. Under Section 107(c) the added text may be subsequently amended or stricken 11099 in the same manner as other amendments to the articles are effected. Section 107 provides as 11100 follows: 11101 11102

(a) General rule.--A business corporation as defined in 15 Pa.C.S. § 1103 11103 (relating to definitions) that was incorporated prior to the enactment of this act 11104 and that desires to continue in effect any of the provisions of prior law 11105 contained in paragraph (2) may file in the Department of State, prior to the 11106 general effective date of this act, a statement with respect to continuation of 11107 procedure executed by the corporation in the manner provided by 15 Pa.C.S. § 11108 1108 (relating to execution of documents) setting forth: 11109

(1) The name of the corporation. 11110 (2) One or more of the following paragraphs, in haec verba: 11111 The entire board of directors, or a class of the board, where the board is classified 11112

with respect to the power to elect directors, or any individual director may be 11113 removed from office without assigning any cause by the vote of shareholders entitled 11114 to cast at least a majority of the votes which all shareholders would be entitled to cast 11115 at any annual election of directors or of such class of directors. The preceding 11116 sentence shall be interpreted in the same manner as the first sentence of section 405 11117 of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation 11118 Law of 1933, as amended by the act of July 20, 1968 (P.L. 459, No. 216). 11119

Special meetings of the shareholders may be called at any time by the president on 11120 the board of directors, or shareholders entitled to cast at least one-fifth of the votes 11121 which all shareholders are entitled to cast at the particular meeting, or by such other 11122 officers or persons as may be provided in the articles or bylaws. The preceding 11123 sentence shall be interpreted in the same manner as the first sentence of subsection C 11124 of section 501 of the Business Corporation Law of 1933, as amended by the act of 11125 August 27, 1963 (P.L. 1355, No. 534). 11126

Every amendment to the articles shall be proposed by either the board of directors 11127

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by the adoption of a resolution setting forth the proposed amendment or by petition of 11128 shareholders entitled to cast at least ten percent of the votes which all shareholders 11129 are entitled to cast thereon, setting forth the proposed amendment which petition shall 11130 be directed to, and filed with, the board of directors. The preceding sentence shall be 11131 interpreted in the same manner as the first sentence of section 802 of the Business 11132 Corporation Law of 1933, as amended by the act of August 27, 1963 (P.L. 1355, No. 11133 534). 11134

(3) A statement that the filing of the statement with respect to continuation of 11135 procedure was authorized by the board of directors. 11136 (b) Alternative procedure.--A qualified shareholder of a registered corporation as 11137

defined in 15 Pa.C.S. § 2502 (relating to registered corporation status) who desires to 11138 continue to enjoy the benefits of any of the provisions of prior law described in 11139 subsection (a)(2), may file in the Department of State, prior to the general effective date 11140 of this act, a statement with respect to continuation of procedure executed by the 11141 qualified shareholder setting forth: 11142

(1) The name of the corporation. 11143 (2) One or more of the following paragraphs, in haec verba: 11144 On the petition of a qualified shareholder, as defined in section 107(f) of the 11145

General Association Act of 1988, which petition shall be directed to, and filed with 11146 the board of directors, the entire board of directors, or a class of the board, where the 11147 board is classified with respect to the power to elect directors (which term includes 11148 directors elected for terms of more than one year and directors elected by holders of 11149 specified classes of series of shares), or any individual director may be removed from 11150 office without assigning any cause by the vote of shareholders entitled to cast at least 11151 a majority of the votes which all shareholders would be entitled to cast at any annual 11152 election of directors or of such class of directors. 11153

Special meetings of the shareholders may be called at any time by a qualified 11154 shareholder as defined in section 107(f) of the General Association Act of 1988. 11155

Every amendment to the articles shall be proposed by either the board of directors 11156 by the adoption of a resolution setting forth the proposed amendment or by petition of 11157 any qualified shareholder as defined in section 107(f) of the General Association Act 11158 of 1988, setting forth the proposed amendment, which petition shall be directed to, 11159 and filed with, the board of directors. 11160

(3) A statement that the person executing the statement is a qualified shareholder 11161 of the corporation as defined in section 107(f) of the General Association Act of 11162 1988. 11163 (c) Effect of filing.--Upon filing in the Department of State, the statement with 11164

respect to continuation of procedure shall operate as an amendment of the articles of the 11165 corporation effective as of the general effective date of this act. A provision of the 11166 articles set forth in a statement with respect to continuation of procedure may be 11167 amended or stricken in the manner provided by law and the articles of incorporation. For 11168 the purposes of 15 Pa.C.S. § 1103, the statement shall be a part of the “articles” as 11169 therein defined. The filing of a statement with respect to continuation of procedure as 11170 permitted by this section shall not be void or voidable by reason of the participation of 11171 one or more directors who are affiliated with any shareholder. 11172

(d) Discretionary action or inaction.--A director or qualified shareholder shall not be 11173 held liable for taking or omitting to take any action permitted by subsection (a) or (b) 11174 respectively, it being the intention of this section that any such director or qualified 11175

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shareholder may exercise absolute discretion in taking or omitting to take any such 11176 action. 11177

(e) Statement of correction.--The provisions of 15 Pa.C.S. § 138 (relating to 11178 statement of correction) shall be applicable to a filing under this section. The 11179 corporation shall be deemed a person adversely affected by any filing under subsection 11180 (b) that is erroneously executed. 11181

(f) Definition.--As used in this section, the term “qualified shareholder” means a 11182 shareholder who: 11183

(1) on January 1, 1980 and continuously thereafter to the date of the exercise of 11184 any power conferred upon a qualified shareholder by this section or the articles, or 11185

(2) if the corporation was incorporated after January 1, 1980, and before the date 11186 of enactment of this act within one year after the incorporation of the corporation and 11187 continuously thereafter to the date of the exercise of any power conferred upon a 11188 qualified shareholder by this section or the articles, held (together with its affiliates or 11189 associates as defined in 15 Pa.C.S. § 2552 (relating to definitions)) sufficient shares 11190 of a corporation to be entitled under the first sentence of subsection C of section 501 11191 of the Business Corporation Law of 1933, to call a special meeting of shareholders of 11192 the corporation. 11193

A statement with respect to continuation of procedure filed under Section 107(a) is 11194 generally applicable to the corporation, in contrast to a statement filed under Section 11195 107(b) which is applicable only to the qualified shareholder filing the statement and any 11196 other qualified shareholders of the corporation. Should a qualified shareholder who has 11197 filed a statement of continuation of procedure cease to be such, and if there are no other 11198 qualified shareholders of the corporation, the statement will no longer be “operative” 11199 within the meaning of 15 Pa.C.S. § 1914(c)(4) and the board of directors may then 11200 restate the articles without shareholder approval to remove the provisions of the 11201 statement with respect to continuation of procedure. 11202

11203 Because subsection (b) provides that the provisions of this chapter control over the 11204

provisions of Part I, this chapter will control over the provisions of Chapter 3 regarding entity 11205 transactions. For example, the special requirements in 15 Pa.C.S. § 2556 for approval of 11206 certain business combinations will control over the provisions in 15 Pa.C.S. Subch. 3B for 11207 approving transactions under Chapter 3. 11208 11209

Subsection (c)(2) is an exception to the rule of 15 Pa.C.S. § 1306(a)(8)(ii) and (b) 11210 (permitting the articles generally to vary the provisions of the 1988 BCL). A provision of the 11211 articles of a registered corporation relating to any provision of Subchapter 25E and following 11212 must be consistent with the statutory provision. Provisions for opting out of Subchapters 25E 11213 and following are contained in 15 Pa.C.S. §§ 2541, 2551, 2561 and 2571. 11214 11215

Subsection (d) supplies former 15 Pa.C.S. §§ 2541(d) and 2551(c) and has been 11216 expanded to apply to all of Subchapters 25E and following. 11217 11218

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11219 11220

“articles” 11221 “business corporation” 11222 “bylaws” 11223

ACTIVE/ 6744855.14 249

“obligation” 11224 11225

The term “registered corporation” used in this section is defined in 15 Pa.C.S. § 2502. 11226 11227 11228

Subchapter C 11229 Directors and Shareholders 11230

11231 § 2521. Call of special meetings of shareholders. 11232 11233

(a) General rule. – The shareholders of a registered corporation shall not be entitled by 11234 statute to call a special meeting of the shareholders. 11235 11236

(b) Exception. – Subsection (a) shall not apply to the call of a special meeting by an 11237 interested shareholder (as defined in section 2553 (relating to interested shareholder)) for the 11238 purpose of approving a business combination under section 2555(3) or (4) (relating to 11239 requirements relating to certain business combinations). 11240

11241 (c) Contrary articles provision. – A provision of the articles of a registered corporation 11242

described in section 2502(1) (relating to registered corporation status) adopted after July 1, 11243 2015, may not provide that a special meeting may be called by less than 25% of the votes that 11244 all shareholders would be entitled to cast at the meeting. 11245

11246 Amended Committee Comment (2014): 11247 11248

Subsection (a) follows the general approach of the Delaware General Corporation Law 11249 which does not confer on the shareholders a statutory right to call a special meeting of 11250 shareholders, except in the case of a corporation that has no directors in office. Cf. Delaware 11251 General Corporation Law § 211. 11252 11253

With respect to the meaning of the phrase “entitled to cast” in subsection (c), see the 11254 definition of “entitled to vote” in 15 Pa.C.S. § 1103. 11255 11256

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11257 11258

“articles” 11259 “shareholder” 11260

11261 The term “registered corporation” used in this section is defined in 15 Pa.C.S. § 2502. 11262

11263 11264

Subchapter D 11265 Fundamental Changes Generally 11266

11267 § 2538. Approval of transactions with interested shareholders. 11268 11269

ACTIVE/ 6744855.14 250

(a) General rule.—The following transactions shall require the affirmative vote of the 11270 shareholders entitled to cast at least a majority of the votes that all shareholders other than the 11271 interested shareholder are entitled to cast with respect to the transaction, without counting the 11272 vote of the interested shareholder: 11273 11274

(1) Any transaction authorized under Subchapter C of Chapter 19 (relating to 11275 merger[, consolidation, share exchanges] liabilities and sale of assets) or Subchapter C 11276 (relating to merger) or D (relating to interest exchange) of Chapter 3 between a 11277 registered corporation or subsidiary thereof and a shareholder of the registered 11278 corporation. 11279

11280 (2) Any transaction authorized under Subchapter [D] F of Chapter [19] 3 11281

(relating to division) in which the interested shareholder receives a disproportionate 11282 amount of any of the shares or other securities of any corporation surviving or resulting 11283 from the plan of division. 11284

11285 (3) Any transaction authorized under Subchapter F of Chapter 19 (relating to 11286

voluntary dissolution and winding up) in which a shareholder is treated differently from 11287 other shareholders of the same class (other than any dissenting shareholders under 11288 Subchapter D of Chapter 15 (relating to dissenters rights)). 11289

11290 (4) Any reclassification authorized under Subchapter B of Chapter 19 (relating 11291

to amendment of articles) in which the percentage of voting or economic share interest 11292 in the corporation of a shareholder is materially increased relative to substantially all 11293 other shareholders. 11294

11295 (b) Exceptions.—Subsection (a) shall not apply to a transaction: 11296

11297 (1) that has been approved by a majority vote of the board of directors without 11298

counting the vote of directors who: 11299 11300

(i) are directors or officers of, or have a material equity interest in, the 11301 interested shareholder; or 11302

11303 (ii) were nominated for election as a director by the interested shareholder, 11304

and first elected as a director, within 24 months of the date of the vote on the 11305 proposed transaction; 11306

11307 (2) in which the consideration to be received by the shareholders for shares of 11308

any class of which shares are owned by the interested shareholder is not less than the 11309 highest amount paid by the interested shareholder in acquiring shares of the same class; 11310 or 11311

11312 (3) effected pursuant to section [1924(b)(1)(ii) (relating to adoption by board 11313

of directors)] 321(d)(1)(ii) (relating to approval by business corporation). 11314 11315

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(c) Additional approvals.—The approvals required by this section shall be in addition 11316 to, and not in lieu of, any other approval required by this subpart, the articles of the 11317 corporation the bylaws of the corporation or otherwise. 11318 11319

(d) Definition of "interested shareholder".—As used in this section, the term 11320 "interested shareholder" includes the shareholder who is a party to the transaction or who is 11321 treated differently from other shareholders and any person, or group of persons, that is acting 11322 jointly or in concert with the interested shareholder and any person who, directly or indirectly, 11323 controls, is controlled by or is under common control with the interested shareholder. An 11324 interested shareholder shall not include any person who, in good faith and not for the purpose 11325 of circumventing this section, is an agent, bank, broker, nominee or trustee for one or more 11326 other persons, to the extent that the other person or persons are not interested shareholders. 11327

11328 Amended Committee Comment (2014): 11329 11330

The requirements of this section for approval of interested transactions are intended to 11331 be more restrictive than the requirements of 15 Pa.C.S. § 1728. 11332 11333

Subsection (b)(3) was added by the GAA Amendments Act of 1992 to make clear that 11334 the requirements of this section are not applicable to short-form mergers. But see 15 Pa.C.S. 11335 § 2539. 11336

11337 Under 15 Pa.C.S. § 2501(c), a registered corporation may render this section 11338

inapplicable to the corporation by a contrary provision of its articles. 11339 11340 The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11341 11342 “articles” 11343 “board of directors” 11344 “bylaws” 11345 “director” 11346 “entitled to vote” 11347 “reclassification” 11348 “shareholder” 11349 “shares” 11350

11351 The term “registered corporation” used in this section is defined in 15 Pa.C.S. § 2502. 11352

11353 11354 § 2539. Adoption of plan of merger by board of directors. 11355 11356

Section [1924(b)(1)(ii) (relating to adoption by board of directors)] 321(d)(1)(ii) 11357 (relating to approval by business corporation) shall be applicable to a plan relating to a merger 11358 [or consolidation] to which a registered corporation described in section 2502(1)(i) (relating 11359 to registered corporation status) is a party only if the plan: 11360 11361

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(1) has been approved by the board of directors of the registered corporation; 11362 and 11363

11364 (2) is consistent with the requirements, if applicable, of Subchapter F (relating to 11365

business combinations). 11366 11367

Amended Committee Comment (2014): 11368 11369

This section was added by the GAA Amendments Act of 1992 in recognition of the 11370 lowering by that act of the threshold required to do a “short form” merger without a vote of 11371 the shareholders. See also 15 Pa.C.S. § 2538(b)(3). 11372 11373

The term “board of directors” used in this section is defined in 15 Pa.C.S. § 1103. 11374 11375

The term “registered corporation” used in this section is defined in 15 Pa.C.S. § 2502. 11376 11377 11378

Chapter 27 11379 Management Corporations 11380

11381 Subchapter A 11382

Preliminary Provisions 11383 11384 § 2701. Application and effect of chapter. 11385 11386

(a) General rule. – This chapter shall be applicable to a business corporation, other 11387 than a statutory close corporation or a professional corporation, that elects to become a 11388 management corporation in the manner provided by this chapter. 11389 11390

(b) Laws applicable to management corporations. – Except as otherwise provided in 11391 this chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 11392 applicable to all management corporations. The specific provisions of this chapter shall 11393 control over the general provisions of Part I and this subpart. Except as otherwise provided in 11394 this article, a management corporation may be simultaneously subject to this chapter and one 11395 or more other chapters of this article. 11396 11397

(c) Effect of a contrary provision of the bylaws. – The bylaws of a management 11398 corporation may provide either expressly or by necessary implication that any one or more of 11399 the provisions of this chapter, except this subchapter, shall not be applicable, in whole or in 11400 part, to the corporation. 11401 11402 Amended Committee Comment (2014): 11403 11404

Chapter 27 as originally enacted by the General Association Act of 1988 was revised 11405 generally by the GAA Amendments Act of 1990 to increase its flexibility in light of its 11406

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purpose of providing a form of organization intermediate in statutory requirements between a 11407 general business corporation and a business trust. 11408 11409

Because subsection (b) provides that the provisions of this chapter control over the 11410 provisions of Part I, this chapter will control over the provisions of Chapter 3 regarding entity 11411 transactions. 11412 11413

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11414 11415

“business corporation” 11416 “bylaws” 11417 “management corporation” 11418 “professional corporation” 11419 “statutory close corporation” 11420

11421 11422

Subchapter C 11423 Fundamental Changes 11424

11425 § 2721. Bylaw and fundamental change procedures. 11426 11427

So long as a business corporation is a management corporation subject to this chapter: 11428 11429

(1) The board of directors shall have the full authority vested by this subpart in 11430 the shareholders to amend the articles under section 2704(b) (relating to procedure) to 11431 renew the election of the corporation to be subject to this chapter and to adopt or change 11432 the bylaws, and a bylaw adopted by the board of directors pursuant to this section may 11433 continue in effect as long as the corporation remains subject to this chapter. 11434

11435 (2) [An amendment or plan shall not be adopted under Chapter 19 (relating 11436

to fundamental changes ), and a bylaw shall not be adopted or changed by the 11437 shareholders, without the approval of the board of directors.] None of the following 11438 shall be adopted or changed by the shareholders without the approval of the board of 11439 directors: 11440

11441 (i) a plan under Chapter 3 (relating to entity transactions); 11442 11443 (ii) an amendment of the articles; 11444 11445 (iii) an amendment, adoption or repeal of a bylaw; 11446 11447 (iv) a plan of asset transfer; or 11448 11449 (v) a resolution recommending dissolution. 11450

11451 (3) In the case of a corporation that in the ordinary course of business redeems 11452

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all outstanding shares at the option of the shareholder at the net asset value or at another 11453 agreed method or amount of value thereof, [an amendment or plan under Chapter 19] 11454 a plan under Chapter 3, an amendment of the articles or a plan of asset transfer under 11455 section 1932 (relating to voluntary transfer of corporate assets) shall not require the 11456 approval of the shareholders of the corporation for adoption by the corporation. 11457

11458 Committee Comment (2014): 11459 11460

Under paragraph (1), the board of directors of a management corporation may effect any 11461 change in the bylaws, including one that under this subpart would ordinarily require 11462 shareholder consent, but may not effect any change in the articles that under this subpart 11463 requires shareholder consent, except an amendment continuing (but not originally effecting) 11464 an election under 15 Pa.C.S. § 2704(b) or changing the number of authorized shares under 15 11465 Pa.C.S. § 2712. Thus, the shareholders of a management corporation retain control of 11466 fundamental transactions affecting their shares, but have no direct control over the selection 11467 of management of the corporation, since they can “vote with their feet” by selling out in the 11468 public market or, in the case of a nonregistered corporation, cashing out under the triennial 11469 cash out required by 15 Pa.C.S. §§ 2704 and 2705(c). 11470 11471

Paragraph (2) imposes a “two-house” requirement with respect to action on the matters 11472 listed in that paragraph. 11473 11474

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11475 11476 “amendment” 11477 “articles” 11478 “board of directors” 11479 “business corporation” 11480 “bylaws” 11481 “management corporation” 11482 “shareholders” 11483 “shares” 11484

11485 11486

Chapter 29 11487 Professional Corporations 11488

11489 Subchapter A 11490

Preliminary Provisions 11491 11492 § 2901. Application and effect of chapter. 11493 11494

(a) General rule. – This chapter shall be applicable to a business corporation, other 11495 than a management corporation, that: 11496 11497

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(1) on the effective date of this chapter was subject to the act of July 9, 1970 11498 (P.L. 461, No. 160), known as the Professional Corporation Law; or 11499

11500 (2) elects to become a professional corporation in the manner provided by this 11501

chapter. 11502 11503

(b) Application to business corporations generally. – The existence of a provision of 11504 this chapter shall not of itself create any implication that a contrary or different rule of law is 11505 or would be applicable to a business corporation that is not a professional corporation, and 11506 this chapter shall not affect any statute or rule of law that is or would be applicable to a 11507 business corporation that is not a professional corporation. This chapter shall not alter or 11508 affect any right or privilege existing under any statute or general rule heretofore or hereafter 11509 enacted by the General Assembly or (with respect to attorneys at law) prescribed by the 11510 Supreme Court of Pennsylvania: 11511 11512

(1) not prohibiting; or 11513 11514 (2) in terms permitting; 11515

11516 performance of professional services in corporate form by a corporation that is not a 11517 professional corporation. 11518 11519

(c) Laws applicable to professional corporations. – Except as otherwise provided in 11520 this chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 11521 applicable to all professional corporations. The specific provisions of this chapter shall 11522 control over the general provisions of Part I and this subpart. Except as otherwise provided in 11523 this article, a professional corporation may be simultaneously subject to this chapter and one 11524 or more other chapters of this article. 11525 11526 Amended Committee Comment (2014): 11527 11528

Chapter 29 is basically a reenactment of the Professional Corporation Law, act of July 9, 11529 1970 (P.L. 461, No. 160). 11530 11531

Professional partnership associations which on August 8, 1970 were subject to the act of 11532 June 2, 1874 (P.L. 271, No. 153), entitled “An act authorizing the formation of partnership 11533 associations, in which the capital subscribed shall alone be responsible for the debts of the 11534 association, except under certain circumstances,” became subject to the Professional 11535 Corporation Law of 1970 and are accordingly brought within the scope of this chapter by 11536 subsection (a)(1). 11537 11538

Because subsection (c) provides that the provisions of this chapter control over the 11539 provisions of Part I, this chapter will control over the provisions of Chapter 2 regarding entity 11540 names and Chapter 3 regarding entity transactions. 11541

11542 The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11543

ACTIVE/ 6744855.14 256

11544 “business corporation” 11545 “management corporation” 11546 “professional corporation” 11547

11548 The term “professional services” used in this section is defined in 15 Pa.C.S. § 102. 11549

11550 11551

Subchapter B 11552 Powers, Duties and Safeguards 11553

11554 § 2921. Corporate name. 11555 11556

(a) General rule.—A professional corporation may adopt any name that is not 11557 prohibited by law or the ethics of the profession in which the corporation is engaged or by a 11558 rule or regulation of the court, department, board, commission or other government unit 11559 regulating the profession. 11560 11561

(b) Additional names permitted.—The provisions of section [1303(a) (relating to 11562 corporate name)] 202 (relating to requirements for names generally) shall not prohibit the 11563 use of a name of a professional corporation if the name contains and is restricted to the name 11564 or the last name of one or more of the present, prospective or former shareholders or of 11565 individuals who were associated with a predecessor or whose individual name or names 11566 appeared in the name of the predecessor. The name may also contain: 11567 11568

(1) the word "and" or any symbol or substitute therefor; 11569 11570 (2) the word "associates"; 11571 11572 (3) the term "P.C."; or 11573 11574 (4) any or all of the words or terms in paragraphs (1), (2) and (3). 11575

11576 [No change to Amended Committee Comment (1992).] 11577

11578 11579

Chapter 31 11580 Insurance Corporations 11581

11582 Subchapter A 11583

Preliminary Provisions 11584 11585 § 3101. Application and effect of chapter. 11586 11587

(a) General rule. – This chapter shall be applicable to a business corporation that is a 11588

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domestic insurance corporation. 11589 11590 (b) Application to business corporations generally. – The existence of a provision of 11591

this chapter shall not of itself create any implication that a contrary or different rule of law is 11592 or would be applicable to a business corporation that is not an insurance corporation. This 11593 chapter shall not affect any statute or rule of law that is or would be applicable to a business 11594 corporation that is not an insurance corporation. 11595

11596 (c) Laws applicable to insurance corporations. – Except as otherwise provided in this 11597

chapter, Part I (relating to preliminary provisions) and this subpart shall be generally 11598 applicable to all insurance corporations. The specific provisions of this chapter shall control 11599 over the general provisions of Part I and this subpart. Except as otherwise provided in this 11600 article, an insurance corporation may be simultaneously subject to this chapter and one or 11601 more other chapters of this article. 11602 11603 Committee Comment (2014): 11604 11605

Because subsection (c) provides that the provisions of this chapter control over the 11606 provisions of Part I, this chapter will control over the provisions of Chapter 2 regarding entity 11607 names and Chapter 3 regarding entity transactions. 11608

11609 The term “business corporation” used in this section is defined in 15 Pa.C.S. § 1103. 11610 11611 The term “domestic insurance corporation” used in this section is defined in 15 Pa.C.S. 11612

§ 3102. 11613 11614 11615

Chapter 33 11616 Benefit Corporations 11617

11618 Subchapter A 11619

Preliminary Provisions 11620 11621 § 3301. Application and effect of chapter. 11622

11623 (a) General rule. – This chapter shall apply to all benefit corporations. 11624 11625 (b) Application of business corporation law generally. – The existence of a provision 11626

of this chapter shall not of itself create any implication that a contrary or different rule of law 11627 is or would be applicable to a business corporation that is not a benefit corporation. This 11628 chapter shall not affect any statute or rule of law that is or would be applicable to a business 11629 corporation that is not a benefit corporation. 11630

11631 (c) Laws applicable to benefit corporations. – Except as otherwise provided in this 11632

chapter, Part I (relating to preliminary provisions) and this subpart shall apply generally to 11633 benefit corporations. The [specific] provisions of this chapter shall control over [the general 11634

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provisions of this subpart] any inconsistent provision of this title. A benefit corporation 11635 may be simultaneously subject to this chapter and one or more other chapters of this article. 11636

11637 (d) Organic records may not be inconsistent. – A provision of the articles or bylaws of 11638

a benefit corporation may not relax, be inconsistent with or supersede any provision of this 11639 chapter. 11640 11641 Amended Committee Comment (2014): 11642 11643

This chapter authorizes the organization of a form of business corporation that offers 11644 entrepreneurs and investors the option to build, and invest in, businesses that operate in a 11645 socially and environmentally responsible manner. Enforcement of those responsibilities 11646 comes not from governmental oversight, but rather from new provisions on transparency and 11647 accountability included in this chapter. 11648 11649

Because subsection (c) provides that the provisions of this chapter control over the 11650 provisions of Part I, this chapter will control over the provisions of Chapter 3 regarding entity 11651 transactions. For example, the requirement of approval of certain actions by a “minimum 11652 status vote” will control over the provisions in 15 Pa.C.S. Subch. 3B for approving 11653 transactions under Chapter 3. 11654

11655 The last sentence of subsection (c) makes clear that a corporation subject to one or more 11656

other chapters of Article C, such as a statutory close corporation subject to Chapter 23, a 11657 registered (or publicly traded) corporation subject to Chapter 25, and an insurance corporation 11658 subject to Chapter 31 may also be a benefit corporation. In the case of a professional 11659 corporation subject to Chapter 29, 15 Pa.C.S. § 3311(e) provides a special rule that eliminates 11660 any conflict between this chapter and 15 Pa.C.S. § 2922(a) regarding the purposes of a 11661 professional corporation. 11662 11663

As a result of subsection (d), a corporation that elects to be subject to this chapter will be 11664 subject to all of the provisions of the chapter and will not be able to vary their application to 11665 the corporation. 11666 11667

The Committee Comments to Chapter 33 are intended to form part of the legislative 11668 history of Chapter 33 and to be citable as such under 1 Pa.C.S. § 1939. 11669 11670

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11671 11672

“articles” 11673 “business corporation” 11674 “bylaws” 11675 “relax” 11676

11677 The term “benefit corporation” used in this section is defined in 15 Pa.C.S. § 3302. 11678

11679 11680

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§ 3304. Election of benefit corporation status. 11681 11682 * * * 11683 11684 (b) Fundamental transactions. – If an association that is not a benefit corporation is a 11685

party to a merger[, consolidation] or division or is the exchanging association in [a share] an 11686 interest exchange, and the surviving, new or any resulting association in the merger, 11687 [consolidation,] division or [share] interest exchange is to be a benefit corporation, then the 11688 plan of merger, [consolidation,] division or [share] interest exchange shall not be effective 11689 unless it is adopted by the [corporation] association by at least the minimum status vote. 11690

11691 Amended Committee Comment (2014): 11692 11693

This section provides the procedures for an existing corporation to become a benefit 11694 corporation. A corporation that is being newly formed may become a benefit corporation in 11695 the manner provided in 15 Pa.C.S. § 3303. Subsection (a) applies to a business corporation 11696 that is directly electing to be a benefit corporation by amending its articles of incorporation. 11697 Subsection (b) applies when a corporation is becoming a benefit corporation indirectly in the 11698 context of a fundamental transaction. In both cases, the change to benefit corporation status 11699 must be approved by at least the minimum status vote. 11700 11701

Subsection (b) also applies to an association that is not a corporation when the 11702 association is a party to a transaction that will result in a benefit corporation. In those 11703 situations, a supermajority vote of the owners of the association is required by subsection (b). 11704 11705

See 15 Pa.C.S. § 3311(d) with respect to changing the identification of a specific public 11706 benefit that it is the purpose of a benefit corporation to pursue. 11707 11708

The following terms used in this section are defined in 15 Pa.C.S. § 1103: 11709 11710

“articles” 11711 “business corporation” 11712

11713 The following terms used in this section are defined in 15 Pa.C.S. § 3302: 11714

11715 “benefit corporation” 11716 “minimum status vote” 11717 11718 11719

Chapter 41 11720 Foreign Business Corporations 11721

11722 Subchapter B 11723 Qualification 11724

11725

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§ 4121. Admission of foreign corporations. (Repealed.) 11726 11727 § 4122. Excluded activities. (Repealed.) 11728 11729 § 4123. Requirements for foreign corporation names. (Repealed.) 11730 11731 § 4124. [Application for a certificate of authority] Advertisement of 11732

registration to do business. 11733 11734

[(a) General rule.—An application for a certificate of authority shall be executed 11735 by the foreign business corporation and shall set forth: 11736 11737

(1) The name of the corporation. 11738 11739 (2) The name of the jurisdiction under the laws of which it is incorporated. 11740 11741 (3) The address, including street and number, if any, of its principal office 11742

under the laws of the jurisdiction in which it is incorporated. 11743 11744 (4) Subject to section 109 (relating to name of commercial registered office 11745

provider in lieu of registered address), the address, including street and number, if 11746 any, of its proposed registered office in this Commonwealth. 11747

11748 (5) A statement that it is a corporation incorporated for a purpose or 11749

purposes involving pecuniary profit, incidental or otherwise. 11750 11751

(b) Advertisement.—]A foreign business corporation shall officially publish notice of 11752 its intention to [apply or its application for a certificate of authority] register to do 11753 business or its registration to do business in this Commonwealth under Chapter 4 (relating to 11754 foreign associations). The notice may appear prior to or after the day on which [application 11755 is made to the Department of State] a registration statement is delivered to the department 11756 for filing and shall set forth briefly: 11757 11758

(1) A statement that the corporation will [apply or has applied for a certificate 11759 of authority under the provisions of the Business Corporation Law of 1988] register 11760 or has registered to do business in this Commonwealth under Chapter 4. 11761

11762 (2) The name of the corporation and [of the jurisdiction under the laws of 11763

which it is incorporated] its jurisdiction of formation. 11764 11765 (3) The address, including street and number, if any, of its principal office under 11766

the laws of [the jurisdiction in which it is incorporated] its jurisdiction of formation. 11767 11768 (4) Subject to section 109, the address, including street and number, if any, of its 11769

proposed registered office in this Commonwealth. 11770 11771

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(c) [Filing.—The application for a certificate of authority shall be filed in the 11772 Department of State.] (Repealed.) 11773 11774

(d) [Cross reference.—See section 134 (relating to docketing statement).] 11775 (Repealed.) 11776 11777 Amended Committee Comment (2014): 11778 11779

The prior provisions of this section regarding applying for a certificate of authority have 11780 been supplied by Subchapter B of Chapter 4. 11781 11782

The term “foreign business corporation” used in this section is defined in 15 Pa.C.S. § 11783 1103. 11784 11785

The following terms used in this section are defined in 15 Pa.C.S. § 102: 11786 11787

“department” 11788 “jurisdiction of formation” 11789 “officially publish” 11790 “principal office” 11791 “registered office” 11792

11793 11794 § 4125. Issuance of certificate of authority. (Repealed.) 11795 11796 § 4126. Amended certificate of authority. (Repealed.) 11797 11798 § 4127. Merger, consolidation or division of qualified foreign corporations. 11799

(Repealed.) 11800 11801 § 4128. Revocation of certificate of authority. (Repealed.) 11802 11803 § 4129. [Application for] Advertisement of termination of [authority] 11804

registration to do business. 11805 11806

[(a) General rule. – Any qualified foreign business corporation may withdraw 11807 from doing business in this Commonwealth and surrender its certificate of authority by 11808 filing in the Department of State an application for termination of authority, executed by 11809 the corporation, which shall set forth: 11810

11811 (1) The name of the corporation and, subject to section 109 (relating to 11812

name of commercial registered office provider in lieu of registered address), the 11813 address, including street and number, if any, of its last registered office in this 11814 Commonwealth. 11815

11816

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(2) The name of the jurisdiction under the laws of which it is incorporated. 11817 11818 (3) The date on which it received a certificate of authority to do business in 11819

this Commonwealth. 11820 11821 (4) A statement that it surrenders its certificate of authority to do business 11822

in this Commonwealth. 11823 11824 (5) A statement that notice of its intention to withdraw from doing business 11825

in this Commonwealth was mailed by certified or registered mail to each municipal 11826 corporation in which the registered office or principal place of business of the 11827 corporation in this Commonwealth is located, and that the official publication 11828 required by subsection (b) has been effected. 11829

11830 (6) The post office address, including street and number, if any, to which 11831

process may be sent in an action or proceeding upon any liability incurred before 11832 the filing of the application for termination of authority. 11833

11834 (b) Advertisement.—] A [qualified] registered foreign business corporation shall, 11835

before filing [an application for termination of authority] a statement of withdrawal under 11836 section 415 (relating to voluntary withdrawal of registration), officially publish and mail a 11837 notice of its intention to withdraw from doing business in this Commonwealth in a manner 11838 similar to that required by section 1975(b) (relating to notice to creditors and taxing 11839 authorities). The notice shall set forth [briefly]: 11840

11841 (1) The name of the corporation and [the jurisdiction under the laws of which 11842

it is incorporated] its jurisdiction of formation. 11843 11844 (2) The address, including street and number, if any, of its principal office under 11845

the laws of its jurisdiction of [incorporation] formation. 11846 11847 (3) Subject to section 109, the address, including street and number, if any, of its 11848

last registered office in this Commonwealth. 11849 11850

(c) [Filing. – The application for termination of authority and the certificates or 11851 statement required by section 139 (relating to tax clearance of certain fundamental 11852 transactions) shall be filed in the department. See section 134 (relating to docketing 11853 statement). (Reserved.) 11854

11855 (d) [Effect of filing. – Upon the filing of the application for termination of 11856

authority, the authority of the corporation to do business in this Commonwealth shall 11857 cease. The termination of authority shall not affect any action or proceeding pending at 11858 the time thereof or affect any right of action arising with respect to the corporation 11859 before the filing of the application for termination of authority. Process against the 11860 corporation in an action upon any liability incurred before the filing of the application 11861 for termination of authority may be served as provided in 42 Pa.C.S. Ch. 53 (relating to 11862

ACTIVE/ 6744855.14 263

bases of jurisdiction and interstate and international procedure) or as otherwise 11863 provided or prescribed by law.] (Reserved.) 11864 11865 Amended Committee Comment (2014): 11866 11867

The prior provisions of this section regarding terminating the authority of a foreign 11868 corporation to do business in Pennsylvania have been supplied by Subchapter B of Chapter 4. 11869 11870

The following terms used in this section are defined in 15 Pa.C.S. § 102: 11871 11872

“department” 11873 “jurisdiction of formation” 11874 “officially publish” 11875 “principal office” 11876 “registered office” 11877

11878 11879 § 4130. Change of address after withdrawal. (Repealed.) 11880 11881 § 4131. Registration of name. (Repealed.) 11882 11883

Subchapter C 11884 Powers, Duties and Liabilities 11885

11886 § 4141. Penalty for doing business without certificate of authority. 11887

(Repealed.) 11888 11889 § 4142. General powers and duties of qualified foreign corporations. 11890

(Repealed.) 11891 11892 § 4143. General powers and duties of nonqualified foreign corporations. 11893

(Repealed.) 11894 11895 § 4144. Registered office of qualified foreign corporations. (Repealed.) 11896 11897

Subchapter D 11898 Domestication (Reserved) 11899

11900 § 4161. Domestication. (Repealed.) 11901 11902 § 4162. Effect of domestication. (Repealed.) 11903 11904

Subpart C. 11905 Nonprofit Corporations 11906

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11907 Chapter 51 11908

General Provisions 11909 11910 § 5103. Definitions. 11911 11912

(a) General definitions. – Subject to additional definitions contained in subsequent 11913 provisions of this subpart that are applicable to specific provisions of this subpart, the 11914 following words and phrases when used in Part I (relating to preliminary provisions) or in this 11915 subpart shall have the meanings given to them in this section unless the context clearly 11916 indicates otherwise: 11917

11918 * * * 11919 11920 “Articles.” The original articles of incorporation, all amendments thereof, and any other 11921

articles, statements or certificates permitted or required to be filed in the Department of State 11922 by sections 108 (relating to change in location or status of registered office provided by agent) 11923 and 138 (relating to statement of correction), Chapter 3 (relating to entity transactions) or this 11924 subpart and including what have heretofore been designated by law as certificates of 11925 incorporation or charters. If an amendment of the articles or [articles of merger or division 11926 made in the manner permitted by this subpart] a statement filed under Chapter 3 restates 11927 articles in their entirety [or if there are articles of consolidation, conversion or 11928 domestication], thenceforth the “articles” shall not include any prior documents and any 11929 certificate issued by the department with respect thereto shall so state. 11930

11931 * * * 11932 11933 “Foreign nonprofit corporation.” A foreign corporation not-for-profit or other entity 11934

subject to Chapter 61 (relating to foreign nonprofit corporations), whether or not required to 11935 [qualify thereunder] register under Chapter 4 (relating to foreign associations). 11936

11937 * * * 11938 11939 [“Nonqualifed foreign corporation” or “nonqualified foreign nonprofit 11940

corporation.” A foreign corporation not-for-profit that is not a qualified foreign 11941 corporation, as defined in this section.] 11942

11943 * * * 11944 11945 [“Qualified foreign corporation” or “qualified foreign nonprofit corporation.” A 11946

foreign corporation not-for-profit authorized under Chapter 61 (relating to foreign 11947 nonprofit corporations) to do business in this Commonwealth.] 11948

11949 * * * 11950

11951 11952

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§ 5106. Uniform application of subpart. 11953 11954

(a) General rule. – Except as provided in subsection (b), this [subpart] title and its 11955 amendments are intended to provide uniform rules for the governance and regulation of the 11956 affairs of nonprofit corporations and of their officers, directors and members and of members 11957 of other bodies, regardless of the date or manner of incorporation or qualification, or of the 11958 issuance of any evidences of membership in or shares of a nonprofit corporation. 11959 11960

(b) Exceptions. – 11961 11962

(1) Unless expressly provided otherwise in any amendment to this [subpart] 11963 title, the amendment shall take effect only prospectively. 11964

11965 (2) Any existing corporation lawfully using a name or, as a part of its name, a 11966

word that could not be used as or included in the name of a corporation subsequently 11967 incorporated or qualified under this [subpart] title may continue to use the name or 11968 word as part of its name if the use or inclusion of the word or name was lawful when 11969 first adopted by the corporation in this Commonwealth. 11970

11971 (3) Subsection (a) shall not adversely affect the rights specifically provided for 11972

or saved in this subpart, including, without limiting the generality of the foregoing, the 11973 provisions of section [5952(d) (relating to proposal and adoption of plan of division)] 11974 363 (relating to approval of division). 11975

11976 (4) Nothing in this [subpart] title shall be deemed to repeal or supersede any 11977

provision in section 7 of the act of April 26, 1855 (P.L. 328, No. 347), entitled “An act 11978 relating to Corporations and to Estates held for Corporate, Religious and Charitable 11979 uses.” 11980

11981 11982

Chapter 53 11983 Incorporation 11984

11985 Subchapter A 11986

Incorporation Generally 11987 11988 § 5303. Corporate name. (Repealed.) 11989 11990 § 5304. Required name changes by senior corporations. (Repealed.) 11991 11992 § 5305. Reservation of corporate name. (Repealed.) 11993 11994

Subchapter C 11995 Revival 11996

11997

ACTIVE/ 6744855.14 266

§ 5341. Statement of revival. 11998 11999

(a) General rule. – Any nonprofit corporation whose charter or articles have been 12000 forfeited by proclamation of the Governor pursuant to section 1704 of the act of April 9, 1929 12001 (P.L. 343, No. 176), known as The Fiscal Code, or otherwise, or whose corporate existence 12002 has expired by reason of any limitation contained in its charter or articles and the failure to 12003 effect a timely renewal or extension of its corporate existence, may, at any time by [filing] 12004 delivering to the department for filing a statement of revival, procure a revival of its charter or 12005 articles, together with all the rights, franchises, privileges and immunities and subject to all of 12006 its duties, debts and liabilities that had been vested in and imposed upon the corporation by its 12007 charter or articles as last in effect. 12008

12009 (b) Contents of statement. – The statement of revival shall be [executed] signed in the 12010

name of the forfeited or expired corporation and shall, subject to section 109 (relating to name 12011 of commercial registered office provider in lieu of registered address), set forth: 12012 12013

(1) The name of the corporation at the time its charter or articles were forfeited 12014 or expired and the address, including street and number, if any, of its last registered 12015 office. 12016

12017 (2) The statute by or under which the corporation was incorporated and the date 12018

of incorporation. 12019 12020 (3) The name that the corporation adopts as its new name if the adoption of a 12021

new name is required by section [5304] 207 (relating to required name changes by 12022 senior [corporations] associations). 12023

12024 (4) The address, including street and number, if any, of its registered office in 12025

this Commonwealth. 12026 12027 (5) A reference to the proclamation or other action by which its charter or 12028

articles were forfeited or a reference to the limitation contained in its expired charter or 12029 articles. 12030

12031 (6) A statement that the corporate existence of the corporation shall be revived. 12032 12033 (7) A statement that the filing of the statement of revival has been authorized by 12034

the corporation. Every forfeited or expired corporation may act by its last directors or 12035 may elect directors and officers in the manner provided by this subpart for the limited 12036 purpose of effecting a filing under this section. 12037

12038 (c) Filing and effect. – The statement of revival and, in the case of a forfeited 12039

corporation, the clearance certificates required by section 139 (relating to tax clearance of 12040 certain fundamental transactions) shall be [filed in the Department of State] delivered to the 12041 department for filing. Upon the filing of the statement of revival, the corporation shall be 12042 revived with the same effect as if its charter or articles had not been forfeited or expired by 12043

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limitation. The revival shall validate all contracts and other transactions made and effected 12044 within the scope of the articles of the corporation by its representatives during the time when 12045 its charter or articles were forfeited or expired to the same effect as if its charter or articles had 12046 not been forfeited or expired. 12047 12048

(d) Cross [reference. – See section] references. See sections 134 (relating to 12049 docketing statement) and 135 (relating to requirements to be met by filed documents). 12050 12051 12052

Chapter 57 12053 Officers, Directors and Members 12054

12055 Subchapter A 12056

Notice and Meetings Generally 12057 12058 § 5704. Place and notice of meetings of members. 12059 12060

(a) Place. – Meetings of members may be held at the geographic location within or 12061 without this Commonwealth provided in or fixed pursuant to the bylaws. Unless otherwise 12062 provided in or pursuant to the bylaws, all meetings of the members shall be held at the 12063 executive office of the corporation wherever situated. If a meeting of members is held by 12064 means of the Internet or other electronic communications technology in a fashion pursuant to 12065 which the members have the opportunity to read or hear the proceedings substantially 12066 concurrently with their occurrence, vote on matters submitted to the members, pose questions 12067 to the directors and members of any other body, make appropriate motions and comment on 12068 the business of the meeting, the meeting need not be held at a particular geographic location. 12069

12070 (b) Notice. – Notice in record form of every meeting of the members shall be given 12071

by, or at the direction of, the secretary or other authorized person to each member of record 12072 entitled to vote at the meeting at least: 12073 12074

(1) ten days prior to the day named for a meeting that will consider a transaction 12075 under Chapter 3 (relating to entity transactions) or a fundamental change under Chapter 12076 59 (relating to fundamental changes); or 12077

12078 (2) five days prior to the day named for the meeting in any other case. 12079

12080 If the secretary or other authorized person neglects or refuses to give notice of a meeting, the 12081 person or persons calling the meeting may do so. 12082 12083

(c) Contents. – In the case of a special meeting of the members, the notice shall 12084 specify the general nature of the business to be transacted, and in all cases the notice shall 12085 comply with the express requirements of this subpart. The corporation shall not have a duty 12086 to augment the notice. 12087 12088

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12089 Subchapter E 12090

Members 12091 12092 § 5757. Action by members. 12093 12094

(a) General rule. – Except as otherwise provided in this [subpart] title or in a bylaw 12095 adopted by the members, whenever any corporate action is to be taken by vote of the 12096 members of a nonprofit corporation, it shall be authorized upon receiving the affirmative vote 12097 of a majority of the votes cast by the members entitled to vote thereon and, if any members 12098 are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the 12099 votes cast by the members entitled to vote as a class. 12100

12101 (b) Changes in required vote.--Whenever a provision of this [subpart] title requires a 12102

specified number or percentage of votes of members or of a class of members for the taking of 12103 any action, a nonprofit corporation may prescribe in a bylaw adopted by the members that a 12104 higher number or percentage of votes shall be required for the action. The number or 12105 percentage of members necessary to call a special meeting of members or to petition for the 12106 proposal of an amendment of articles under this subpart may not be increased under this 12107 subsection. See sections 5504(d) (relating to adoption, amendment and contents of bylaws) 12108 and 5914(d) (relating to adoption of amendments). 12109

12110 (c) Expenses.--Unless otherwise restricted in the articles, the corporation shall pay the 12111

reasonable expenses of solicitation of votes, proxies or consents of members by or on behalf 12112 of the board of directors or its nominees for election to the board, including solicitation by 12113 professional proxy solicitors and otherwise, and may pay the reasonable expenses of a 12114 solicitation by or on behalf of other persons. 12115

12116 (d) Cross reference. – See section 322 (relating to approval by nonprofit corporation). 12117

12118 12119 § 5766. Consent of members in lieu of meeting. 12120 12121

(a) Unanimous consent. – Unless otherwise restricted in the bylaws, any action 12122 required or permitted to be taken at a meeting of the members or of a class of members of a 12123 nonprofit corporation may be taken without a meeting if a consent or consents to the action in 12124 record form are signed, before, on or after the effective date of the action, by all of the 12125 members who would be entitled to vote at a meeting for that purpose. The consent or 12126 consents must be filed with the minutes of the proceedings of the members. 12127 12128

(b) Partial consent. – If the bylaws so provide, any action required or permitted to be 12129 taken at a meeting of the members or of a class of members may be taken without a meeting 12130 upon the signed consent of members who would have been entitled to cast the minimum 12131 number of votes that would be necessary to authorize the action at a meeting at which all 12132 members entitled to vote thereon were present and voting. The consents must be filed in 12133 record form with the minutes of the proceedings of the members. 12134

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12135 (c) [Effectiveness] Notice of action by partial consent. – [An action taken pursuant 12136

to subsection (b) shall not become effective until after at least ten days' notice of the 12137 action has been given to each member entitled to vote thereon who has not consented 12138 thereto.] Unless the bylaws require notice before an action pursuant to subsection (b) takes 12139 effect, prompt notice that an action has been taken shall be given to each member entitled to 12140 vote on the action that has not consented. 12141 12142 Amended Committee Comment (2014): 12143 12144

The analogous provision of the BCL, which is 15 Pa.C.S. § 1766, provides that 12145 subsection (c) may not be relaxed by the articles of incorporation. That restriction is needed 12146 in the BCL because otherwise the articles of incorporation of a business corporation could 12147 reduce or eliminate the required delay in the effectiveness of an action by partial consent 12148 under 15 Pa.C.S. § 1306(a)(8)(ii) and (b). The articles of incorporation of a nonprofit 12149 corporation, in contrast, are subject to the more restrictive test that they be “not inconsistent” 12150 with the NPCL. Thus, subsection (c) is protected from variation by the more restricted scope 12151 of articles of incorporation of nonprofit corporations. See the Committee Comment to 15 12152 Pa.C.S. § 5306. 12153

12154 Subsections (b) and (c) were added by the GAA Amendments Act of 2013 and were 12155

patterned after 15 Pa.C.S. § 1766(b) and (c). The GAA Amendments Act of 2013 also 12156 amended subsection (a) to clarify its wording. The changes to subsection (a) were patterned 12157 after 15 Pa.C.S. § 1766(a) and were intended as a codification of existing law and practice. 12158

12159 Prior to its amendment in 2014 by the Associations Transactions Act, subsection (c) 12160

provided that an action taken by partial consent under subsection (b) could not become 12161 effective until after at least ten days’ notice had been given to non-consenting members. The 12162 purpose of the delay was to provide the foundation for an action in equity by a nonconsenting 12163 member to enjoin consummation of the corporate decision. The usual effect of the delay, 12164 however, was not to protect the members but rather to create an impediment to taking action 12165 beneficial to the corporation. The Committee decided that the interests of members of a 12166 nonprofit corporation are not substantial enough to justify the problems the delay caused and 12167 that the delay should not be required, but the bylaws of a nonprofit corporation may require 12168 advance notice if desired. 12169

12170 The following terms used in this section are defined in 15 Pa.C.S. § 5103: 12171 12172 “bylaws” 12173 “entitled to vote” 12174 “member” 12175 “nonprofit corporation” 12176 “unless otherwise restricted” 12177 “voting” 12178 12179 The following terms used in this section are defined in 15 Pa.C.S. § 102: 12180

ACTIVE/ 6744855.14 270

12181 “record form” 12182 “signed” 12183

12184 12185

Chapter 59 12186 [Fundamental Changes] 12187

Amendments, Sale of Assets and Dissolution 12188 12189

Subchapter A 12190 Preliminary Provisions 12191

12192 § 5901. Omission of certain provisions from filed plans. (Repealed.) 12193 12194 § 5902. Statement of termination. 12195 12196

(a) General rule. – If articles of amendment [or articles of merger, consolidation, 12197 division or conversion of a nonprofit corporation or to which it is a party] have been filed 12198 in the [Department of State] department prior to the termination of the amendment [or plan] 12199 pursuant to provisions therefor set forth in the resolution or petition relating to the amendment 12200 [or in the plan], the termination shall not be effective unless the corporation shall, prior to the 12201 time the amendment [or plan] is to become effective, file in the department a statement of 12202 termination. The statement of termination shall be executed by the corporation that filed the 12203 amendment [or by each corporation that is a party to the plan, unless the plan permits 12204 termination by less than all of the corporations, in which case the statement shall be 12205 executed on behalf of the corporation or corporations exercising the right to terminate,] 12206 and shall set forth: 12207

12208 (1) A copy of the articles of amendment [or articles of merger, consolidation, 12209

division or conversion relating to the amendment or plan that is terminated]. 12210 12211 (2) A statement that the amendment [or plan] has been terminated in accordance 12212

with the provisions therefor set forth therein. 12213 12214

(b) Cross references. – See sections 134 (relating to docketing statement) and 138 12215 (relating to statement of correction). 12216 12217 12218 § 5905. Proposal of fundamental transactions. 12219 12220

Where any provision of this chapter requires that an amendment of the articles[, a plan] 12221 or the dissolution of a nonprofit corporation be proposed or approved by action of the board 12222 of directors, that requirement shall be construed to authorize and be satisfied by the written 12223 agreement or consent of all of the members of the corporation entitled to vote thereon. 12224 12225

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12226 Subchapter C 12227

[Merger, Consolidation and] Sale of Assets 12228 12229 § 5921. Merger and consolidation authorized. (Repealed.) 12230 12231 § 5922. Plan of merger or consolidation. (Repealed.) 12232 12233 § 5923. Notice of meeting of members. (Repealed.) 12234 12235 § 5924. Adoption of plan. (Repealed.) 12236 12237 § 5925. Authorization by foreign corporations. (Repealed.) 12238 12239 § 5926. Articles of merger or consolidation. (Repealed.) 12240 12241 § 5927. Filing of articles of merger or consolidation. (Repealed.) 12242 12243 § 5928. Effective date of merger or consolidation. (Repealed.) 12244 12245 § 5929. Effect of merger or consolidation. (Repealed.) 12246 12247 § 5930. Voluntary transfer of corporate assets. 12248 12249

(a) General rule. – A sale, lease, exchange or other disposition of all, or substantially 12250 all, of the property and assets, with or without goodwill, of a nonprofit corporation, if not 12251 made pursuant to Subchapter [D] F of Chapter [19] 3 (relating to division), may be made only 12252 pursuant to a plan of asset transfer. The property or assets of a direct or indirect subsidiary 12253 corporation that is controlled by a parent corporation shall also be deemed the property or 12254 assets of the parent corporation for purposes of this subsection. The plan of asset transfer 12255 shall set forth the terms and consideration of the sale, lease, exchange or other disposition or 12256 may authorize the board of directors or other body to fix any or all of the terms and 12257 conditions, including the consideration to be received by the corporation. Any of the terms of 12258 the plan may be made dependent upon facts ascertainable outside of the plan if the manner in 12259 which the facts will operate upon the terms of the plan is set forth in the plan. The plan of 12260 asset transfer shall be proposed and adopted, and may be amended after its adoption and 12261 terminated, by a nonprofit corporation in the manner provided in this subchapter for the 12262 proposal, adoption, amendment and termination of a plan of merger. A copy or summary of 12263 the plan shall be included in, or enclosed with, the notice of the meeting at which members 12264 will act on the plan. In order to make effective any plan so adopted, it shall not be necessary 12265 to file any articles or other document in the department, but the corporation shall comply with 12266 the requirements of section 5547(b) (relating to nondiversion of certain property). 12267 12268

* * * 12269

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12270 12271

Subchapter D 12272 [Division] (Reserved) 12273

12274 § 5951. Division authorized. (Repealed.) 12275 12276 § 5952. Proposal and adoption of plan of division. (Repealed.) 12277 12278 § 5953. Division without member approval. (Repealed.) 12279 12280 § 5954. Articles of division. (Repealed.) 12281 12282 § 5955. Filing of articles of division. (Repealed.) 12283 12284 § 5956. Effective date of division. (Repealed.) 12285 12286 § 5957. Effect of division. (Repealed.) 12287 12288

Subchapter E 12289 [Conversion] (Reserved) 12290

12291 § 5961. Conversion authorized. (Repealed.) 12292 12293 § 5962. Proposal and adoption of plan of conversion. (Repealed.) 12294 12295 § 5963. Articles of conversion. (Repealed.) 12296 12297 § 5964. Filing of articles of conversion. (Repealed.) 12298 12299 § 5965. Effective date of conversion. (Repealed.) 12300 12301 § 5966. Effect of conversion. (Repealed.) 12302 12303

Subchapter F 12304 Voluntary Dissolution and Winding Up 12305

12306 § 5980. Dissolution by domestication. (Repealed.) 12307 12308

Chapter 61 12309 Foreign Nonprofit Corporations 12310

12311

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Subchapter B 12312 Qualification 12313

12314 § 6121. Admission of foreign corporations. (Repealed.) 12315 12316 § 6122. Excluded activities. (Repealed.) 12317 12318 § 6123. Requirements for foreign corporation names. (Repealed.) 12319 12320 § 6124. [Application for a certificate of authority] Advertisement of 12321

registration to do business. 12322 12323

[(a) General rule.—An application for a certificate of authority shall be executed 12324 by the foreign nonprofit corporation and shall set forth: 12325 12326

(1) The name of the corporation. 12327 12328 (2) The name of the jurisdiction under the laws of which it is incorporated. 12329 12330 (3) The address, including street and number, if any, of its principal office 12331

under the laws of the jurisdiction in which it is incorporated. 12332 12333 (4) Subject to section 109 (relating to name of commercial registered office 12334

provider in lieu of registered address), the address, including street and number, if 12335 any, of its proposed registered office in this Commonwealth. 12336

12337 (5) A statement that it is a corporation incorporated for a purpose or 12338

purposes not involving pecuniary profit, incidental or otherwise. 12339 12340

(b) Advertisement.—]A foreign nonprofit corporation shall officially publish notice 12341 of its intention to [apply or its application for a certificate of authority] register to do 12342 business or its registration to do business in this Commonwealth under Chapter 4 (relating to 12343 foreign associations). The notice may appear prior to or after the day on which [application 12344 is made to the Department of State] a registration statement is delivered to the department 12345 for filing and shall set forth [briefly]: 12346 12347

(1) A statement that the corporation will [apply or has applied for a certificate 12348 of authority under the provisions of the Nonprofit Corporation Law of 1988] 12349 register or has registered to do business in this Commonwealth under Chapter 4. 12350

12351 (2) The name of the corporation and [of the jurisdiction under the laws of 12352

which it is incorporated] its jurisdiction of formation. 12353 12354 (3) The address, including street and number, if any, of its principal office under 12355

the laws of [the jurisdiction in which it is incorporated] its jurisdiction of formation. 12356

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12357 (4) Subject to section 109, the address, including street and number, if any, of its 12358

proposed registered office in this Commonwealth. 12359 12360

(c) [Filing.—The application for a certificate of authority shall be filed in the 12361 Department of State.] (Repealed.) 12362 12363

(d) [Cross reference.—See section 134 (relating to docketing statement).] 12364 (Repealed.) 12365 12366 12367 § 6125. Issuance of certificate of authority. (Repealed.) 12368 12369 § 6126. Amended certificate of authority. (Repealed.) 12370 12371 § 6127. Merger, consolidation or division of qualified foreign corporations. 12372

(Repealed.) 12373 12374 § 6128. Revocation of certificate of authority. (Repealed.) 12375 12376 § 6129. [Application for] Advertisement of termination of [authority] 12377

registration to do business. 12378 12379

[(a) General rule. – Any qualified foreign nonprofit corporation may withdraw 12380 from doing business in this Commonwealth and surrender its certificate of authority by 12381 filing in the Department of State an application for termination of authority, executed by 12382 the corporation, which shall set forth: 12383

12384 (1) The name of the corporation and, subject to section 109 (relating to 12385

name of commercial registered office provider in lieu of registered address), the 12386 address, including street and number, if any, of its registered office in this 12387 Commonwealth. 12388

12389 (2) The name of the jurisdiction under the laws of which it is incorporated. 12390 12391 (3) The date on which it received a certificate of authority to do business in 12392

this Commonwealth. 12393 12394 (4) A statement that it surrenders its certificate of authority to do business 12395

in this Commonwealth. 12396 12397 (5) A statement that notice of its intention to withdraw from doing business 12398

in this Commonwealth was mailed by certified or registered mail to each municipal 12399 corporation in which the registered office or principal place of business of the 12400 corporation in this Commonwealth is located, and that the official publication 12401

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required by subsection (b) has been effected. 12402 12403 (6) The post office address, including street and number, if any, to which 12404

process may be sent in an action or proceeding upon any liability incurred before 12405 the filing of the application for termination of authority. 12406

12407 (b) Advertisement.—]A [qualified] registered foreign nonprofit corporation shall, 12408

before filing [an application for termination of authority] a statement of withdrawal under 12409 section 415 (relating to voluntary withdrawal of registration), officially publish and mail a 12410 notice of its intention to withdraw from doing business in this Commonwealth in a manner 12411 similar to that required by section 5975(b) (relating to notice to creditors and taxing 12412 authorities). The notice shall set forth [briefly]: 12413

12414 (1) The name of the corporation and [the jurisdiction under the laws of which 12415

it is incorporated] its jurisdiction of formation. 12416 12417 (2) The address, including street and number, if any, of its principal office under 12418

the laws of its jurisdiction of [incorporation] formation. 12419 12420 (3) Subject to section 109, the address, including street and number, if any, of its 12421

last registered office in this Commonwealth. 12422 12423

(c) [Filing. – The application for termination of authority and the certificates or 12424 statement required by section 139 (relating to tax clearance of certain fundamental 12425 transactions) shall be filed in the department. See section 134 (relating to docketing 12426 statement). (Reserved.) 12427

12428 (d) [Effect of filing. – Upon the filing of the application for termination of 12429

authority, the authority of the corporation to do business in this Commonwealth shall 12430 cease. The termination of authority shall not affect any action or proceeding pending at 12431 the time thereof or affect any right of action arising with respect to the corporation 12432 before the filing of the application for termination of authority. Process against the 12433 corporation in an action upon any liability incurred before the filing of the application 12434 for termination of authority may be served as provided in 42 Pa.C.S. Ch. 53 (relating to 12435 bases of jurisdiction and interstate and international procedure) or as otherwise 12436 provided or prescribed by law.] (Reserved.) 12437 12438 12439 § 6130. Change of address after withdrawal. (Repealed.) 12440 12441 § 6131. Registration of name. (Repealed.) 12442 12443

Subchapter C 12444 Powers, Duties and Liabilities 12445

12446 § 6141. Penalty for doing business without certificate of authority. 12447

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(Repealed.) 12448 12449 § 6142. General powers and duties of qualified foreign corporations. 12450

(Repealed.) 12451 12452 § 6143. General powers and duties of nonqualified foreign corporations. 12453

(Repealed.) 12454 12455 § 6144. Registered office of qualified foreign corporations. (Repealed.) 12456 12457

Subchapter D 12458 Domestication (Reserved) 12459

12460 § 6161. Domestication. (Repealed.) 12461 12462 § 6162. Effect of domestication. (Repealed.) 12463 12464

Subpart D 12465 Cooperative Corporations 12466

12467 Chapter 77 12468

Workers’ Cooperative Corporations 12469 12470 § 7702. Definitions. 12471 12472

The following words and phrases when used in this chapter shall have the meanings 12473 given to them in this section unless the context clearly indicates otherwise: 12474

12475 [“Bureau.” The Corporation Bureau of the department.] 12476 12477 “Corporation.” A corporation [organized] for profit which has elected to be governed 12478

by this chapter. 12479 12480 * * * 12481

12482 12483 § 7703. Corporations. 12484 12485

(b) Name. – 12486 12487

(1) [The corporation may adopt any name corporate name to indicate its 12488 cooperative character as long as the name has not been previously adopted.] The 12489 name of the corporation must comply with section 202 (relating to requirements for 12490 names generally). 12491

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12492 * * * 12493

12494 12495 § 7704. Articles of incorporation. 12496 12497 * * * 12498 12499

(d) Contents of articles. – The articles of incorporation shall be signed by the persons 12500 originally associating themselves together and shall state [distinctly]: 12501

12502 (1) The name [by which] of the corporation [shall be known, which may not 12503

be the same as, or confusingly similar to, the name of an association or corporation 12504 existing under the las of the Commonwealth, the name of a foreign or alien 12505 association or corporation authorized to transact business in this Commonwealth, 12506 or a corporate name reserved or registered as provided by law]. 12507 12508 * * * 12509

12510 § 7723. Dissolution. 12511 12512

(a) General rule. – A corporation may dissolve and wind up; may merge [or 12513 consolidate] with other corporations; and may sell to, lease to or exchange with other 12514 corporations all or substantially all of its property and assets. Except as otherwise provided in 12515 this chapter, these actions are governed by Chapter 3 (relating to entity transactions) and 12516 Subchapter C of Chapter 19 (relating to merger[, consolidation, share exchanges] liabilities 12517 and sale of assets). A workers' cooperative corporation which has not revoked its election to 12518 be governed by this chapter may not [consolidate or] merge with one or more corporations 12519 organized under any law other than this chapter. If a member objects to a corporation's 12520 merger [or consolidation], the member may terminate membership in the corporation. The 12521 price of redemption of the member's interest shall be the amount in the member's individual 12522 capital account on terms and conditions as the law, the articles of incorporation and the 12523 bylaws provide. 12524 12525

* * * 12526 12527 12528

Part III 12529 Partnerships and Limited Liability Companies 12530

12531 Chapter 82 12532

Registered Limited Liability Partnerships 12533 12534

Subchapter A 12535 Domestic Registered Limited Liability Partnerships 12536

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12537 § 8203. Name. (Repealed.) 12538 12539

Subchapter B 12540 Foreign Registered Limited Liability Partnerships 12541

12542 § 8211. Foreign registered limited liability partnerships. 12543 12544

(a) Governing law.—Subject to the Constitution of Pennsylvania: 12545 12546

(1) The laws of the jurisdiction under which a foreign registered limited liability 12547 partnership is organized govern its organization and internal affairs and the liability of 12548 its partners except as provided in subsection (c). 12549

12550 (2) A foreign registered limited liability partnership may not be denied 12551

registration by reason of any difference between those laws and the laws of this 12552 Commonwealth. 12553

12554 [(b) Registration to do business.—A foreign registered limited liability 12555

partnership, regardless of whether or not it is also a foreign limited partnership, shall be 12556 subject to Subchapter K of Chapter 85 (relating to foreign limited partnerships) as if it 12557 were a foreign limited partnership, except that: 12558 12559

(1) Its application for registration shall state that it is a registered limited 12560 liability partnership. 12561

12562 (2) The name under which it registers and conducts business in this 12563

Commonwealth shall comply with the requirements of section 8203 (relating to 12564 name). 12565

12566 (3) Section 8582(a)(5) and (6) (relating to registration) shall not be 12567

applicable to the application for registration of a foreign limited liability 12568 partnership that is not a foreign limited partnership.] (Repealed.) 12569

12570 (c) Exception.—The liability of the partners in a foreign registered limited liability 12571

partnership shall be governed by the laws of the jurisdiction under which it is organized, 12572 except that the partners shall not be entitled to greater protection from liability than is 12573 available to the partners in a domestic registered limited liability partnership. 12574 12575 Amended Committee Comment (2014): 12576 12577

A foreign registered limited liability company is subject to the registration and other 12578 provisions of 15 Pa.C.S. Ch. 4. 12579 12580

Subsection (c) was added by the GAA Amendments Act of 2001 to avoid a potentially 12581 significant loss of tax revenue by Pennsylvania. The registered limited liability partnership 12582

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statutes of some states, as well as the 1996 Limited Liability Partnership Act Amendments to 12583 the Uniform Partnership Act, provide general partners in registered limited liability 12584 partnerships with essentially the same limited liability as shareholders in a corporation. See 12585 Uniform Partnership Act (1997) § 306(c). If Pennsylvania were to honor that full limited 12586 liability, it would provide a significant incentive for Pennsylvania corporations to switch their 12587 form of organization to a registered limited liability partnership organized in a state providing 12588 full limited liability in order to avoid Pennsylvania corporate taxes. Under the rule in 12589 subsection (c), the partners in a foreign registered limited liability partnership will be in no 12590 worse position than partners in a domestic limited liability partnership, but there will be no 12591 incentive for corporations to switch their form because they would be giving up the limited 12592 liability enjoyed by their shareholders. 12593 12594

The following terms used in this section are defined in 15 Pa.C.S. § 8202: 12595 12596

"domestic registered limited liability partnership" 12597 "foreign registered limited liability partnership" 12598 "partner" 12599

12600 12601

Chapter 85 12602 Limited Partnerships 12603

12604 Subchapter A 12605

Perliminary Provisions 12606 12607 § 8503. Definitions and index of definitions. 12608 12609

(a) Definitions. – The following words and phrases when used in this chapter shall 12610 have the meanings given to them in this section unless the context clearly indicates otherwise: 12611 12612

“Certificate of limited partnership.” The certificate referred to in section 8511 (relating 12613 to certificate of limited partnership) and the certificate as amended. The term includes any 12614 other statements or certificates permitted or required to be filed in the Department of State by 12615 sections 108 (relating to change in location or status of registered office provided by agent) 12616 and 138 (relating to statement of correction), Chapter 3 (relating to entity transactions) or this 12617 part. If an amendment of the certificate of limited partnership or a [certificate of merger or 12618 division made in the manner permitted by this chapter] statement filed under Chapter 3 12619 restates the certificate in its entirety [or if there is a certificate of consolidation], thenceforth 12620 the “certificate of limited partnership” shall not include any prior documents and any 12621 certificate issued by the department with respect thereto shall so state. 12622 12623

* * * 12624 12625

“Foreign limited partnership.” A partnership formed under the laws of any jurisdiction 12626 other than this Commonwealth and having as partners one or more general partners and one or 12627

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more limited partners, whether or not required to register under [Subchapter K (relating to 12628 foreign limited partnerships)] Chapter 4 (relating to foreign associations). 12629 12630

* * * 12631 12632 [“Nonqualified foreign limited partnership.” A foreign limited partnership that is 12633

not a qualified foreign limited partnership as defined in this section.] 12634 12635 * * * 12636 12637 [“Qualified foreign limited partnership.” A foreign limited partnership that is 12638

registered under Subchapter K (relating to foreign limited partnerships) to do business 12639 in this Commonwealth.] 12640 12641

* * * 12642 12643 12644 § 8505. Name. (Repealed). 12645 12646

Subchapter B 12647 Formation 12648

12649 § 8513. Cancellation of certificate. 12650 12651

(a) General rule. – A certificate of limited partnership shall be canceled upon the 12652 dissolution and the commencement of winding up of the limited partnership or at any other 12653 time there are no limited partners. The certificate of cancellation shall set forth: 12654

12655 (1) The name of the limited partnership. 12656 12657 (2) The date of filing of its original certificate of limited partnership. 12658 12659 (3) The reason for filing the certificate of cancellation. 12660 12661 (4) The effective date (which shall be a date certain) of cancellation if it is not to 12662

be effective upon the filing of the certificate. 12663 12664 (5) Any other information the general partners filing the certificate determine. 12665 12666

(b) Filing. – The certificate of cancellation and the certificates or statement required 12667 by section 139 (relating to tax clearance of certain fundamental transactions) shall be filed in 12668 the department. 12669

12670 (c) Effectiveness of certificate of cancellation. – Upon the filing of the certificate of 12671

cancellation in the department or upon the effective date specified in the certificate of 12672

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cancellation, whichever is later, the certificate of cancellation shall become effective and the 12673 certificate of limited partnership shall be canceled. 12674

12675 [(d) Dissolution by domestication. – Whenever a domestic limited partnership has 12676

domesticated itself under the laws of another jurisdiction by action similar to that 12677 provided by section 8590 (relating to domestication) and has authorized that action by 12678 the vote required by this chapter for the approval of a proposal that the limited 12679 partnership dissolve voluntarily, the limited partnership may surrender its certificate of 12680 limited partnership under the laws of this Commonwealth by filing in the department a 12681 certificate of cancellation under subsection (a).] 12682

12683 (e) Cross references. – See sections 134 (relating to docketing statement) and 8514 12684

(relating to execution of certificates). 12685 12686 12687 § 8514. Execution of certificates. 12688 12689

(a) General rule. – Each certificate or other document required or permitted by this 12690 chapter to be [filed in] delivered to the Department of State for filing shall be [executed] 12691 signed in the following manner: 12692 12693

(1) An original certificate of limited partnership must be signed by all general 12694 partners named therein. 12695

12696 (2) A certificate of amendment must be signed by at least one general partner and 12697

by each other general partner designated in the certificate as a new general partner. 12698 12699 (3) A certificate of cancellation must be signed by all general partners or 12700

liquidating trustees or, if there is no general partner or liquidating trustee, by a majority 12701 in interest of the limited partners. 12702

12703 (4) A certificate of change of registered office must be signed by a general partner. 12704 12705 (5) A certificate of summary of record must be signed by all general partners. 12706 12707 (6) A certificate of withdrawal must be signed by the person withdrawing. 12708 12709 (7) A certificate of termination must be signed by a general partner. 12710 12711 (8) A [certificate of merger, consolidation or division] statement of merger, 12712

interest exchange, conversion, division or domestication must be signed by a general 12713 partner. 12714

12715 (9) [An application for registration as a foreign limited partnership] A foreign 12716

registration statement must be signed by a general partner. 12717 12718

ACTIVE/ 6744855.14 282

(10) [A certificate of amendment of registration of a foreign limited 12719 partnership] An amendment of a foreign registration statement must be signed by a 12720 general partner. 12721

12722 (11) A [certificate of cancellation of registration of] statement of withdrawal by 12723

a foreign limited partnership must be signed by a general partner. 12724 12725 [(12) A certificate of domestication must be signed by a general partner.] 12726

12727 (b) Attorney-in-fact. – Except as otherwise provided in the partnership agreement, any 12728

person may sign a certificate or other document affecting the existence, organization or 12729 internal affairs of a limited partnership by an attorney-in-fact or fiduciary. It shall not be 12730 necessary to present to or file in the department the original or a copy of any document 12731 evidencing the authority of an attorney-in-fact or fiduciary. 12732 12733 Amended Committee Comment (2014): 12734 12735

This section collects in one place the requirements for execution of all of the various 12736 certificates and statements provided for in Chapters 3 and 85. 12737 12738

The prior law required that the certificate of limited partnership and any amendments 12739 thereto be signed by all partners, and there developed an unnecessarily cumbersome practice 12740 of having the limited partners sign powers of attorney to authorize the general partners to 12741 execute certificates of amendment on their behalf. Because the limited partners are not 12742 required to be named in the certificate of limited partnership, this section only requires 12743 signature by general partners. 12744 12745

Certificates of amendment are required to be signed by only one general partner, but a 12746 certificate of cancellation must be signed by all current general partners or liquidating trustees 12747 or a majority in interest of the limited partners if there is no general partner or liquidating 12748 trustee. 12749 12750

The requirement of the Revised Uniform Act that a power of attorney to sign a 12751 certificate relating to the admission of a partner must specifically describe the admission has 12752 been omitted. No such requirement is contained elsewhere in Title 15, and to retain it here 12753 would create a trap for the unwary. Subsection (b) does not impose any particular 12754 requirements on a power of attorney or authorization to sign a certificate or other document 12755 affecting the existence, organization or internal affairs of a limited partnership (including, 12756 without limitation, the partnership agreement), and it is intended that such a power of attorney 12757 or authorization need not be in writing (unless required by an applicable statute of frauds) and 12758 need not be notarized or acknowledged. 12759 12760

The last sentence of subsection (b) is patterned after 15 Pa.C.S. § 135(b) and has been 12761 included in this section simply for purposes of convenience and clarity since 15 Pa.C.S. § 12762 135(b) would apply to filings under Chapter 85 in any event. 12763 12764

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Rules on what constitutes delivery of documents to and by the Department of State are 12765 set forth in 15 Pa.C.S. § 113. 12766

12767 The following terms used in this section are defined in 15 Pa.C.S. § 8503: 12768

12769 “certificate of limited partnership” 12770 “department” 12771 “foreign limited partnership” 12772 “general partner” 12773 “limited partners” 12774 “liquidating trustee” 12775

12776 12777

Subchapter F 12778 [Merger and Consolidation] (Reserved) 12779

12780 § 8545. Merger and consolidation of limited partnerships authorized. 12781

(Repealed.) 12782 12783 § 8546. Approval of merger or consolidation. (Repealed.) 12784 12785 § 8547. Certificate of merger or consolidation. (Repealed.) 12786 12787 § 8548. Effective date of merger or consolidation. (Repealed.) 12788 12789 § 8549. Effect of merger of consolidation. (Repealed.) 12790 12791

Subchapter I 12792 Dissolution 12793

12794 § 8571. Nonjudicial dissolution. 12795 12796

* * * 12797 12798

[(c) Dissolution by domestication. – Whenever a domestic limited partnership has 12799 domesticated itself under the laws of another jurisdiction by action similar to that 12800 provided by section 8590 (relating to domestication) and has authorized that action in 12801 the manner required by this subchapter for the approval of a proposal that the 12802 partnership dissolve voluntarily, the partnership may surrender its certificate of limited 12803 partnership under the laws of this Commonwealth by filing in the department a 12804 certificate of cancellation under section 8513 (relating to cancellation of certificate). If 12805 the partnership, as domesticated in the other jurisdiction, registers to do business in this 12806 Commonwealth either prior to or simultaneously with the filing of the certificate of 12807 cancellation under this subsection, the partnership shall not be required to file with the 12808

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certificate of cancellation the tax clearance certificates that would otherwise be required 12809 by section 139 (relating to tax clearance of certain fundamental transactions).] 12810

12811 * * * 12812

12813 Amended Committee Comment (2014): 12814 12815

Subsection (a) collects in one place all of the events causing dissolution of a limited 12816 partnership. The 90 day grace period in the Revised Uniform Limited Partnership Act in 12817 subsection (a)(4) has been increased to 180 days to recognize the difficulties that may be 12818 encountered by limited partnerships with a large number of partners in attempting to avail 12819 themselves of it. 12820 12821

As originally enacted in 1988, subsection (a)(4) provided that the decision to continue 12822 the business of a limited partnership upon an event of withdrawal of a sole remaining general 12823 partner required the approval of all of the limited partners, but former subsection (c) permitted 12824 the partnership agreement to reduce the required consent of limited partners to not less than a 12825 majority in interest. At the time, no other state limited partnership statute contained a 12826 provision similar to former subsection (c) and the Internal Revenue Service considered the 12827 Pennsylvania approach so unique that it refused to issue a Revenue Ruling approving Chapter 12828 85 so long as Chapter 85 contained former subsection (c). As a result, the GAA Amendments 12829 Act of 1990 repealed former subsection (c) and transferred its substance to 15 Pa.C.S. § 8103. 12830 12831

The Internal Revenue Service subsequently reversed its position and no longer objects to 12832 a state statute permitting a decision to continue the business of a limited partnership to be 12833 made by less than unanimous consent of the limited partners. The GAA Amendments Act of 12834 2001 accordingly repealed 15 Pa.C.S. § 8103 and has adopted a majority in interest vote as 12835 the default rule in subsection (a)(4). 12836 12837

Subsection (b) is not found in the Revised Uniform Limited Partnership Act and adds a 12838 procedure to facilitate preservation of the business of the limited partnership pending a 12839 decision on its formal continuation. 12840 12841

Former subsection (c), which provided a procedure for a limited partnership that had 12842 domesticated from Pennsylvania to another state to withdraw as a domestic limited 12843 partnership, was repealed in 2014 by the Association Transaction Act and has been supplied 12844 by 15 Pa.C.S. Subch. 4B. 12845 12846

The following terms used in this section are defined in 15 Pa.C.S. § 8503: 12847 12848

“certificate of limited partnership” 12849 “court” 12850 “event of withdrawal of a general partner” 12851 “general partner” 12852 “limited partner” 12853 “limited partnership” 12854

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“partners” 12855 “partnership agreement” 12856

12857 12858

Subchapter J 12859 [Division] (Reserved) 12860

12861 § 8576. Division authorized. (Repealed.) 12862 12863 § 8577. Proposal and adoption of plan of division. (Repealed.) 12864 12865 § 8578. Division without approval of limited partners. (Repealed.) 12866 12867 § 8579. Certificate of division. (Repealed.) 12868 12869 § 8580. Effect of division. (Repealed.) 12870 12871

Subchapter K 12872 [Foreign Limited Partnerships] (Reserved) 12873

12874 § 8581. Governing law. (Repealed.) 12875 12876 § 8582. Registration. (Repealed.) 12877 12878 § 8583. Effect of filing. (Repealed.) 12879 12880 § 8584. Name. (Repealed.) 12881 12882 § 8585. Changes and amendments. (Repealed.) 12883 12884 § 8586. Cancellation of registration. (Repealed.) 12885 12886 § 8587. Doing business without registration. (Repealed.) 12887 12888 § 8588. Action by Attorney General. (Repealed.) 12889 12890 § 8589. General powers and duties of qualified foreign limited 12891

partnerships. (Repealed.) 12892 12893 § 8590. Domestication. (Repealed.) 12894 12895

Chapter 89 12896 Limited Liability Companies 12897

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12898 Subchapter A 12899

Preliminary Provisions 12900 12901 § 8903. Definitions and index of definitions. 12902 12903

(a) Definitions. – The following words and phrases when used in this chapter shall 12904 have the meanings given to them in this section unless the context clearly indicates otherwise: 12905

12906 “Certificate of organization.” The certificate of organization referred to in section 8913 12907

(relating to certificate of organization) and the certificate of organization as amended. The 12908 term includes any other statements or certificates permitted or required to be filed in the 12909 Department of State by sections 108 (relating to change in location or status of registered 12910 office provided by agent) and 138 (relating to statement of correction), Chapter 3 (relating to 12911 entity transactions) or this part. If an amendment of the certificate of organization or a 12912 [certificate of merger or division made in the manner permitted by this chapter] 12913 statement filed under Chapter 3 restates the certificate of organization in its entirety [or if 12914 there is a certificate of consolidation or domestication], thenceforth the certificate of 12915 organization shall not include any prior documents, and any certificate issued by the 12916 Department of State with respect thereto shall so state. 12917

12918 * * * 12919 12920 “Foreign limited liability company.” An association organized under the laws of any 12921

jurisdiction other than this Commonwealth, whether or not required to register under 12922 [Subchapter J (relating to foreign companies)] Chapter 4 (relating to foreign associations), 12923 which would be a limited liability company if organized under the laws of this 12924 Commonwealth. 12925

12926 * * * 12927 12928 “Qualified foreign limited liability company.” A foreign limited liability company that 12929

is registered under [Subchapter J (relating to foreign companies)] to do business in this 12930 Commonwealth Chapter 4 (relating to foreign associations). 12931

12932 * * * 12933

12934 12935 § 8905. Name. (Repealed.) 12936 12937 § 8908. Election of professional association to become limited liability 12938

company. (Repealed.) 12939 12940

Subchapter G 12941 [Mergers and Consolidations] (Reserved) 12942

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12943 § 8956. Merger and consolidation of limited liability companies 12944

authorized. (Repealed.) 12945 12946 § 8957. Approval of merger or consolidation. (Repealed.) 12947 12948 § 8958. Certificate of merger or consolidation. (Repealed.) 12949 12950 § 8959. Effect of merger of consolidation. (Repealed.) 12951 12952

Subchapter H 12953 [Division] (Reserved) 12954

12955 § 8961. Division authorized. (Repealed.) 12956 12957 § 8962. Proposal and adoption of plan of division. (Repealed.) 12958 12959 § 8963. Division without member approval. (Repealed.) 12960 12961 § 8964. Certificate of division. (Repealed.) 12962 12963 § 8965. Effect of division. (Repealed.) 12964 12965

Subchapter I 12966 Dissolution 12967

12968 § 8978. Dissolution by domestication. (Repealed.) 12969 12970

Subchapter J 12971 [Foreign Companies] (Reserved) 12972

12973 § 8981. Foreign limited liability companies. (Repealed.) 12974 12975 § 8982. Domestication. (Repealed.) 12976 12977

Part IV 12978 Unincorporated Associations 12979

12980 Chapter 91 12981

Unincorporated Nonprofit Associations 12982 12983 § 9112. Definitions. 12984

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12985 The following words and phrases when used in this chapter shall have the meanings 12986

given to them in this section unless the context clearly indicates otherwise: 12987 12988 * * * 12989 12990 [“Transfer.” Includes: 12991 12992

(1) an assignment; 12993 12994 (2) a conveyance; 12995 12996 (3) a sale; 12997 12998 (4) a lease; 12999 13000 (5) an encumbrance, including a mortgage or security interest; 13001 13002 (6) a gift; and 13003 13004 (7) a transfer by operation of law.] 13005

13006 13007

Chapter 93 13008 Professional Associations 13009

13010 § 9302. Application of chapter. 13011 13012

This chapter shall apply to and the word “association” in this chapter shall mean a 13013 professional association organized under the act of August 7, 1961 (P.L. 941, No. 416), 13014 known as the Professional Association Act, which has not: 13015 13016

(1) Reorganized as an electing partnership under Chapter 87 (relating to electing 13017 partnerships). 13018

13019 (2) Elected to become a professional corporation in the manner provided by 13020

section 2905 (relating to election of professional associations to become professional 13021 corporations). 13022

13023 (3) [Elected to become a limited liability company in the manner provided 13024

by section 8908 (relating to election of professional association to become limited 13025 liability company).] Converted to a limited liability company under Subchapter E of 13026 Chapter 3 (relating to conversion). 13027

13028 An association may not be originally organized under this chapter. 13029 13030

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13031 Part V 13032

Business Trusts 13033 13034

Chapter 95 13035 Business Trusts 13036

13037 § 9502. Creation, status and termination of business trusts. 13038 13039

(a) Creation.—[A business trust may be created in real or personal property, or 13040 both, with power in] Except as provided in the instrument, the trustee has the power: 13041

13042 (1) To receive title to, hold, buy, sell, exchange, transfer and convey real and 13043

personal property for the use of the business trust. 13044 13045 (2) To take, receive, invest or disburse the receipts, earnings, rents, profits or 13046

returns from the trust estate. 13047 13048 (3) To carry on and conduct any lawful business designated in the deed or other 13049

instrument of trust, and generally to do any lawful act in relation to such trust property 13050 that any individual owning the same absolutely might do. 13051

13052 (4) To merge with another business trust or other association, to divide or to 13053

engage in any other fundamental or other transaction contemplated by the deed or other 13054 instrument of trust. 13055

13056 (b) Term.—Except as otherwise provided in the instrument, a business trust shall have 13057

perpetual existence. 13058 13059

(c) Separate entity.—A business trust is a separate legal entity. Except as otherwise 13060 provided in the instrument, title to real and personal property may be held in the name of the 13061 trust, without in any manner diminishing the rights, powers and duties of the trustees as 13062 provided in subsection (a). 13063 13064

(d) Termination.—Except as otherwise provided in the instrument: 13065 13066

(1) The business trust may not be terminated, dissolved or revoked by a 13067 beneficial owner or other person. 13068

13069 (2) The death, incapacity, dissolution, termination or bankruptcy of a beneficial 13070

owner or a trustee shall not result in the termination, dissolution or revocation of the 13071 business trust. 13072

13073 (e) Contents of instrument.—The instrument may contain any provision for the 13074

regulation of the internal affairs of the business trust included in the instrument by the settlor, 13075

ACTIVE/ 6744855.14 290

the trustee or the beneficiaries in accordance with the applicable procedures for the adoption 13076 or amendment of the instrument. 13077 13078 Amended Committee Comment (2014): 13079 13080

As originally enacted in 1988, subsection (a) provided that the powers enumerated in 13081 that subsection were to be exercised by the trustee "or a majority of the trustees." The quoted 13082 phrase was deleted by the GAA Amendments Act of 2001 because the Committee was 13083 concerned that it could be read incorrectly to require that, whenever a business trust had more 13084 than one trustee, the trustees could act only by an absolute majority of the trustees in office, as 13085 opposed to, for example, a majority of a quorum of the trustees present at a duly-convened 13086 meeting. It is intended that the instrument may provide for whatever governance mechanism 13087 and rules are considered appropriate by the parties. A similar reference to a majority of the 13088 trustees has been retained in 15 Pa.C.S. § 9503(c) because in that case it is expressly made 13089 applicable only in the absence of a controlling provision in the instrument. 13090

13091 The Association Transactions Act amended subsection (a) to make clear that the powers 13092

listed in that subsection do not have to be conferred expressly by the instrument and will exist 13093 unless the instrument provides otherwise. 13094 13095

Chapter 95 is intended to provide the widest possible freedom of contract for the parties 13096 involved in a business trust. The GAA Amendments Act of 2001 added subsection (e) to 13097 confirm that intent. The provisions of Chapter 95 have been deliberately kept very brief. The 13098 lack of detailed rules in Chapter 95 should be read in the context of subsection (e) and should 13099 not be seen to imply that statutory rules and restrictions on business trusts in other states 13100 should be imported into Pennsylvania. It is intended, for example, that Chapter 95 will permit 13101 the instrument of a Pennsylvania business trust to deal with all the issues treated in 12 Del. 13102 Code § 3806 with at least as much freedom as permitted by that section. 13103 13104 13105 § 9503. Documentation of trust. 13106 13107

(a) General rule. – A business trust shall not be valid unless created by deed of trust or 13108 other written instrument subscribed by one or more individuals, associations or other entities. 13109 The trustees of a business trust shall promptly cause the instrument or any amendment 13110 thereof, except an amendment solely effecting or reflecting the substitution of or other change 13111 in the trustees, to be filed in the Department of State. 13112

13113 (b) Definition of “instrument”. – The term “instrument”, as used in this chapter, shall 13114

mean the original deed of trust or other written instrument, all amendments thereof and any 13115 other statements or certificates permitted or required to be filed in the department by sections 13116 108 (relating to change in location or status of registered office provided by agent) and 138 13117 (relating to statement of correction), Chapter 3 (relating to entity transactions) or this chapter. 13118 If an amendment of the instrument or [articles of merger made in the manner permitted by 13119 section 1921(c) (relating to business trusts and other associations) or a certificate of 13120 merger made in the manner permitted by section 8545(c) (relating to business trusts and 13121

ACTIVE/ 6744855.14 291

other associations)] a statement filed under Chapter 3 restates an instrument in its entirety, 13122 thenceforth the “instrument” shall not include any prior documents, and any certificate issued 13123 by the department with respect thereto shall so state. 13124 13125

* * * 13126 13127 13128 § 9507. Foreign business trusts. 13129 13130

[(a) General rule. – A business trust organized under any laws other than those of 13131 this Commonwealth shall be subject to Subchapters B (relating to qualification) and C 13132 (relating to powers, duties and liabilities) of Chapter 41, as if it were a foreign business 13133 corporation, except that a qualified foreign business trust shall enjoy the same rights 13134 and privileges as a domestic business trust, but no more, and, except as otherwise 13135 provided by law, shall be subject to the same liabilities, restrictions, duties and penalties 13136 now in force or hereafter imposed upon domestic business trusts, to the same extent as if 13137 it were a domestic business trust.] (Repealed.) 13138 13139

(b) Provision applicable to all foreign business trusts. – Section 9506(c) (relating to 13140 certain specifically authorized debt terms) shall be applicable to any obligation, as defined in 13141 section 1510 (relating to certain specifically authorized debt terms), of a business trust 13142 organized under any laws other than those of this Commonwealth, whether or not required to 13143 qualify in this Commonwealth, executed or effected in this Commonwealth or affecting real 13144 property situated in this Commonwealth. 13145 13146 13147

Title 54 13148 Names 13149

13150 Chapter 3 13151

Fictitious Names 13152 13153 § 302. Definitions. 13154 13155

(a) Definitions. – The following words and phrases when used in this chapter shall 13156 have, unless the context clearly indicates otherwise, the meanings given to them in this 13157 section: 13158

13159 “Business.” Any commercial or professional activity. 13160 13161 “Entity.” Any individual or any corporation, association, partnership, joint-stock 13162

company, business trust, syndicate, joint adventureship or other combination or group of 13163 persons, regardless of whether it is organized or formed under the laws of this Commonwealth 13164 or any other jurisdiction. 13165

13166

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“Fictitious name.” Any assumed or fictitious name, style or designation other than the 13167 proper name of the entity using such name. The term includes a name assumed by a general 13168 partnership, syndicate, joint adventureship or similar combination or group of persons. 13169

13170 “Proper name.” When used with respect to an association of a type listed in the 13171

following paragraphs, the term means the name set forth in: 13172 13173

(1) [the articles of incorporation, for a corporation;] the public organic 13174 record, for a domestic filing association; 13175

13176 (2) the statement of registration, for a limited liability partnership; 13177 13178 [(3) the certificate of limited partnership, for a limited partnership;] 13179 13180 (4) the statement of election, for an electing partnership; 13181 13182 [(5) the certificate of organization, for a limited liability company; 13183 13184 (6) the articles of association, for a professional association; 13185 13186 (7) the deed of trust or other trust instrument, if any, that has been filed in 13187

the Department of State for a business trust; or 13188 13189 (8) a publicly filed document in another jurisdiction which is of a type listed 13190

in paragraphs (1) through (7).] 13191 13192 (9) the statement of registration of a foreign registered association under 15 13193

Pa.C.S. § 412(a)(1)(i) (relating to foreign registration statement), or if that name does 13194 not comply with 15 Pa.C.S. § 202 (relating to requirements for names generally), the 13195 name set forth in the statement under 15 Pa.C.S. § 412(a)(1)(ii). 13196

13197 (b) Other defined terms. – The definitions in 15 Pa.C.S. § 102 (relating to definitions) 13198

apply to this title except to the extent they are inconsistent with the provisions of this title. 13199 13200 13201 § 303. Scope of chapter. 13202 13203

* * * 13204 13205

(d) Efect of registration.—The registration of a name under this chapter does not 13206 render the name unavailable for use by another entity. 13207 13208 13209 § 311. Registration. 13210 13211

* * * 13212

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13213 (e) Duplicate use of names. – The fictitious name shall be distinguishable upon the 13214

records of the department from: 13215 13216

(1) The name of any domestic [corporation] filing entity, domestic limited 13217 liability partnership, domestic electing partnership, [or any] registered foreign 13218 [corporation authorized to do business in this Commonwealth] association or the 13219 name of any corporation or other association registered at any time under Chapter 5 13220 (relating to corporate and other association names) unless such name is available or is 13221 made available for use under the provisions or procedures of 15 Pa.C.S. § [5303(b)(1)(i) 13222 or (ii) (relating to duplicate use of names) or the equivalent] 202(b)(1) (relating to 13223 requirements for names generally). 13224

13225 (2) Deleted by Act 2000, June 22, P.L. 356, No. 43, § 4. 13226 13227 (3) The name of any administrative department, board or commission or other 13228

agency of this Commonwealth. 13229 13230 (4) A name the exclusive right to which is at the time reserved or registered by 13231

any other person [whatsoever in the manner provided by] under 15 Pa.C.S. § 208 13232 (relating to reservation of name) or 209 (relating to registration of name of nonregistered 13233 foreign association) or another statute. 13234 13235 * * * 13236

13237 13238

Chapter 5 13239 Corporate and Other Association Names 13240

13241 § 501. Register established. 13242 13243

(a) General rule. – A register is established by this chapter which shall consist of such 13244 of the following names as are not deleted therefrom by operation of section 504 (relating to 13245 effect of failure to make filings) or 506 (relating to voluntary termination of registration by 13246 corporations and other associations): 13247 13248

(1) A name registered prior to February 13, 1973, under the act of May 16, 1923 13249 (P.L. 246, No. 160), relating to registration of certain names. 13250

13251 (2) A name registered under section 502 (relating to certain additions to 13252

register). 13253 13254 (3) In the case of a domestic or [qualified] registered foreign corporation, a 13255

name rendered unavailable for corporate use by other corporations by reason of any 13256 filing in the department by such domestic or [qualified] registered foreign corporation. 13257

13258

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(4) A name registered under 15 Pa.C.S. § [4131] 209 (relating to registration of 13259 name of nonregistered foreign association) or any similar provision of law. 13260

13261 (5) In the case of a business trust which exists subject to 15 Pa.C.S. Ch. 95 13262

(relating to business trusts), the name of the trust as set forth in the[: (i)] instrument filed 13263 in the department under 15 Pa.C.S. § 9503 (relating to documentation of trust)[; or (ii) 13264 application for registration filed under 15 Pa.C.S. § 9507 (relating to foreign 13265 business trusts)]. 13266

13267 (6) In the case of a limited partnership or limited liability company subject to 15 13268

Pa.C.S. Ch. 85 (relating to limited partnerships) or 89 (relating to limited liability 13269 companies), the name of the partnership or company as set forth in the certificate of 13270 limited partnership, certificate of organization or [application for] statement of 13271 registration as a [foreign limited partnership or foreign limited liability company, as 13272 the case may be] registered foreign association. 13273

13274 (7) (Repealed.) 13275 13276 (8) In the case of a registered limited liability partnership subject to 15 Pa.C.S. 13277

Ch. 82 (relating to registered limited liability partnerships) that is not also a limited 13278 partnership, the name of the partnership as set forth in the statement of registration [or 13279 application for registration as a foreign registered limited liability partnership] as a 13280 registered foreign association. 13281

13282 (b) Subsequent availability of certain names. – Whenever, by reason of change in 13283

name, withdrawal or dissolution of a domestic or [qualified] registered foreign [corporation] 13284 association, failure to renew a registration of its name by a [nonqualified] nonregistered 13285 foreign [corporation] association, or for any other cause, its name is no longer rendered 13286 unavailable by the express provisions of Title 15 (relating to corporations and unincorporated 13287 associations), such name shall no longer be deemed to be registered under subsection (a)(3) or 13288 (4) on the register established by this chapter. 13289 13290 13291 § 502. Certain additions to register. 13292 13293

(a) Corporation names. – 13294 13295

(1) A domestic corporation not-for-profit incorporated prior to May 16, 1923 13296 may register its name with the department under this chapter by effecting the filing 13297 specified in 15 Pa.C.S. § 5311 (relating to filing of certificate of summary of record by 13298 certain corporations). 13299

13300 (2) Any person who is not eligible to make a filing under 15 Pa.C.S. § [4131 13301

(relating to registration of name) or 6131 (relating to registration of name)] 209 13302 (relating to registration of name of nonregistered foreign association) may register a 13303

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corporation name with the department by filing an application for registration of name, 13304 executed by the person, which shall set forth: 13305

13306 (i) The name of the corporation. 13307 13308 (ii) The address, including street and number, if any, of the person who 13309

executed the application. 13310 13311

(b) Associations generally. – An association other than a corporation may register 13312 with the department the name under which it is doing business or operating by filing an 13313 application for registration, which shall be executed by the association, and shall set forth: 13314 13315

(1) The name to be registered. 13316 13317 (2) The address, including street and number, if any, of the association. 13318 13319 (3) The length of time, if any, during which the name has been used by the 13320

applicant. 13321 13322 (4) Such other information necessary to the administration of this chapter as the 13323

department may specify by regulation. 13324 13325

(c) Limitation on names which may be registered. – Notwithstanding subsections (a) 13326 and (b), no new name shall be registered or deemed to be registered under this section which 13327 is not distinguishable upon the records of the department from any other name then registered 13328 or deemed to be registered under this chapter, without the consent of the senior registrant. 13329

13330 (d) Annual renewal. – A person who has in effect a registration of a corporate name 13331

may renew the registration from year to year by annually filing an application for renewal 13332 setting forth the facts required to be set forth in an original application for registration. A 13333 renewal application may be filed between October 1 and December 31 in each year and shall 13334 extend the registration for the following calendar year. 13335

13336 (e) Cross reference. – See 15 Pa.C.S. § 134 (relating to docketing statement). 13337

13338 13339 § 503. Decennial filings required. 13340 13341

(a) General rule. – Except as otherwise provided in this section, every corporation or 13342 other association whose name is registered under this chapter shall, during the year 2001 and 13343 every tenth year thereafter, file in the department a report, which shall be executed by the 13344 corporation or other association, and shall set forth: 13345 13346

(1) The name of the corporation or other association. 13347 13348

ACTIVE/ 6744855.14 296

(2) The address, including street and number, if any, of its registered or other 13349 office. 13350

13351 (3) A statement that the corporation or other association continues to exist. 13352 13353 (4) Such other information necessary to the administration of this chapter as the 13354

department may specify by regulation. 13355 13356

(b) Exceptions. – Subsection (a) shall not apply to any of the following: 13357 13358

(1) A corporation or other association that during the ten years ending on 13359 December 31 of the year in which a filing would otherwise be required under subsection 13360 (a) has made any filing in the department pursuant to a provision of this title or 15 13361 Pa.C.S. (relating to corporations and unincorporated associations) other than: 13362

13363 (i) a report required by subsection (a); or 13364 13365 (ii) a filing under[: 13366

13367 (A) 15 Pa.C.S. § 1305 (relating to reservation of corporate name); 13368 13369 (B) 15 Pa.C.S. § 5305 (relating to reservation of corporate name); 13370 13371 (C) 15 Pa.C.S. § 8203(b) (relating to name); 13372 13373 (D) 15 Pa.C.S. § 8505(b) (relating to name); or 13374 13375 (E) 15 Pa.C.S. § 8905(b) (relating to name)] 15 Pa.C.S. § 208 13376

(relating to reservation of name) or 209 (relating to registration of name of 13377 nonregistered foreign association). 13378

13379 (2) A corporation whose name is registered pursuant to section 501(a)(4) 13380

(relating to register established). 13381 13382 (3) A corporation that has had officer information forwarded to the department 13383

by the Department of Revenue during the preceding ten years under 15 Pa.C.S. § 1110 13384 (relating to annual report information). 13385

13386 (b.1) Deleted by 2001, June 22, P.L. 418, No. 34, § 3, effective in 60 days. 13387 13388 (c) [Exemptions. – An association shall be exempt from the 2001 decennial filing 13389

if the association made a filing: 13390 13391

(1) After December 31, 1989, and before January 1, 1992, pursuant to a 13392 provision of this title or 15 Pa.C.S. other than a filing under: 13393

13394

ACTIVE/ 6744855.14 297

(i) 15 Pa.C.S. § 1305; 13395 13396 (ii) 15 Pa.C.S. § 5305; 13397 13398 (iii) 15 Pa.C.S. § 8203(b); 13399 13400 (iv) 15 Pa.C.S. § 8505(b); or 13401 13402 (v) 15 Pa.C.S. § 8905(b). 13403

13404 (2) Under this section during the year 2000. ] (Repealed.) 13405

13406 (d) Cross references. – See 15 Pa.C.S. §§ 134 (relating to docketing statement) and 13407

135 (relating to requirements to be met by filed documents). 13408