2024 Pa. Act 59 | Pennsylvania Act 2024-59 — CORPORATIONS AND UNINCORPORATED ASSOCIATIONS (15 PA.C.S.) - OMNIBUS AMENDMENTS

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CORPORATIONS AND UNINCORPORATED ASSOCIATIONS (15 PA.C.S.) - OMNIBUS AMENDMENTS
	Act of Jul. 15, 2024, P.L. 728, No. 59	Cl. 15

Session of 2024

No. 2024-59

HB 1716

AN ACT

Amending Title 15 (Corporations and Unincorporated Associations) of the Pennsylvania Consolidated Statutes, in entities generally, further providing for requirements for names generally and providing for registration of name of domestic nonfiling association; in entity transactions, further providing for nature of transactions and for approval by limited liability company; in foreign associations, further providing for foreign registration statement; in general provisions, further providing for definitions; in corporate powers, duties and safeguards, further providing for certain specifically authorized debt terms; in officers, directors and shareholders, further providing for derivative action; in foreign business corporations, further providing for application of article; in general provisions, further providing for definitions; in corporate powers, duties and safeguards, further providing for certain specifically authorized debt terms; in officers, directors and members, further providing for derivative action; in general partnerships, further providing for contents of partnership agreement; in limited partnerships, further providing for contents of partnership agreement and for derivative action; and, in limited liability companies, further providing for contents of operating agreement and for derivative action.

The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1. Section 202(b)(2) of Title 15 of the Pennsylvania Consolidated Statutes is amended to read:

§ 202. Requirements for names generally.

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

(2) A name that has been reserved or registered pursuant to section 208 (relating to reservation of name) [or] , 209 (relating to registration of name of nonregistered foreign association) or 210 (relating to registration of name of domestic nonfiling association) . A name shall be rendered unavailable for use under this subchapter by reason of the filing by the department of an assumed or fictitious name registration under 54 Pa.C.S. Ch. 3 (relating to fictitious names) only to the extent expressly provided in 54 Pa.C.S. Ch. 3.

Section 2. Title 15 is amended by adding a section to read:

§ 210. Registration of name of domestic nonfiling association.

(a) General rule.--A domestic nonfiling association that is not a limited liability partnership may register a name that is available for use by a domestic filing entity under section 202 (relating to requirements for names generally) by delivering to the department for filing an application for registration of name, signed by the association, stating:

(1) The name of the association.

(2) The address, including street and number, if any, of the principal office of the association.

(3) The name being registered.

(b) Annual renewal.--A domestic nonfiling association that has in effect a registration of its name may renew the registration from year to year by annually filing an application for renewal stating the facts required to be stated in an original application for registration. A renewal application may be filed between October 1 and December 31 in each year and shall extend the registration for the following calendar year.

(c) Use of registered name.--A domestic nonfiling association whose name registration is effective may convert under Subchapter E of Chapter 3 (relating to conversion) to a domestic filing entity under the registered name or consent in a signed record to the use of that name by another entity.

(d) Cross references.--See sections 134 (relating to docketing statement) and 135 (relating to requirements to be met by filed documents).

Section 3. Sections 315(a) and 325(d)(2)(iv) of Title 15 are amended to read:

§ 315. Nature of transactions.

(a) General rule.--The fact that a sale or conversion of the interests in or assets of an association or a transaction under this chapter or other law produces a result that could be accomplished in any other manner permitted by a different set of provisions of this chapter or other law shall not be a basis for recharacterizing the sale, conversion or transaction as a different form of sale, conversion or transaction under this chapter or other law .

§ 325. Approval by limited liability company.

(d) Merger by action of managers only.--Unless otherwise required by a provision of the organic rules in record form, a plan of merger shall not require the approval of the members of a manager-managed, domestic limited liability company and shall be deemed adopted by the company when a resolution approving the plan has been adopted by the managers pursuant to subsection (a) if:

(2) The plan of merger provides for the merger of the company (referred to in this paragraph as the "constituent company") with or into a single indirect wholly owned subsidiary (referred to in this paragraph as the "subsidiary company") of the constituent company if all of the following provisions are satisfied:

(iv) Immediately following the effectiveness of the merger, the certificate of organization and operating agreement of the holding company are identical to the certificate of organization and operating agreement of the constituent company immediately before the effectiveness of the merger, except for changes that could be made without member approval pursuant to Chapter [89] 88 (relating to limited liability companies).

Section 4. Section 412(b) of Title 15 is amended by adding a paragraph to read:

§ 412. Foreign registration statement.

(b) Qualification or registration under former statutes.--The effect of a foreign association qualifying or registering to do business under prior provisions of law shall be as follows:

(6) A reference in the law of this Commonwealth to qualification as a foreign association includes registration under subsection (a) and deemed registration under this subsection.

Section 5. The definition of "foreign business corporation" in section 1103(a) of Title 15 is amended to read:

§ 1103. Definitions.

(a) General definitions.--Subject to additional definitions contained in subsequent provisions of this subpart that are applicable to specific provisions of this subpart, the following words and phrases when used in Part I (relating to preliminary provisions) or in this subpart shall have the meanings given to them in this section unless the context clearly indicates otherwise:

"Foreign business corporation." A foreign corporation for profit subject to Chapter 4 (relating to foreign associations), whether or not required to [qualify] register thereunder.

Section 6. Sections 1510(c), 1781(a)(1), 4101, 5103(b), 5510(c), 5781(a)(1), 8415(c)(2), 8615(c)(2), 8692(a)(1), 8815(c)(2) and 8882(a)(1) of Title 15 are amended to read:

§ 1510. Certain specifically authorized debt terms.

"Affiliate." An affiliate or associate as defined in section [2552] 102 (relating to definitions).

"Obligation." Includes an installment sale contract.

§ 1781. Derivative action.

(a) General rule.--Subject to section 1782 (relating to eligible shareholder plaintiffs and security for costs) and subsections (b) and (g), a plaintiff may maintain a derivative action to enforce a right of a business corporation only if:

(1) the plaintiff first makes a demand on the corporation or the board of directors requesting that the corporation bring an action to enforce the right, and:

[(i) if a special litigation committee is not appointed under section 1783 (relating to special litigation committee), the board determines that:

(A) an action based on some or all of the claims asserted in the demand not be brought by the corporation but that the corporation not object to an action being brought by the party that made the demand; or

(B) an action already commenced continue under the control of the plaintiff; or]

(i.1) if a special litigation committee is not appointed under section 1783 (relating to special litigation committee):

(A) the board determines that:

(I) an action based on some or all of the claims asserted in the demand not be brought by the corporation but that the corporation not object to an action being brought by the party that made the demand; or

(II) an action already commenced continue under the control of the plaintiff; or

(B) the board does not notify the party that made the demand within 60 days after the demand was made that the board has appointed a special litigation committee or has made a determination described under either clause (A)(I) or (II); or

(ii) if a special litigation committee is appointed under section 1783, a determination is made:

(A) under section 1783(e)(1) that the corporation not object to the action; or

(B) under section 1783(e)(5)(i) that the plaintiff continue the action;

§ 4101. Application of article.

(a) General rule.--Except as otherwise provided in this section or in subsequent provisions of this article, this article shall apply to and the words "corporation" or "foreign business corporation" in this article shall include every foreign corporation for profit, including a corporation that, if a domestic corporation for profit, would be a banking institution[,] or credit union [or savings association].

(b) Domestic Federal financial institution exclusion.--Except as permitted by act of Congress, this article shall not apply to:

(1) Any of the following institutions or similar federally chartered institutions engaged in this Commonwealth in activities similar to those conducted by banking institutions[, saving associations] or credit unions:

(i) National banking associations organized under The National Bank Act (13 Stat. 99, 12 U.S.C. § 1 et seq.).

(ii) Federal savings and loan associations and Federal mutual savings banks organized under the Home Owners' Loan Act of 1933 (48 Stat. 128, 12 U.S.C. § 1461 et seq.).

(iii) Federal credit unions organized under the Federal Credit Union Act (48 Stat. 1216, 12 U.S.C. § 1751 et seq.).

(2) Any other Federal corporation intended by the Congress to be treated for state law purposes as a domestic corporation of this Commonwealth.

§ 5103. Definitions.

(b) Index of other definitions.--The following is a nonexclusive list of words and phrases which when used in this subpart shall have the meanings given to them in section 102 (relating to definitions):

"Act" or "action."

"Charitable purposes."

"Conversion."

"Corporation for profit."

"Corporation not-for-profit."

"Court."

"Department."

"Division."

"Domestic corporation for profit."

"Domestic corporation not-for-profit."

"Domestication."

"Execute."

"Foreign corporation for profit."

"Foreign corporation not-for-profit."

"Interest exchange."

"Internal Revenue Code of 1986."

"Merger."

"Obligation."

"Officially publish."

"Record form."

"Representative."

"Sign."

§ 5510. Certain specifically authorized debt terms.

(c) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

"Affiliate." An affiliate or associate as defined in section [2552] 102 (relating to definitions).

"Obligation." Includes an installment sale contract.

§ 5781. Derivative action.

(a) General rule.--Subject to section 5782 (relating to eligible member plaintiffs and security for costs) and subsection (b), a plaintiff may maintain a derivative action to enforce a right of a nonprofit corporation only if:

(1) the plaintiff first makes a demand on the corporation or the board of directors, requesting that the corporation bring an action to enforce the right, and:

[(i) if a special litigation committee is not appointed under section 5783 (relating to special litigation committee), the board determines that:

(B) an action already commenced continue under the control of the plaintiff; or]

(i.1) if a special litigation committee is not appointed under section 5783 (relating to special litigation committee):

(A) the board determines that:

(II) an action already commenced continue under the control of the plaintiff; or

(ii) if a special litigation committee is appointed under section 5783, a determination is made:

(A) under section 5783(e)(1) that the corporation not object to the action; or

(B) under section 5783(e)(5)(i) that the plaintiff continue the action;

§ 8415. Contents of partnership agreement.

(2) Vary the right of a partner to approve a merger, interest exchange, conversion[,] or division [or domestication] under section 333(a)(2) (relating to approval of merger), 343(a)(2) (relating to approval of interest exchange), 353(a)(3) (relating to approval of conversion)[,] or 363(a)(2) (relating to approval of division) [or 373(a)(2) (relating to approval of domestication)].

§ 8615. Contents of partnership agreement.

§ 8692. Derivative action.

(a) General rule.--Subject to section 8693 (relating to eligible partner plaintiffs and security for costs) and subsection (b), a plaintiff may maintain a derivative action to enforce a right of a limited partnership only if:

(1) the plaintiff first makes a demand on the limited partnership or the general partners requesting that the partnership bring an action to enforce the right, and:

[(i) if a special litigation committee is not appointed under section 8694 (relating to special litigation committee), the general partners determine that:

(A) an action based on some or all of the claims asserted in the demand not be brought by the limited partnership but that the partnership not object to an action being brought by the party that made the demand; or

(B) an action already commenced continue under the control of the plaintiff; or]

(i.1) if a special litigation committee is not appointed under section 8694 (relating to special litigation committee):

(A) the general partners determine that:

(I) an action based on some or all of the claims asserted in the demand not be brought by the limited partnership but that the partnership not object to an action being brought by the party that made the demand; or

(II) an action already commenced continue under the control of the plaintiff; or

(B) the general partners do not notify the party that made the demand within 60 days after the demand was made that the general partners have appointed a special litigation committee or have made a determination described under either clause (A)(I) or (II); or

(ii) if a special litigation committee is appointed under section 8694, a determination is made:

(A) under section 8694(e)(1) that the partnership not object to the action; or

(B) under section 8694(e)(5)(i) that the plaintiff continue the action;

§ 8815. Contents of operating agreement.

(2) Vary the right of a member to approve a merger, interest exchange, conversion[,] or division [or domestication] under section 333(a)(2) (relating to approval of merger), 343(a)(2) (relating to approval of interest exchange), 353(a)(3) (relating to approval of conversion)[,] or 363(a)(2) (relating to approval of division) [or 373(a)(2) (relating to approval of domestication)].

§ 8882. Derivative action.

(a) General rule.--Subject to section 8883 (relating to eligible plaintiffs and security for costs) and subsection (b), a plaintiff may maintain a derivative action to enforce a right of a limited liability company only if:

(1) the plaintiff first makes a demand on the company or the other members in a member-managed limited liability company, or the managers of a manager-managed limited liability company, requesting that the company bring an action to enforce the right and:

[(i) if a special litigation committee is not appointed under section 8884 (relating to special litigation committee), the members in a member-managed company or managers of a manager-managed company determine that:

(A) an action based on some or all of the claims asserted in the demand not be brought by the company but that the company not object to an action being brought by the party that made the demand; or

(B) an action already commenced continue under the control of the plaintiff; or]

(i.1) if a special litigation committee is not appointed under section 8884 (relating to special litigation committee):

(A) the members in a member-managed company or managers of a manager-managed company determine that:

(I) an action based on some or all of the claims asserted in the demand not be brought by the company but that the company not object to an action being brought by the party that made the demand; or

(II) an action already commenced continue under the control of the plaintiff; or

(B) the members in a member-managed company or managers of a manager-managed company do not notify the party that made the demand within 60 days after the demand was made that they have appointed a special litigation committee or have made a determination described under either clause (A)(I) or (II); or

(ii) if a special litigation committee is appointed under section 8884, a determination is made:

(A) under section 8884(e)(1) that the company not object to the action; or

(B) under section 8884(e)(5)(i) that the plaintiff continue the action;

Section 7. This act shall take effect in 60 days.

APPROVED--The 15th day of July, A.D. 2024.

JOSH SHAPIRO

Section 7. This act shall take effect in 60 days.

APPROVED--The 15th day of July, A.D. 2024.

JOSH SHAPIRO

Pennsylvania Act 2024-59 — CORPORATIONS AND UNINCORPORATED ASSOCIATIONS (15 PA.C.S.) - OMNIBUS AMENDMENTS

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