Pennsylvania’s Act 122 updated our corporate laws at the end of 2022. Much of the 123-page, single-spaced collection of “omnibus amendments” reads like a detailed proofreading job, cleaning up glitches in the codification of our corporate laws.
However, there are some noteworthy substantive changes, primarily affecting nonpublic firms.
The change most visible to the business community will be the annual report filing required beginning in 2024. Entities that must file this report include corporations (both business and nonprofit), partnerships (limited and LLPs), LLCs, business trusts, and certain other “associations”.
This annual filing (and the associated $7 fee) replaces the $70 “decennial report” previously required every ten years (in the absence of any other corporate filings), which was repealed effective in January 2023.
Corporate law geeks should pay attention to several new provisions:
- Allowing entities to override otherwise applicable fiduciary limitations.
- Confirming that certain fiduciary duties exist only in favor of the entity, and not of creditors or a shareholder.
- Confirming that a shareholder is subject to bylaws, whether or not they know what they may say.
- Allowing corporations (but not LLCs or partnerships) to limit litigation over “internal corporate claims” to a particular Pennsylvania court (provided that such court has “jurisdiction”, the legal right to decide such a claim).
- Codifying rules for the personal liability of officers.
- Confirming the effectiveness of share transfer restrictions to protect an election, or to satisfy a statutory or regulatory requirement.
Many provisions confirm that internet technology may be used for corporate meetings, acceding to the Pandemic’s reality.
Act 122 formally validates the common practice of signing contracts using a fictitious name, registered or unregistered (rather than with the formal name registered in Harrisburg). However, a firm still can’t file a lawsuit using an unregistered fictitious name – the court filing must use a firm’s formal name or a registered fictitious name.
The new law’s text is at 2022 Act 122 – PA General Assembly (state.pa.us).
The Secretary of State’s press release on the new annual report requirement is at Annual Reports in Pennsylvania (pa.gov).
For further information about Act 122’s changes, or Pennsylvania corporate law generally, please contact Stanley Jaskiewicz, Esquire, of our Business Law department at firstname.lastname@example.org, or 215-241-8866.