15 Pa.C.S. § 57 Retroactivity.
Section 56 of this act shall apply retroactively to January 30, 1978. 2014, OCTOBER 22, P.L.2640, NO.172
15 Pa.C.S. Ch. 57
15 Pa.C.S. Ch. 57
in effect15 Pa.C.S. § 5701 Applicability of subchapter.
The provisions of this subchapter shall apply to every nonprofit corporation unless otherwise restricted:
(1) by any other provision of this subpart; or
(2) except with respect to section 5707(a) (relating to exception to requirement of notice), in the bylaws. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5702 Manner of giving notice.
(a) General rule.--
(1) Any notice required to be given to any person under the provisions of this subpart or by the articles or bylaws of any nonprofit corporation shall be given to the person either personally or by delivering a copy thereof:
(i) By first class or express mail, postage prepaid, or courier service, charges prepaid, to the person's postal address appearing on the books of the corporation or, in the case of directors or members of an other body, supplied by the person to the corporation for the purpose of notice. Notice under this subparagraph shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or with a courier service for delivery to that person.
(ii) By facsimile transmission, e-mail or other electronic communication to the facsimile number or address for e-mail or other electronic communications supplied by the person to the corporation for the purpose of notice. Notice under this subparagraph shall be deemed to have been given to the person entitled thereto when sent.
(2) A notice of meeting shall specify the day, hour and geographic location, if any, of the meeting and any other information required by any other provision of this subpart.
(b) Adjourned meetings of members.--When a meeting of members is adjourned, it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which the adjournment is taken, unless the board or other body fixes a new record date for the adjourned meeting or this subpart requires notice of the business to be transacted and such notice has not previously been given.
(c) Bulk mail notice.--A corporation having more than 100 members of record that gives notice by mail of any regular or special meeting of the members (or any other notice required by this subpart or by the articles or bylaws to be given to all members or to a class of members) at least 20 days prior to the day named for the meeting or any corporate or member action specified in the notice may use any class of postpaid mail.
(d) Notice by publication.--If the bylaws so provide, persons authorized or required to give notice of a meeting of members may, in lieu of any written notice of a meeting of members required to be given by this subpart, give notice of the meeting by causing notice of the meeting to be officially
published. If 80% of the members of record entitled to vote at the meeting do not have addresses of record within the territory of general circulation of the newspapers required for official publication, the notice shall also be published in newspapers that have an aggregate territory of general circulation that includes the addresses of record of at least 80% of the members of record.
(e) Notice by public announcement.--In lieu of any written notice of a meeting of members required to be given by this subpart, persons authorized or required to give notice of a meeting of members of any church or other religious organization may give notice of the meeting by announcement at any two regular church or religious services held during different weeks within 30 days prior to the time at which the meeting of members will be held. In any case where notice of a meeting is given by announcement, notice shall be given at the last service preceding the meeting. In the event that two church or religious services are not held within such 30-day period, notice of a meeting of members shall be given as otherwise provided in this subchapter.
(f) Effect of notice pursuant to optional procedures.--For the purposes of this subpart, notice given under subsection (d) or (e) shall be deemed to be written notice to every member of record entitled to vote at a meeting or to every person otherwise entitled to notice. (Dec. 19, 1990, P.L.834, No.198, eff. imd.; July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsec. (a)(1). 2013 Amendment. Act 67 amended subsec. (a).
Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5702.1 Optional procedures for giving of notice (Repealed).
1990 Repeal. Section 5702.1 was repealed December 19, 1990, P.L.834, No.198, effective immediately.
15 Pa.C.S. § 5703 Place and notice of meetings of board of directors or other body.
(a) Place.--Meetings of the board of directors or other body may be held at such place within or without this Commonwealth as the board of directors or other body may from time to time appoint or as may be designated in the notice of the meeting.
(b) Notice.--Regular meetings of the board of directors or other body may be held upon such notice, if any, as the bylaws may prescribe. Unless otherwise provided in the bylaws, written notice of every special meeting of the board of directors or other body shall be given to each director or member of such other body at least five days before the day named for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board or other body need be specified in the notice of the meeting. (Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5704 Place and notice of meetings of members.
(a) Place.--Meetings of members may be held at a geographic location within or without this Commonwealth as may be provided in or fixed pursuant to the bylaws. Authority to provide for the location of a meeting of the members includes the authority
to determine to hold a meeting solely by means of electronic technology in accordance with section 5708 (relating to use of conference telephone or other electronic technology), notwithstanding that the authority may refer to one or more geographic locations. Unless otherwise provided in or fixed pursuant to the bylaws, all meetings of the members that are not held solely by means of electronic technology shall be held at the executive office of the corporation wherever situated.
(b) Notice.--Notice in record form of every meeting of the members shall be given by, or at the direction of, the secretary or other authorized person to each member of record entitled to vote at the meeting at least:
(1) ten days prior to the day named for a meeting that will consider a transaction under Chapter 3 (relating to entity transactions) or a fundamental change under Chapter 59 (relating to amendments, sale of assets and dissolution); or
(2) five days prior to the day named for the meeting in any other case.
(c) Contents.--In the case of a special meeting of the members, the notice shall specify the general nature of the business to be transacted, and in all cases the notice shall comply with the express requirements of this subpart. The corporation shall not have a duty to augment the notice.
(d) Alternative authority.--If the secretary or other authorized person does not give notice of a meeting within a reasonable time, a person calling the meeting may do so. (Dec. 19, 1990, P.L.834, No.198, eff. imd.; Dec. 18, 1992, P.L.1333, No.169, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days; Oct. 22, 2014, P.L.2640, No.172, eff. July 1, 2015; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5705 Waiver of notice.
(a) General rule.--Whenever any notice is required to be given under the provisions of this subpart or the articles or bylaws of any nonprofit corporation, a waiver thereof that is filed with the secretary of the corporation in record form, signed by the person or persons entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of the notice. Neither the business to be transacted at, nor the purpose of, a meeting need be specified in the waiver of notice of the meeting.
(b) Waiver by attendance.--Attendance of a person at any meeting shall constitute a waiver of notice of the meeting except where a person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting was not lawfully called or convened. (Dec. 19, 1990, P.L.834, No.198, eff. imd.; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (a). 1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5706 Modification of proposal contained in notice.
Whenever the language of a proposed resolution is included in a written notice of a meeting required to be given under the provisions of this subpart or the articles or bylaws of any nonprofit corporation, the meeting considering the resolution may without further notice adopt it with such clarifying or other amendments as do not enlarge its original purpose. (Dec. 19, 1990, P.L.834, No.198, eff. imd.)
1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5707 Exception to requirement of notice.
(a) General rule.--Whenever any notice or communication is required to be given to any person under the provisions of this subpart or by the articles or bylaws of any nonprofit corporation or by the terms of any agreement or other instrument or as a condition precedent to taking any corporate action and communication with that person is then unlawful, the giving of the notice or communication to such person shall not be required and there shall be no duty to apply for a license or other permission to do so. Any action or meeting that is taken or held without notice or communication to that person shall have the same validity as if the notice or communication had been duly given. If the action taken is such as to require the filing of any document with respect thereto under any provision of law or any agreement or other instrument, it shall be sufficient, if such is the fact and if notice or communication is required, to state therein that notice or communication was given to all persons entitled to receive notice or communication except persons with whom communication was unlawful.
(b) Members without forwarding addresses.--Subsection (a) shall also be applicable to any member with whom the corporation has been unable to communicate for more than 24 consecutive months because communications to the member are returned unclaimed or the member has otherwise failed to provide the corporation with a current address. Whenever the member provides the corporation with a current address, subsection (a) shall cease to be applicable to the member under this subsection. (Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section. Cross References. Section 5707 is referred to in section 5701 of this title.
15 Pa.C.S. § 5708 Use of conference telephone or other electronic technology.
(a) Incorporators, directors and members of an other body.--Except as otherwise provided in the bylaws, one or more persons may participate in a meeting of the incorporators, the board of directors or an other body of a nonprofit corporation by means of conference telephone or other electronic technology by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this subsection shall constitute presence in person at the meeting.
(b) Members.--Except as otherwise provided in the bylaws, the presence or participation by a member, including voting and taking other action, at a meeting of members by conference telephone or other electronic technology constitutes the presence of, or vote or action by, the member for the purposes of this subpart.
(c) Exclusive use of electronic technology.--Unless the bylaws provide expressly that a meeting of members may not be held solely by means of electronic technology, a meeting of the members does not need to be held at a geographic location if the meeting is held by means of electronic technology in a fashion pursuant to which the members have a reasonable opportunity to participate in the meeting, read or hear the proceedings substantially concurrently with their occurrence, vote on matters submitted to the members and, subject to such guidelines and procedures as the board of directors may adopt, make appropriate motions and comment on the business of the
meeting. Any guidelines or procedures adopted by the board or an other body must comply with section 5709(c) (relating to conduct of members meeting). (Dec. 19, 1990, P.L.834, No.198, eff. imd.; July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5708 is referred to in sections 5704, 5758 of this title.
15 Pa.C.S. § 5709 Conduct of members meeting.
(a) Presiding officer.--There shall be a presiding officer at every meeting of the members. The presiding officer shall be appointed in the manner provided in the bylaws or, in the absence of such provision, by the board of directors. If the bylaws are silent on the appointment of the presiding officer and the board fails to designate a presiding officer, the president shall be the presiding officer.
(b) Authority of the presiding officer.--Except as otherwise provided in the bylaws, the presiding officer shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting if the board of directors has not determined the order of business or established such rules.
(c) Procedural standard.--Any rules adopted for, and the conduct of, a meeting shall be fair to the members.
(d) Closing of the polls.--The presiding officer shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes, nor any revocations or changes thereto, may be accepted. (June 22, 2001, P.L.418, No.34, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsecs. (b) and (c). 2001 Amendment. Act 34 added section 5709. Cross References. Section 5709 is referred to in section 5708 of this title.
15 Pa.C.S. § 5711 Alternative provisions.
(a) General rule.--Section 5716 (relating to alternative standard) shall not be applicable to any nonprofit corporation to which section 5715 (relating to exercise of powers generally) is applicable. Section 5715 shall be applicable to any corporation except a corporation:
(1) the bylaws of which by amendment adopted by the board of directors on or before July 26, 1990, and not subsequently rescinded by an articles amendment, explicitly provide that section 5715 or corresponding provisions of prior law shall not be applicable to the corporation; or
(2) the articles of which explicitly provide that section 5715 or corresponding provisions of prior law shall not be applicable to the corporation.
(b) Reversal of opt-out.--A provision of the articles or bylaws providing that section 5715 or corresponding provisions of prior law shall not be applicable to the corporation may be rescinded pursuant to the procedures required by this subpart and the articles and bylaws at the time of the rescission to amend the articles or bylaws. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5711 is referred to in sections 5715, 5716 of this title.
15 Pa.C.S. § 5712 Standard of care, justifiable reliance and business judgment rule.
(a) General rule.--A director of a nonprofit corporation shall stand in a fiduciary relation to the corporation and shall perform the duties of a director, including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner the director reasonably believes to be in the best interests of the corporation and with such care, including the skill and diligence that a person of ordinary prudence would use under similar circumstances and reasonable inquiry into those issues required by the statutes of this Commonwealth to be considered in the circumstances and those interests and factors listed in section 5715(a) (relating to exercise of powers generally) or 5716(a) (relating to alternative standard) that the director considers appropriate. This subsection is subject to subsection (d) where applicable.
(a.1) Justifiable reliance.--In performing the duties of a director and in satisfying the requirements of subsection (d), a director is entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by any of the following:
(1) One or more officers or employees of the corporation or an affiliate of the corporation whom the director reasonably believes to be reliable and competent in the matters presented.
(2) Counsel, public accountants or other persons as to matters which the director reasonably believes to be within the professional or expert competence of such person.
(3) A committee of the board upon which the director does not serve, duly designated in accordance with law, as
to matters within its designated authority, which committee the director reasonably believes to merit confidence.
(b) Effect of actual knowledge.--A director is not considered to be acting in good faith under subsection (a.1) if the director has actual knowledge concerning the matter that causes the director to believe reliance is unwarranted.
(c) Officers.--(Deleted by amendment).
(d) Business judgment rule.--A director who makes a business judgment in good faith fulfills the duties under this section if:
(1) the subject of the business judgment does not involve self-dealing by the director or an associate or affiliate of the director;
(2) the director is informed with respect to the subject of the business judgment to the extent the director reasonably believes to be appropriate under the circumstances; and
(3) the director rationally believes that the business judgment is in the best interests of the corporation.
(e) Burden of proof.--A person challenging the conduct of a director as violating the duty of care under this section has the burden of proving:
(1) a breach of the duty of care, including the inapplicability of the provisions as to the fulfillment of that duty under subsection (d); and
(2) in a damage action, that the breach was the legal cause of damage suffered by the corporation. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5712 is referred to in sections 5715, 5716, 5717 of this title.
15 Pa.C.S. § 5713 Personal liability of directors.
(a) General rule.--If a bylaw adopted by the members of a nonprofit corporation so provides, a director shall not be personally liable, as such, for monetary damages for any action taken unless:
(1) the director has breached or failed to perform the duties of his office under this subchapter; and
(2) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
(b) Exception.--Subsection (a) shall not apply to:
(1) the responsibility or liability of a director pursuant to any criminal statute; or
(2) the liability of a director for the payment of taxes pursuant to Federal, State or local law.
(c) Application.--An amendment or repeal of a provision adopted under subsection (a) does not affect its application with respect to an act by a director occurring before the amendment or repeal unless the provision in effect at the time of the act explicitly authorizes its amendment or repeal after an act has occurred.
(d) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to corporate representatives). (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 relettered former subsec. (c) to subsec. (d) and added present subsec. (c). Cross References. Section 5713 is referred to in sections 5504, 5505 of this title.
15 Pa.C.S. § 5714 Presumption of assent.
A director of a nonprofit corporation who is present at a meeting of its board of directors, or of a committee of the
board, at which action on any corporate matter is taken on which the director is generally competent to act, shall be presumed to have assented to the action taken unless the director's dissent, abstention or vote against the matter is entered in the minutes of the meeting or unless the director delivers to the secretary of the meeting before the adjournment thereof a dissent in record form to the action or transmits the dissent in record form to the secretary of the corporation immediately after the adjournment of the meeting. The right to dissent shall not apply to a director who voted in favor of the action. Nothing in this subchapter shall bar a director from asserting that minutes of the meeting incorrectly omitted the director's dissent, abstention or vote against if, promptly upon receipt of a copy of such minutes, the director notifies the secretary of the corporation in record form of the asserted omission or inaccuracy. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5715 Exercise of powers generally.
(a) General rule.--In discharging the duties of their respective positions, the board of directors, committees of the board and individual directors of a nonprofit corporation may, in considering the best interests of the corporation, consider to the extent they deem appropriate:
(1) The effects of any action upon any or all groups affected by such action, including members, employees, suppliers, customers and creditors of the corporation, and upon communities in which offices or other establishments of the corporation are located.
(2) The short-term and long-term interests of the corporation, including benefits that may accrue to the corporation from its long-term plans and the possibility that these interests may be best served by the continued independence of the corporation.
(3) The resources, intent and conduct (past, stated and potential) of any person seeking to acquire control of the corporation.
(4) All other pertinent factors.
(b) Consideration of interests and factors.--The board of directors, committees of the board and individual directors shall not be required, in considering the best interests of the corporation or the effects of any action, to regard any corporate interest or the interests of any particular group affected by such action as a dominant or controlling interest or factor. The consideration of interests and factors in the manner described in this subsection and in subsection (a) shall not constitute a violation of section 5712 (relating to standard of care, justifiable reliance and business judgment rule).
(c) Specific applications.--In exercising the powers vested in the corporation, including, without limitation, those powers pursuant to section 5502 (relating to general powers), and in no way limiting the discretion of the board of directors, committees of the board and individual directors pursuant to subsections (a) and (b), the fiduciary duty of directors shall not be deemed to require them to act as the board of directors, a committee of the board or an individual director solely because of the effect such action might have on an acquisition or potential or proposed acquisition of control of the corporation or the consideration that might be offered or paid to members in such an acquisition.
(d) Presumption.--In assessing whether the standard set forth in section 5712 or 5728 (relating to interested directors or officers; quorum) has been satisfied, there shall not be any
greater obligation to justify, or higher burden of proof with respect to, any act as the board of directors, any committee of the board or any individual director relating to or affecting an acquisition or potential or proposed acquisition of control of the corporation than is applied to any other act as a board of directors, any committee of the board or any individual director. Notwithstanding section 5712(d) and the preceding provision of this subsection, any act as the board of directors, a committee of the board or an individual director relating to or affecting an acquisition or potential or proposed acquisition of control to which a majority of the disinterested directors shall have assented shall be presumed to satisfy the standard set forth in section 5712 or 5728, unless it is proven by clear and convincing evidence that the disinterested directors did not assent to such act in good faith after reasonable investigation.
(e) Definition.--The term "disinterested director" as used in subsection (d) and for no other purpose means:
(1) A director of the corporation other than:
(i) A director who has a direct or indirect financial or other interest in the person acquiring or seeking to acquire control of the corporation or who is an affiliate or associate of, or was nominated or designated as a director by, a person acquiring or seeking to acquire control of the corporation.
(ii) Depending on the specific facts surrounding the director and the act under consideration, an officer or employee or former officer or employee of the corporation.
(2) A person shall not be deemed to be other than a disinterested director solely by reason of any or all of the following:
(i) The ownership by the director of a membership in or shares of the corporation.
(ii) The receipt as a member of or holder of shares of any class of any distribution made to all members of or holders of shares of that class.
(iii) The receipt by the director of director's fees or other consideration as a director.
(iv) Any interest the director may have in retaining the status or position of director.
(v) The former business or employment relationship of the director with the corporation.
(vi) Receiving or having the right to receive retirement or deferred compensation from the corporation due to service as a director, officer or employee.
(f) Cross reference.--See section 5711 (relating to alternative provisions). (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsecs. (b), (d) and
(e)(1)(i). Cross References. Section 5715 is referred to in sections 5711, 5712, 5717, 5728 of this title.
15 Pa.C.S. § 5716 Alternative standard.
(a) General rule.--In discharging the duties of their respective positions, the board of directors, committees of the board and individual directors of a nonprofit corporation may, in considering the best interests of the corporation, consider the effects of any action upon employees, upon suppliers and customers of the corporation and upon communities in which offices or other establishments of the corporation are located,
and all other pertinent factors. The consideration of those factors shall not constitute a violation of section 5712 (relating to standard of care, justifiable reliance and business judgment rule).
(b) Presumption.--(Deleted by amendment).
(c) Cross reference.--See section 5711 (relating to alternative provisions). (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5716 is referred to in sections 5711, 5712, 5717 of this title.
15 Pa.C.S. § 5717 Limitation on standing.
The duty of the board of directors, committees of the board and individual directors under section 5712 (relating to standard of care, justifiable reliance and business judgment rule) is solely to the nonprofit corporation and not to any member or creditor or any other person or group, and may be enforced directly by the corporation or may be enforced by an action in the right of the corporation, and may not be enforced directly by a member or creditor or by any other person or group. Notwithstanding the preceding sentence, sections 5715(a) and (b) (relating to exercise of powers generally) and 5716(a) (relating to alternative standard) do not impose upon the board of directors, committees of the board and individual directors, any legal or equitable duties, obligations or liabilities or create any right or cause of action against, or basis for standing to sue, the board of directors, committees of the board and individual directors. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5718 (Reserved).
(Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 5718.
15 Pa.C.S. § 5719 Renunciation of corporate opportunities.
The articles of incorporation or bylaws, or an action of the board of directors, may renounce any interest or expectancy of a nonprofit corporation in, or in being offered an opportunity to participate in, a specified corporate opportunity or specified classes or categories of corporate opportunities that are presented to the corporation or to one or more of its directors, officers or members. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 5719.
15 Pa.C.S. § 5721 Board of directors.
Unless otherwise provided by statute or in a bylaw adopted by the members, all powers enumerated in section 5502 (relating to general powers) and elsewhere in this title or otherwise vested by law in a nonprofit corporation shall be exercised by or under the authority of the board of directors, and the business and affairs of every nonprofit corporation shall be managed by or under the direction of, a board of directors. If any such provision is made in the bylaws, the powers and duties conferred or imposed upon the board of directors by this title shall be exercised or performed to such extent and by such other body as shall be provided in the bylaws. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5721 is referred to in sections 5502, 5504 of this title.
15 Pa.C.S. § 5722 Qualifications of directors.
(a) General rule.--Each director of a nonprofit corporation shall be a natural person of full age, except as provided in subsection (b), who, unless otherwise restricted in the bylaws, need not be a resident of this Commonwealth or a member of the corporation. Except as otherwise provided in this section, the qualifications of directors may be prescribed in the bylaws.
(b) Advisory committee.--A nonprofit corporation organized primarily for recreational or youth development and delinquency prevention purposes for the benefit of individuals 18 years of age or younger may amend its articles of incorporation to establish an advisory committee to its board, composed of members who may include individuals who are 16 or 17 years of age. If a nonprofit corporation amends its articles of incorporation to establish an advisory committee under this subsection, the total number of advisory committee members may not exceed the total number of directors required for a quorum for the transaction of business. (Feb. 10, 2006, P.L.21, No.6, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (a).
15 Pa.C.S. § 5723 Number of directors.
The board of directors of a nonprofit corporation shall consist of one or more members. The number of directors shall be fixed by or in the manner provided in the bylaws. If not so fixed, the number of directors shall be the same as that stated in the articles or three if no number is so stated. (July 9, 2013, P.L.476, No.67, eff. 60 days)
15 Pa.C.S. § 5724 Term of office of directors.
(a) General rule.--Each director of a nonprofit corporation shall hold office until the expiration of the term for which the director was selected and until a successor has been selected and qualified or until the director's earlier death,
resignation or removal. Directors, other than those selected by virtue of their office or former office in the corporation or in any other entity or organization, shall be selected for the term of office provided in the bylaws. In the absence of a provision fixing the term, it shall be one year.
(b) Resignations.--A director may resign at any time upon notice in record form to the corporation. A resignation that is not conditioned upon acceptance by the board of directors shall be effective upon receipt by the corporation of the notice of resignation, unless the notice specifies a later effective time or an effective time determined upon the happening of an event or events. If a resignation is conditioned upon its acceptance by the board, a decision by the board to accept or reject the resignation shall be made by the board in the manner required by Subchapter B (relating to fiduciary duty).
(c) Decrease in number.--A decrease in the number of directors shall not have the effect of shortening the term of any incumbent director.
(d) Classified board of directors.--Except as otherwise provided in the bylaws, if the directors are classified in respect of the time for which they shall severally hold office:
(1) Each class shall be as nearly equal in number as possible.
(2) The term of office of at least one class shall expire in each year.
(3) The members of a class shall not be elected for a longer period than four years. (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsec. (b).
15 Pa.C.S. § 5725 Selection of directors.
(a) General rule.--Except as otherwise provided in this section, directors of a nonprofit corporation, other than those constituting the first board of directors, shall be elected by the members.
(b) Other methods.--If a bylaw adopted by the members so provides, directors may be elected, appointed, designated or otherwise selected by the person or persons or by the method or methods as shall be fixed by, or in the manner provided in, the bylaw, and the directors may be classified as to the members who exercise the power to select directors.
(c) Vacancies.--Except as otherwise provided in the bylaws:
(1) Vacancies in the board of directors, including vacancies resulting from an increase in the number of directors, may be filled by a majority of the remaining members of the board though less than a quorum, or by a sole remaining director, and each person so selected shall be a director to serve for the balance of the unexpired term unless otherwise restricted in the bylaws.
(2) When one or more directors resign from the board effective at a future date, the directors then in office, including those who have so resigned, shall have power by the applicable vote to fill the vacancies, the vote thereon to take effect when the resignations become effective.
(3) In the case of a corporation having a board of directors classified in respect of the time for which directors shall severally hold office, any director chosen to fill a vacancy, including a vacancy resulting from an increase in the number of directors, shall hold office until the next election of the class for which the director has been chosen and until a successor has been selected and
qualified or until the director's earlier death, resignation or removal.
(c.1) No directors in office.--At any time when the offices of all of the directors of a membership corporation are vacant, any officer, member of an other body or member may call a special meeting of members for the purpose of electing directors.
(d) Alternate directors.--If the bylaws so provide, a person or group of persons entitled to elect, appoint, designate or otherwise select one or more directors may select an alternate for each director. In the absence of a director from a meeting of the board, the director's alternate may, in the manner and upon the notice, if any, as may be provided in the bylaws, attend the meeting or execute a consent in record form and exercise at the meeting or in the consent, the powers of the absent director as may be specified by, or in the manner provided in, the bylaws. When so exercising the powers of the absent director, the alternate shall be subject in all respects to the provisions of this subpart relating to directors.
(e) Nomination of directors.--Unless otherwise provided in the bylaws, directors shall be nominated by a nominating committee or from the floor.
(f) Cross reference.--See the definition of "member" in section 5103 (relating to definitions). (Dec. 12, 1984, P.L.977, No.193, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added subsec. (c.1). Cross References. Section 5725 is referred to in sections 5504, 5755 of this title.
15 Pa.C.S. § 5726 Removal of directors.
(a) Removal by the members.--
(1) Unless otherwise provided in a bylaw adopted by the members, the entire board of directors, or a class of the board where the board is classified with respect to the power to select directors, or any individual director of a nonprofit corporation may be removed from office without assigning any cause by the vote of members, or a class of members, entitled to elect directors, or the class of directors. In case the board or a class of the board or any one or more directors are so removed, new directors may be elected at the same meeting.
(2) An individual director shall not be removed, unless the entire board or class of the board is removed, from the board of a corporation in which members are entitled to vote cumulatively for the board or a class of the board if sufficient votes are cast against the resolution for removal of the director which, if cumulatively voted at an annual or other regular election of directors, would be sufficient to elect one or more directors to the board or to the class.
(b) Removal by the board.--Unless otherwise provided in a bylaw adopted by the members, the board of directors may declare vacant the office of a director who has been judicially declared of unsound mind or who has been convicted of an offense punishable by imprisonment for a term of more than one year, or for any other proper cause which the bylaws may specify, or if, within 60 days, or other time as the bylaws may specify, after notice of selection, a director does not accept the office either in writing or by attending a meeting of the board of directors and fulfill the other requirements of qualification as the bylaws may specify.
(c) Removal by the court.--Upon application of any member or director, the court may remove from office any director in case of fraudulent or dishonest acts, or gross abuse of authority or discretion with reference to the corporation, or for any other proper cause, and may bar from office any director so removed for a period prescribed by the court. The corporation shall be made a party to the action and, as a prerequisite to the maintenance of an action under this subsection, a member shall comply with Subchapter G (relating to judicial supervision of corporate action).
(d) Effect of reinstatement.--An act of the board done during the period when a director has been suspended or removed for cause shall not be impugned or invalidated if the suspension or removal is thereafter rescinded by the members or by the board or by the final judgment of a court. (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5726 is referred to in section 5504 of this title.
15 Pa.C.S. § 5727 Quorum of and action by directors.
(a) General rule.--Unless otherwise provided in the bylaws, a majority of the directors in office of a nonprofit corporation shall be necessary to constitute a quorum for the transaction of business, and the acts of a majority of the directors present and voting at a meeting at which a quorum is present shall be the acts of the board of directors.
(b) Action by consent.--Unless otherwise restricted in the bylaws, any action required or permitted to be approved at a meeting of the directors may be approved without a meeting if one or more consents to the action in record form. Except as provided in subsection (c), the consents must be signed, before, on or after the effective time of the action by all of the directors in office at the effective time. The consent or consents must be filed with the secretary of the corporation.
(c) Effectiveness of consent.--A consent may provide, or a person signing a consent, whether or not then a director, may instruct in record form, that the consent will be effective at a future time, including a time determined upon the happening of an event. In the case of a consent signed by a person not a director at the time of signing, the consent is effective at the stated effective time if the person who signed the consent is a director at the effective time and did not revoke the consent in record form prior to the effective time. A consent is effective at the stated effective time even if one or more signers are no longer directors at the effective time unless the consent has been revoked by a signer who is a director at the effective time. A signer of a consent may revoke the signer's consent in record form until the consent becomes effective. (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5728 Interested directors or officers; quorum.
(a) General rule.--A contract or transaction between a nonprofit corporation and one or more of its directors or officers or between a nonprofit corporation and another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other association in which one or more of the corporation's directors or officers are governors or officers of the other association or have a financial or other interest, is not void or voidable solely for that reason, or solely because the director or officer of the corporation is present at or participates in the meeting of the
board of directors that authorizes the contract or transaction, or solely because the vote of the director or officer is counted for that purpose, if:
(1) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors and the board authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors even though the disinterested directors are less than a quorum;
(2) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the members entitled to vote thereon, if any, and the contract or transaction is specifically approved in good faith by vote of those members;
(3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors or the members; or
(4) the contract or transaction satisfies subsection
(d) or (e).
(b) Quorum.--Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board that authorizes a contract or transaction specified in subsection (a).
(c) Applicability.--The provisions of this section shall be applicable except as otherwise restricted in the bylaws.
(d) Common governors or officers with nonwholly owned associations.--A contract or transaction between a nonprofit corporation and an association that is not wholly owned or controlled by the corporation is not void or voidable solely on the grounds that a person who is a director or officer of the corporation is also a governor or officer of the other association if:
(1) one of the conditions set forth in subsection
(a)(1), (2) or (3) is satisfied; or
(2)
(i) the director or officer does not participate personally and substantially in negotiating the transaction for either the corporation or the other association; and
(ii) if the transaction is approved by the governors of either association, the person that is a governor or officer of each association does not cast a vote that would be necessary at a meeting to approve the transaction on behalf of either association.
(e) Common governors or officers with wholly owned associations.--A contract or transaction between a nonprofit corporation and an association wholly owned or controlled by the corporation is not void or voidable solely on the grounds that a director or officer of the corporation is also a governor or officer of the wholly owned or controlled association.
(f) Cross references.--See sections 5715(d) (relating to exercise of powers generally) and 5730 (relating to compensation of directors). (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5728 is referred to in sections 5715, 5745, 5746 of this title.
15 Pa.C.S. § 5729 Voting rights of directors.
(a) General rule.--Unless otherwise provided in a bylaw adopted by the members every director shall be entitled to one vote.
(b) Multiple and fractional voting.--The requirement of this subpart for the presence of or vote or other action by a specified percentage of directors shall be satisfied by the presence of or vote or other action by directors entitled to cast the specified percentage of the votes which all directors are entitled to cast. (July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (b). Cross References. Section 5729 is referred to in section 5504 of this title.
15 Pa.C.S. § 5730 Compensation of directors.
(a) General rule.--Except as otherwise restricted in the bylaws, the board of directors of a nonprofit corporation has the authority to fix the compensation of directors for their services as directors regardless of the personal interest of the directors. A director may be a salaried officer of the corporation.
(b) Presumption.--If the board of directors of a nonprofit corporation that is not incorporated for a charitable purpose establishes the compensation of directors in accordance with subsection (a), that action is presumed to be fair to the corporation. (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5730 is referred to in sections 5103, 5728 of this title.
15 Pa.C.S. § 5731 Executive and other committees of the board.
(a) Establishment and powers.--Unless otherwise restricted in the bylaws:
(1) The bylaws or the board of directors of a nonprofit corporation may establish one or more committees to consist of one or more directors of the corporation.
(2) Any committee, to the extent provided in the action of the board of directors or in the bylaws, shall have and may exercise all of the powers and authority of the board of directors, except that a committee shall not have any power or authority as to the following:
(i) The submission to members of any action or matter, other than the election or removal of directors, requiring approval of members under this subpart or Chapter 3 (relating to entity transactions).
(ii) The creation or filling of vacancies in the board of directors.
(iii) The adoption, amendment or repeal of the bylaws.
(iv) The amendment or repeal of any resolution of the board that by its terms is amendable or repealable only by the board.
(v) Action on matters committed by the bylaws or an action of the board of directors exclusively to another committee of the board.
(3) The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee or for purposes of action in record form by the committee. In the absence or disqualification of a member and alternate member or members of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not those present constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any absent or disqualified member.
(b) Term.--Each committee of the board shall serve at the pleasure of the board.
(c) Status of committee action.--The term "board of directors" or "board," when used in any provision of this subpart relating to the organization or procedures of or the manner of taking action by the board of directors, shall be construed to include and refer to any executive or other committee of the board. Any provision of this subpart relating or referring to action to be taken by the board of directors or the procedure required therefor shall be satisfied by the taking of corresponding action by a committee of the board of directors to the extent authority to take the action has been delegated to the committee under this section. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; June 22, 2001, P.L.418, No.34, eff. 60 days; July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsec. (a). 2013 Amendment. Act 67 added subsec. (c). Cross References. Section 5731 is referred to in section 5103 of this title.
15 Pa.C.S. § 5732 Officers.
(a) General rule.--Every nonprofit corporation shall have a president, a secretary, and a treasurer, or persons who shall act as such, regardless of the name or title by which they may be designated, elected or appointed and may have such other officers as it may authorize from time to time. The bylaws may prescribe special qualifications for the officers. The president and secretary shall be natural persons of full age. The treasurer may be a corporation, but if a natural person shall be of full age. Unless otherwise restricted in the bylaws, it shall not be necessary for the officers to be directors. Any number of offices may be held by the same person.
(b) Term of office.--The officers shall be elected or appointed at such time, in such manner and for such terms as may be fixed by or pursuant to the bylaws. Unless otherwise provided by or pursuant to the bylaws, each officer shall hold office for a term of one year and until the officer's successor has been selected and qualified or until the officer's earlier death, resignation or removal.
(c) Resignation.--Any officer may resign at any time upon written notice to the corporation. The resignation shall be effective upon receipt thereof by the corporation or at such subsequent time as may be specified in the notice of resignation.
(d) Bonding.--The corporation may secure the fidelity of any or all of the officers by bond or otherwise.
(e) Vacancies.--Unless otherwise provided in the bylaws, the board of directors shall have power to fill any vacancies in any office occurring from whatever reason.
(f) Authority.--Unless otherwise provided in the bylaws, all officers of the corporation, as between themselves and the corporation, shall have such authority and perform such duties in the management of the corporation as may be provided by or pursuant to the bylaws or, in the absence of controlling provisions in the bylaws, as may be determined by or pursuant to actions of the board of directors or other body.
(g) Right to bylaws.--Every officer shall have the right to receive, promptly after demand and without charge, a copy
in record form of the currently effective text of the bylaws, but only to the extent reasonably related to the officer's duties. (Dec. 12, 1984, P.L.977, No.193, eff. 60 days; Dec. 19, 1990, P.L.834, No.198, eff. imd.; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5733 Removal of officers and agents.
Unless otherwise provided in the bylaws, any officer or agent of a nonprofit corporation may be removed by the board of directors or other body with or without cause. The removal shall be without prejudice to the contract rights, if any, of any person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. (July 9, 2013, P.L.476, No.67, eff. 60 days)
15 Pa.C.S. § 5733.1 Officer's standard of care and justifiable reliance.
(a) General rule.--Except as otherwise provided in the bylaws, an officer shall perform the duties of an officer in good faith, in a manner the officer reasonably believes to be in the best interests of the nonprofit corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. A person who performs the duties of an officer in accordance with this subsection, and any provision of the bylaws that modify this subsection, shall not be liable to the corporation by reason of having been an officer of the corporation.
(b) Justifiable reliance.--In performing the duties of an officer, an officer is entitled to rely in good faith on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by any of the following:
(1) One or more other officers or employees of the corporation or an affiliate of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented.
(2) Counsel, public accountants or other persons as to matters that the officer reasonably believes to be within the professional or expert competence of such person.
(c) Effect of actual knowledge.--An officer is not considered to be acting in good faith under subsection (a) if the director has actual knowledge concerning the matter that causes the officer to believe reliance is unwarranted.
(d) Business judgment rule.--Except as otherwise restricted in the bylaws, an officer who makes a business judgment in good faith fulfills the duties of an officer if:
(1) the subject of the business judgment does not involve self-dealing by the officer or an associate or affiliate of the officer;
(2) the officer is informed with respect to the subject of the business judgment to the extent the officer reasonably believes to be appropriate under the circumstances; and
(3) the officer rationally believes that the business judgment is in the best interests of the corporation.
(e) Burden of proof.--A person challenging the conduct of an officer under this section has the burden of proving a breach of the duty of care, including the provisions of subsections
(c) and (d), and, in a damage action, the burden of proving that the breach was the legal cause of damage suffered by the corporation. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 5733.1.
15 Pa.C.S. § 5733.2 Personal liability of officers.
(a) General rule.--If a bylaw adopted by the members of a nonprofit corporation so provides, an officer shall not be personally liable, as such, for monetary damages for any action taken unless:
(1) the officer has breached or failed to perform the duties of an officer under this subchapter; and
(2) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
(b) Exceptions.--Subsection (a) shall not apply to:
(1) the responsibility or liability of an officer pursuant to any criminal statute; or
(2) the liability of an officer for the payment of taxes pursuant to Federal, State or local law.
(c) Application.--An amendment or repeal of a provision described in subsection (a) does not affect its application with respect to an act by an officer occurring before the amendment or repeal unless the provision in effect at the time of the act explicitly authorizes its amendment or repeal after an act has occurred.
(d) Cross reference.--See 42 Pa.C.S. § 8332.5 (relating to corporate representatives). (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 5733.2.
15 Pa.C.S. § 5734 Other body.
The provisions of this subchapter, of Subchapters B (relating to fiduciary duty) and D (relating to indemnification) and of other provisions of law applicable to the board of directors and to directors individually shall be applicable also to any "other body" as defined in section 5103 (relating to definitions) and to the members of an other body individually. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section. Cross References. Section 5734 is referred to in section 5512 of this title.
15 Pa.C.S. § 5741 Third-party actions.
Unless otherwise restricted in its bylaws, a nonprofit corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful. (Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 reenacted and amended the entire section. Cross References. Section 5741 is referred to in sections 5743, 5744 of this title.
15 Pa.C.S. § 5742 Derivative and corporate actions.
Unless otherwise restricted in its bylaws, a nonprofit corporation shall have power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation. Indemnification shall not be made under this section in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation unless and only to the extent that the court of common pleas of the judicial district embracing the county in which the registered office of the corporation is located or the court in which the action was brought determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the court of common pleas or other court shall deem proper. (Dec. 19, 1990, P.L.834, No.198, eff. imd.; Dec. 18, 1992, P.L.1333, No.169, eff. 60 days) 1992 Amendment. Act 169 amended the section heading.
1990 Amendment. Act 198 reenacted and amended the entire section. Cross References. Section 5742 is referred to in sections 5743, 5744 of this title.
15 Pa.C.S. § 5743 Mandatory indemnification.
(a) General rule.--To the extent that a present or former director or officer of a nonprofit corporation has been successful on the merits or otherwise in defense of any action or proceeding referred to in section 5741 (relating to third-party actions) or 5742 (relating to derivative and corporate actions) or in defense of any claim, issue or matter therein, the director or officer shall be indemnified against expenses (including attorney fees) actually and reasonably incurred by the director or officer in connection therewith.
(b) Prospective application.--The limitation of the scope of subsection (a) to a present or former director or officer applies only to acts occurring after January 3, 2023.
(c) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign corporations). (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.; Dec. 18, 1992, P.L.1333, No.169, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5743 is referred to in sections 5782, 6145 of this title.
15 Pa.C.S. § 5744 Procedure for effecting indemnification.
Unless ordered by a court, any indemnification under section 5741 (relating to third-party actions) or 5742 (relating to derivative and corporate actions) shall be made by the nonprofit corporation only as authorized in the specific case upon a determination that indemnification of the representative is proper in the circumstances because he has met the applicable standard of conduct set forth in those sections. The determination shall be made:
(1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action or proceeding;
(2) if such a quorum is not obtainable or if obtainable and a majority vote of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion;
(3) by such other body as may be provided in the bylaws; or
(4) by the members. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.; Dec. 18, 1992, P.L.1333, No.169, eff. 60 days)
15 Pa.C.S. § 5745 Advancing expenses.
Expenses (including attorneys' fees) incurred in defending any action or proceeding referred to in this subchapter may be paid by a nonprofit corporation in advance of the final disposition of the action or proceeding upon receipt of an undertaking by or on behalf of the representative to repay the amount if it is ultimately determined that he is not entitled to be indemnified by the corporation as authorized in this subchapter or otherwise. Except as otherwise provided in the bylaws, advancement of expenses shall be authorized by the board of directors. Section 5728 (relating to interested members, directors or officers; quorum) shall not be applicable to the advancement of expenses under this section.
(Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.; June 22, 2001, P.L.418, No.34, eff. 60 days)
15 Pa.C.S. § 5746 Supplementary coverage.
(a) General rule.--The indemnification and advancement of expenses provided by or granted pursuant to the other sections of this subchapter shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of members or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding that office. Section 5728 (relating to interested directors or officers; quorum) shall be applicable to any bylaw, contract or transaction authorized by the directors under this section. A corporation may create a fund of any nature, which may, but need not, be under the control of a trustee, or otherwise secure or insure in any manner its indemnification obligations, whether arising under or pursuant to this section or otherwise.
(b) When indemnification is not to be made.--Indemnification pursuant to subsection (a) shall not be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness.
(c) Grounds.--Indemnification pursuant to subsection (a) under any bylaw, agreement, vote of members or directors or otherwise may be granted for any action taken or any failure to take any action and may be made whether or not the corporation would have the power to indemnify the person under any other provision of law except as provided in this section and whether or not the indemnified liability arises or arose from any threatened, pending or completed action by or in the right of the corporation. Such indemnification is declared to be consistent with the public policy of this Commonwealth.
(d) Trust property.--This subchapter shall not affect the liability of a representative with respect to the administration of assets held by the corporation pursuant to section 5547 (relating to authority to take and hold trust property). (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; Dec. 19, 1990, P.L.834, No.198, eff. imd.; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 amended subsec. (a). 1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5747 Power to purchase insurance.
Unless otherwise restricted in its bylaws, a nonprofit corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against that liability under the provisions of this subchapter. Such insurance is declared to be consistent with the public policy of this Commonwealth. (Dec. 19, 1990, P.L.834, No.198, eff. imd.)
1990 Amendment. Act 198 reenacted and amended the entire section.
15 Pa.C.S. § 5748 Application to surviving or new corporations.
(a) General rule.--Except as provided in subsection (b), for the purposes of this subchapter, references to "the corporation" include all constituent corporations absorbed in a consolidation, merger or division, as well as the surviving or new corporations surviving or resulting therefrom, so that any person who is or was a representative of the constituent, surviving or new corporation, or is or was serving at the request of the constituent, surviving or new corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this subchapter with respect to the surviving or new corporation as he would if he had served the surviving or new corporation in the same capacity.
(b) Divisions.--Notwithstanding subsection (a), the obligations of a dividing corporation to indemnify and advance expenses of its representatives, whether arising under this subchapter or otherwise, may be allocated in a division in the same manner and with the same effect as any other liability of the dividing corporation. (Dec. 19, 1990, P.L.834, No.198, eff. imd.; June 22, 2001, P.L.418, No.34, eff. 60 days)
15 Pa.C.S. § 5749 Application to employee benefit plans.
For the purposes of this subchapter:
(1) References to "other enterprises" shall include employee benefit plans and references to "serving at the request of the corporation" shall include any service as a representative of the nonprofit corporation that imposes duties on or involves services by the representative with respect to an employee benefit plan, its participants or beneficiaries.
(2) Excise taxes assessed on a person with respect to any employee benefit plan pursuant to applicable law shall be deemed "fines."
(3) Action with respect to an employee benefit plan taken or omitted in good faith by a representative of the corporation in a manner he reasonably believed to be in the interest of the participants and beneficiaries of the plan shall be deemed to be action in a manner that is not opposed to the best interests of the corporation. (Dec. 19, 1990, P.L.834, No.198, eff. imd.) 1990 Amendment. Act 198 added section 5749.
15 Pa.C.S. § 5750 Duration and extent of coverage.
The indemnification and advancement of expenses provided by or granted pursuant to this subchapter shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a representative of the corporation and shall inure to the benefit of the heirs and personal representative of that person. A right to indemnification or to advancement of expenses arising under a provision of the articles or bylaws may not be eliminated or impaired by an amendment to or repeal of the provision after the occurrence of an act that is the subject of the threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative, for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of the act explicitly authorizes the elimination or impairment after an act has occurred.
(Dec. 19, 1990, P.L.834, No.198, eff. imd.; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)
15 Pa.C.S. § 5751 Classes and qualifications of membership.
(a) General rule.--Membership in a nonprofit corporation shall be of the classes, and shall be governed by the rules of admission, retention, suspension and expulsion, prescribed in bylaws adopted by the members, except that the rules shall be reasonable, germane to the purpose or purposes of the corporation and equally enforced as to all members of the same class. Unless otherwise provided by a bylaw adopted by the members:
(1) There shall be one class of members whose voting and other rights and interests shall be equal.
(2) If there is only one class of members, the members shall have all the rights of members generally in a nonprofit corporation.
(b) Corporations without voting members.--Where the articles provide that the corporation shall have no members, as such, or where a nonprofit corporation has under its bylaws or in fact no members entitled to vote on a matter, any provision of this subpart or any other provision of law requiring notice to, the presence of, or the vote, consent or other action by members of the corporation in connection with the matter shall be satisfied by notice to, the presence of, or the vote, consent or other action by the board of directors or other body of the corporation.
(c) Membership status.--Regardless of whether a nonprofit corporation designates or refers to a person as a member of the corporation, the person is not a member of the corporation for purposes of this subpart unless the person satisfies the definition of "member" in section 5103(a) (relating to definitions). (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5751 is referred to in section 5504 of this title.
15 Pa.C.S. § 5752 Organization on a stock share basis.
(a) General rule.--A nonprofit corporation may be organized upon either a nonstock basis or, if so provided in its articles, upon a stock share basis.
(b) Form of certificates; uncertificated shares.--The shares of nonprofit corporations organized upon a stock share basis shall be of the denominations provided in the bylaws and shall be represented by share certificates unless the articles provide that any or all classes and series of shares, or any part thereof, shall be uncertificated shares. A provision of the articles providing for uncertificated shares shall not apply to shares represented by a certificate until the certificate is surrendered to the corporation. Except as otherwise expressly provided by law, the rights and obligations of the holders of shares represented by certificates and the rights and obligations of the holders of uncertificated shares of the same class and series shall be identical. The fact that the corporation is a nonprofit corporation shall be noted conspicuously on the face of each certificate. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice stating:
(1) That the corporation is a nonprofit corporation incorporated under the laws of this Commonwealth.
(2) The name of the registered owner.
(3) The denomination and class of shares and the designation of the series, if any, of the shares issued or transferred.
(c) Rights of shareholders.--Unless otherwise provided in a bylaw adopted by the members, each share shall entitle the holder thereof to one vote. No dividends shall be directly or indirectly paid on the shares, nor shall the shareholders be entitled to any portion of the earnings of the corporation derived through increment of value upon its property, or otherwise incidentally made, until the dissolution of the corporation.
(d) Transferability of shares.--Unless otherwise provided in the bylaws, the shares shall not be transferable by operation of law or otherwise.
(e) Power to cancel shares.--A nonprofit corporation shall have power to exclude from further membership any shareholder who fails to comply with the reasonable and lawful bylaws of the corporation, and may cancel the shares of any offending member without liability for an accounting except as may be provided in the bylaws.
(f) Applicability of the Uniform Commercial Code.--The provisions of 13 Pa.C.S. Div. 8 (relating to investment securities) shall not apply in any manner to the shares of a nonprofit corporation.
(g) Cross reference.--See the definition of "member" in section 5103 (relating to definitions).
(Nov. 1, 1979, P.L.255, No.86, eff. Jan. 1, 1980; July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5752 is referred to in sections 5504, 5541 of this title.
15 Pa.C.S. § 5753 Membership certificates.
A nonprofit corporation organized upon a nonstock basis shall not issue shares of stock, but membership in the corporation may be evidenced by certificates of membership. The fact that the corporation is a nonprofit corporation shall be noted conspicuously on the face of each certificate. (July 9, 2013, P.L.476, No.67, eff. 60 days)
15 Pa.C.S. § 5754 Members grouped in local units.
(a) General rule.--The bylaws of a nonprofit corporation may provide that the members of the corporation shall be grouped in incorporated or unincorporated local units formed upon the basis of territorial areas, or other basis as may be determined in the bylaws, for the purpose of election of delegates or representatives to represent the members of the local units at any regular or special meetings of the corporation. Unless otherwise provided in a bylaw adopted by the members, each local unit participating in a representative capacity by means of one or more delegates or otherwise at a meeting of the corporation shall have a number of votes equal to the total membership of the local unit.
(b) Voting at meetings of delegates.--The requirements of this subpart for action by or the consent of a specified number or percentage of the members shall be satisfied by action by or the consent of that number or percentage of votes of delegates or representatives of members selected pursuant to this section.
(c) Calling and holding meetings of delegates.--The provisions of this subpart relating to the manner of the calling and holding of and the taking of action at meetings of members shall be applicable to meetings of delegates or representatives of members.
(d) Incorporation of local units.--A local unit of an incorporated or unincorporated parent body that is incorporated or organized for a purpose or purposes not involving pecuniary profit, incidental or otherwise, to its members may be incorporated under this subpart by an incorporated parent body or by the members of the local unit. (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5754 is referred to in section 5504 of this title.
15 Pa.C.S. § 5755 Time of holding meetings of members.
(a) Regular meetings.--The bylaws of a nonprofit corporation may provide for the number and the time of meetings of members. Except as otherwise provided in a bylaw adopted by the members, at least one meeting of the members that are entitled to vote for the election of directors shall be held in each calendar year for the election of directors at the time provided in or fixed pursuant to authority granted by the bylaws. Failure to hold the annual or other regular meeting at the designated time shall not work a dissolution of the corporation or affect otherwise valid corporate acts. If the annual or other regular meeting is not called and held within six months after the designated time, any member may call the meeting at any time thereafter.
(b) Special meetings.--Special meetings of the members may be called at any time by:
(1) the board of directors;
(2) members entitled to cast at least 10% of the votes that all members are entitled to cast at the particular meeting;
(3) such officers or other persons as may be provided in the bylaws; or
(4) the provisions provided in section 5725(c.1) (relating to selection of directors).
(b.1) Duties of secretary.--At any time, upon written request of any person who has called a special meeting, it shall be the duty of the secretary to fix the time of the meeting which, if the meeting is called pursuant to a statutory right, shall be held within any period specified by this subpart or, if no period is specified, not more than 60 days after the receipt of the request. If the secretary neglects or refuses to fix the time of the meeting, the person or persons calling the meeting may do so.
(c) Adjournments.--Adjournments of any regular or special meeting may be taken but any meeting at which directors are to be elected shall be adjourned for no longer than from day to day, or for longer periods not exceeding 15 days each, as the members present and entitled to vote shall direct, until the directors have been elected.
(d) Postponement or cancellation.--The board of directors may postpone, or delegate to an officer the authority to postpone, the annual or other regular meeting of members, subject to the provision of subsection (a) providing for a meeting each calendar year. Unless otherwise restricted in the bylaws or otherwise provided by statute, the holding of a special meeting of members may be postponed for not more than 15 days or may be canceled by the person or group that called the special meeting. In the case of a postponed or canceled meeting, prompt notice in record form of the postponement or cancellation must be given to the members entitled to vote at the meeting.
(e) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5755 is referred to in sections 5504, 5509, 6145 of this title.
15 Pa.C.S. § 5756 Quorum.
(a) General rule.--A meeting of members of a nonprofit corporation duly called shall not be organized for the transaction of business unless a quorum is present. Unless otherwise provided in a bylaw adopted by the members:
(1) A quorum for the purposes of consideration and action on a particular matter at a meeting shall consist of:
(i) the presence of members entitled to cast at least a majority of the votes that all members are entitled to cast on the matter; and
(ii) if any members are entitled to vote as a class on the matter, the presence of members entitled to cast at least a majority of the votes entitled to be cast in the class vote.
(2) The members present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough members to leave less than a quorum.
(3) If a meeting cannot be organized because a quorum has not attended, those present may, except as otherwise
provided in this subpart, adjourn the meeting to a time and place they may determine.
(b) Exceptions.--Notwithstanding any contrary provision in the articles or bylaws, those members entitled to vote who attend a meeting of members:
(1) At which directors are to be elected that has been previously adjourned for lack of a quorum, although less than a quorum as fixed in this section or in the bylaws, shall nevertheless constitute a quorum for the purpose of electing directors.
(2) That has been previously adjourned for one or more periods aggregating at least 15 days because of an absence of a quorum, although less than a quorum as fixed in this section or in the bylaws, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in the notice of the meeting if the notice states that those members who attend the adjourned meeting shall nevertheless constitute a quorum for the purpose of acting upon the matter. (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsecs. (a)(1) and (b)(1). 2013 Amendment. Act 67 amended subsecs. (a)(1) and (3) and
(b). Cross References. Section 5756 is referred to in section 5504 of this title; sections 3309, 4309, 5309 of Title 68 (Real and Personal Property).
15 Pa.C.S. § 5757 Action by members.
(a) General rule.--Except as otherwise provided in this title or in a bylaw adopted by the members, whenever any corporate action is to be taken by vote of the members of a nonprofit corporation, it shall be authorized upon receiving the affirmative vote of a majority of the votes cast by the members entitled to vote thereon and, if any members are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by the members entitled to vote as a class.
(b) Changes in required vote.--Whenever a provision of this title requires a specified number or percentage of votes of members or of a class of members for the taking of any action, a nonprofit corporation may prescribe in a bylaw adopted by the members that a higher number or percentage of votes shall be required for the action. The number or percentage of members necessary to call a special meeting of members or to petition for the proposal of an amendment of articles under this subpart may not be increased under this subsection. See sections 5504(d) (relating to adoption, amendment and contents of bylaws) and 5914(d) (relating to adoption of amendments).
(c) Expenses.--Unless otherwise restricted in the articles, the corporation shall pay the reasonable expenses of solicitation of votes, proxies or consents of members by or on behalf of the board of directors or its nominees for election to the board, including solicitation by professional proxy solicitors and otherwise, and may pay the reasonable expenses of a solicitation by or on behalf of other persons.
(d) Cross reference.--See section 322 (relating to approval by nonprofit corporation). (July 9, 2013, P.L.476, No.67, eff. 60 days; Oct. 22, 2014, P.L.2640, No.172, eff. July 1, 2015)
Cross References. Section 5757 is referred to in sections 322, 5504 of this title.
15 Pa.C.S. § 5758 Voting rights of members.
(a) General rule.--Unless otherwise provided in a bylaw adopted by the members, every member of a nonprofit corporation shall be entitled to one vote.
(b) Procedures.--The following apply to voting by the members:
(1) The manner of voting on any matter, including changes in the articles or bylaws, may be by ballot, mail or any reasonable means provided in a bylaw adopted by the members.
(2) If a bylaw adopted by the members provides a fair and reasonable procedure for the nomination of candidates for any office, only candidates who have been duly nominated in accordance therewith shall be eligible for election.
(3) Unless otherwise provided in a bylaw adopted by the members, in elections for directors at a meeting of members held at a geographic location, voting shall be by ballot. The members do not have the right to vote by ballot at a meeting that is not held at a geographic location pursuant to section 5708(c) (relating to use of conference telephone or other electronic technology).
(4) The candidates for election as directors receiving the highest number of votes from each class or group of classes, if any, of members entitled to elect directors separately up to the number of directors to be elected by such class or group of classes shall be elected. If at any meeting of members directors of more than one class are to be elected, each class of directors shall be elected in a separate election.
(c) Cumulative voting.--If a bylaw adopted by the members so provides, in each election of directors of a nonprofit corporation every member entitled to vote shall have the right to multiply the number of votes to which he may be entitled by the total number of directors to be elected in the same election by the members or the class of members to which he belongs, and he may cast the whole number of his votes for one candidate or he may distribute them among any two or more candidates.
(d) Sale of votes.--No member shall sell his vote or issue a proxy for money or anything of value.
(e) Voting lists.--Upon request of a member, the membership register shall be produced at any regular or special meeting of the corporation. If at any meeting the right of a person to vote is challenged, the presiding officer shall require the membership register to be produced as evidence of the right of the person challenged to vote, and all persons who appear by the membership register to be members entitled to vote may vote. See section 6145 (relating to applicability of certain safeguards to foreign corporations). (Dec. 19, 1990, P.L.834, No.198, eff. imd.; June 22, 2001, P.L.418, No.34, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5758 is referred to in sections 5504, 6145 of this title.
15 Pa.C.S. § 5759 Voting and other action by proxy.
(a) General rule.--Voting by members of a nonprofit corporation shall be only in person unless a bylaw adopted by the members provides for voting by proxy. Unless otherwise restricted by a bylaw adopted by the members:
(1) The presence of, or vote or other action at a meeting of members, or the expression of consent or dissent to corporate action, by a proxy of a member pursuant to a bylaw shall constitute the presence of, or vote or action by, or consent or dissent of the member for the purposes of this subpart.
(2) Where two or more proxies of a member are present, the corporation shall, unless otherwise expressly provided in the proxy, accept as the vote or other action of all the members or shares represented thereby the vote cast or other action taken by a majority of them, and, if a majority of the proxies cannot agree whether the memberships or shares represented shall be voted or upon the manner of voting the memberships or shares or taking the other action, the voting of the memberships or shares or right to take other action shall be divided equally among those persons.
(b) Execution and filing.--Every proxy shall be executed or authenticated by the member or by the member's duly authorized attorney-in-fact and filed with or transmitted to the secretary of the corporation or its designated agent. A member or the member's duly authorized attorney-in-fact may execute or authenticate a writing or transmit an electronic message authorizing another person to act for the member by proxy. A telegram, telex, cablegram, datagram, e-mail, Internet communication or other means of electronic transmission from a member or attorney-in-fact, or a photographic, facsimile or similar reproduction of a writing executed by a member or attorney-in-fact:
(1) may be treated as properly executed or authenticated for purposes of this subsection; and
(2) shall be so treated if it sets forth or utilizes a confidential and unique identification number or other mark furnished by the corporation to the member for the purposes of a particular meeting or transaction.
(c) Revocation.--A proxy shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until notice thereof has been given to the secretary of the corporation or its designated agent in writing or by electronic transmission. An unrevoked proxy shall not be valid after 11 months from the date of its execution, authentication or transmission unless a longer time is expressly provided therein. A proxy shall not be revoked by the death or incapacity of the maker unless, before the vote is counted or the authority is exercised, notice of the death or incapacity is given to the secretary of the corporation or its designated agent. See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5759 is referred to in sections 5504, 6145 of this title.
15 Pa.C.S. § 5760 (Reserved).
(July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5760 to section 5762 and added section 5760 (Reserved).
15 Pa.C.S. § 5761 (Reserved).
(July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5761 to section 5763 and added section 5761 (Reserved).
15 Pa.C.S. § 5762 Voting by corporations.
(a) Voting in nonprofit corporation matters.--Unless otherwise provided in a bylaw of a nonprofit corporation adopted by the members, any other domestic or foreign corporation for profit or not-for-profit that is a member of the nonprofit corporation may vote by any of its officers or agents, or by proxy appointed by any officer or agent, unless some other person, by resolution of the board of directors of the other corporation or a provision of its articles or bylaws, a copy of which resolution or provision certified to be correct by one of its officers has been filed with the secretary of the nonprofit corporation, is appointed its general or special proxy in which case that person shall be entitled to vote as the proxy.
(b) Voting by nonprofit corporations.--Shares of or memberships in a domestic or foreign corporation for profit or not-for-profit other than a nonprofit corporation, standing in the name of a shareholder or member that is a nonprofit corporation, may be voted by the persons and in the manner provided for in the case of nonprofit corporations by subsection
(a) unless the laws of the jurisdiction in which the issuer of the shares or memberships is incorporated require the shares or memberships to be voted by some other person or persons or in some other manner in which case, to the extent that those laws are inconsistent with this subsection, this subsection shall not apply. (July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5762 to section 5765 and renumbered and amended former section 5760 to section 5762. Cross References . Section 5762 is referred to in section 5504 of this title.
15 Pa.C.S. § 5763 Determination of members of record.
(a) Fixing record date.--Unless otherwise restricted in the bylaws, the board of directors of a nonprofit corporation may fix a time prior to the date of any meeting of members as a record date for the determination of the members entitled to notice of, or to vote at, the meeting, which time, except in the case of an adjourned meeting, shall not be more than 90 days prior to the date of the meeting of members. Only members of record on the date fixed shall be so entitled notwithstanding any increase or other change in membership on the books of the corporation after any record date fixed as provided in this subsection. Unless otherwise provided in the bylaws, the board of directors may similarly fix a record date for the determination of members of record for any other purpose. A record date may not precede the date on which the board acts to fix that record date. The members of record shall be determined as of the close of business on the record date unless the board fixes a different time of day for that determination. When a determination of members of record has been made as provided in this section for purposes of a meeting, the determination shall apply to any adjournment thereof unless otherwise restricted in the bylaws or unless the board fixes a new record date for the adjourned meeting.
(b) Determination when no record date fixed.--Unless otherwise provided in the bylaws, if a record date is not fixed:
(1) The close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held shall be the record date for
determining members entitled to notice of or to vote at a meeting of members.
(2) The close of business on the day on which the first consent or dissent, request or petition is filed in record form with the secretary of the corporation shall be the record date for determining members entitled to:
(i) express consent or dissent to corporate action without a meeting, when prior action by the board of directors or other body is not necessary;
(ii) call a special meeting of the members; or
(iii) propose an amendment of the articles.
(3) The record date for determining members for any other purpose shall be at the close of business on the day on which the board of directors or other body adopts the resolution relating thereto. (July 9, 2013, P.L.476, No.67, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) Cross References. Section 5763 is referred to in section 5509 of this title.
15 Pa.C.S. § 5764 (Reserved).
(July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5764 to section 5767 and added section 5764 (Reserved).
15 Pa.C.S. § 5764.1 Actions by members to enforce a secondary right (Repealed).
2001 Repeal. Section 5764.1 was repealed June 22, 2001, P.L.418, No.34, effective in 60 days.
15 Pa.C.S. § 5765 Judges of election.
(a) General rule.--Unless otherwise provided in a bylaw adopted by the members:
(1) In advance of any meeting of members of a nonprofit corporation, the board of directors or other body may appoint judges of election, who need not be members, to act at the meeting or any adjournment thereof. If judges of election are not so appointed, the presiding officer of the meeting may, and on the request of any member shall, appoint judges of election at the meeting. The number of judges shall be one or three. A person who is a candidate for office to be filled at the meeting shall not act as a judge.
(2) In case any person appointed as judge fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the board of directors or other body in advance of the convening of the meeting, or at the meeting by the presiding officer thereof.
(3) The judges of election shall determine the number of members of record and the voting power of each, the members present at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, if voting by proxy is permitted under the bylaws, receive votes or ballots, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes, determine the result and perform the acts as may be proper to conduct the election or vote with fairness to all members. The judges of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three judges of election, the decision, act or certificate of a majority shall be effective in all respects as the decision, act or certificate of all.
(4) On request of the presiding officer of the meeting, or of any member, the judges shall make a report in writing of any challenge or question or matter determined by them, and execute a certificate of any fact found by them. Any report or certificate made by them shall be prima facie evidence of the facts stated therein.
(b) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5765 to section 5768 and renumbered and amended former section 5762 to section 5765. Cross References. Section 5765 is referred to in sections 5504, 6145 of this title.
15 Pa.C.S. § 5766 Consent of members in lieu of meeting.
(a) Unanimous consent.--Unless otherwise restricted in the bylaws, any action required or permitted to be taken at a meeting of the members or of a class of members of a nonprofit corporation may be taken without a meeting if a consent or consents to the action in record form are signed, before, on or after the effective time of the action by all of the members who would be entitled to vote at a meeting for that purpose. The consent or consents must be filed with the minutes of the proceedings of the members.
(b) Partial consent.--If the bylaws so provide, any action required or permitted to be taken at a meeting of the members or of a class of members may be taken without a meeting upon the signed consent of members who would have been entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all members entitled to vote thereon were present and voting. The consents must be filed in record form with the minutes of the proceedings of the members.
(c) Notice of action by partial consent.--Unless the bylaws require notice before an action pursuant to subsection (b) takes effect, prompt notice that an action has been taken shall be given to each member entitled to vote on the action that has not consented.
(d) Escrowing of consents.--A consent may provide, or a person signing a consent, whether or not then a member, may instruct in record form that the consent will be effective at a future time, including a time determined upon the happening of an event. In the case of a consent signed by a person not a member at the time of signing, the consent is effective at the stated effective time if the person who signed the consent is a member at the effective time and did not revoke the consent in record form prior to the effective time. A consent is effective at the stated effective time, even if one or more signers are no longer members at the effective time if consents by members entitled to cast the required number of votes have not been revoked before the effective time.
(e) Revocation of consent.--Unless otherwise provided in a consent, a signer of the consent may revoke the signer's consent in record form until it becomes effective. (July 9, 2013, P.L.476, No.67, eff. 60 days; Oct. 22, 2014, P.L.2640, No.172, eff. July 1, 2015; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsec. (a) and added subsecs. (d) and (e).
Amendment. Act 172 amended subsec. (c). 2013 Amendment. Act 67 renumbered and amended former section 5766 to section 5769 and renumbered and amended former section 5763 to section 5766. Cross References. Section 5766 is referred to in section 5504 of this title.
15 Pa.C.S. § 5767 Appointment of custodian of corporation on deadlock or other cause.
(a) General rule.--Upon application of any member, the court may appoint one or more persons to be custodians of and for any nonprofit corporation when it appears that:
(1) at any meeting for the election of directors or members of an other body, the members are so divided that they have failed to elect successors to those whose terms have expired or would have expired upon the qualification of their successors; or
(2) any of the conditions specified in section 5981 (relating to proceedings upon application of member or director), other than that it is beneficial to the interest of the members that the corporation be wound up and dissolved, exist with respect to the corporation.
(a.1) Exception.--The court shall not appoint a custodian to resolve a deadlock if the members by agreement or otherwise have provided for the appointment of a provisional director or member of an other body or other means for the resolution of the deadlock, but the court shall enforce the remedy so provided, if appropriate.
(b) Power and title of custodian.--A custodian appointed under this section shall have all the power and title of a receiver appointed under Subchapter G of Chapter 59 (relating to involuntary liquidation and dissolution), but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets except when the court shall otherwise order.
(c) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5767 to section 5770 and renumbered and amended former section 5764 to section 5767. Cross References. Section 5767 is referred to in section 6145 of this title.
15 Pa.C.S. § 5768 Reduction of membership below stated number.
Whenever the membership of a nonprofit corporation having a stated number of members is reduced below that number by death, withdrawal or otherwise, the corporation shall not on that account be dissolved, but it shall be lawful for the surviving or continuing members to continue the corporate existence unless otherwise restricted in the bylaws. (July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5765 to section 5768.
15 Pa.C.S. § 5769 Termination and transfer of membership.
(a) General rule.--Membership in a nonprofit corporation shall be terminated in the manner provided in a bylaw adopted by the members. If membership in any such corporation is limited to persons who are members in good standing in another corporation, or in any lodge, church, club, society or other
entity or organization, the bylaws shall in each case define the limitations and may provide that failure on the part of a member to keep himself in good standing in the other entity or organization shall be sufficient cause for terminating the membership of the member in the corporation requiring such eligibility.
(b) Expulsion.--
(1) A member shall not be expelled from any nonprofit corporation without notice, trial and conviction, the form of which shall be prescribed by the bylaws.
(2) Paragraph (1) shall not apply to termination of membership pursuant to section 5544 (relating to dues and assessments).
(3) See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations).
(c) Effect of termination of membership.--Unless otherwise provided in the bylaws, the right of a member of a nonprofit corporation to vote, and his right, title and interest in or to the corporation or its property, shall cease upon termination of membership.
(d) Transfer of membership.--Unless otherwise provided in the bylaws, a member may not transfer his membership or any right arising therefrom. The adoption of an amendment to the articles or bylaws of a nonprofit corporation that changes the identity of some or all of the members or the criteria for membership does not constitute a transfer for purposes of this subsection. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5766 to section 5769. Cross References. Section 5769 is referred to in sections 5504, 6145 of this title.
15 Pa.C.S. § 5770 Voting powers and other rights of certain securityholders and other entities.
The power to vote in respect to the corporate affairs and management of a membership corporation and other membership rights as may be provided in a bylaw adopted by the members may be conferred upon:
(1) Registered holders of obligations issued or to be issued by the corporation.
(2) The United States of America, the Commonwealth, a state, or any political subdivision of any of the foregoing, or any entity prohibited by law from becoming a member of a corporation. (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 2013, P.L.476, No.67, eff. 60 days) 2013 Amendment. Act 67 renumbered and amended former section 5767 to section 5770. Cross References. Section 5770 is referred to in sections 5103, 5504 of this title.
15 Pa.C.S. § 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) (Deleted by amendment).
(i.1) if a special litigation committee is not appointed under section 5783 (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 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;
(2) demand is excused under subsection (b);
(3) the action is maintained for the limited purpose of seeking court review under section 5783(f); or
(4) the court has allowed the action to continue under the control of the plaintiff under section 5783(f)(3)(ii).
(b) Prior demand excused.--
(1) A demand under subsection (a)(1) is excused only if the plaintiff makes a specific showing that immediate and irreparable harm to the nonprofit corporation would otherwise result.
(2) If demand is excused under paragraph (1), demand shall be made promptly after commencement of the action.
(c) Contents of demand.--A demand under this section must be in record form and give notice with reasonable specificity of:
(1) the material facts relied upon to support each of the claims made in the demand against each proposed defendant; and
(2) in the case of a derivative action commenced by a member, the basis on which the person making the demand has standing under section 5782.
(d) Additional claims.--If a derivative action is commenced after a demand has been made under this section and includes a claim that was not fairly subsumed under the demand, a new demand must be made with respect to that claim. The new demand
shall not relate back to the date of the original demand for purposes of subsection (e).
(e) Statute of limitations.--The making of a demand tolls any applicable statute of limitations with respect to a claim asserted in the demand until the earlier of the date:
(1) the plaintiff making the demand is notified either:
(i) that the board of directors has decided not to bring an action and not to appoint a special litigation committee; or
(ii) of a determination under section 5783(e) after the appointment of a special litigation committee under section 5783; or
(2) the plaintiff commences an action asserting the claim. (Nov. 21, 2016, P.L.1328, No.170, eff. 90 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days; July 15, 2024, P.L.728, No.59, eff. 60 days) 2024 Amendment. Act 59 amended subsec. (a)(1). 2022 Amendment. Act 122 amended subsecs. (a)(1) intro. par. and (i), (b) and (c). 2016 Amendment. Act 170 added section 5781.
15 Pa.C.S. § 5782 Eligible member plaintiffs and security for costs.
(a) General rule.--Except as provided in subsection (b), in any action or proceeding brought by one or more members of a nonprofit corporation to enforce rights that the plaintiff claims could be, but have not been, asserted by the corporation, each plaintiff has standing to commence and maintain the derivative action if the plaintiff:
(1) was a member of the corporation at the time of the transaction or conduct of which the plaintiff complains; and
(2) continues to be a member until the time of judgment, unless the failure to do so is the result of corporate action that:
(i) was done merely to eliminate derivative claims; or
(ii) has the effect of a reorganization that does not affect the plaintiff's ownership of the enterprise.
(b) Exception.--Any member who, except for the provisions of subsection (a), would be entitled to maintain the action or proceeding and who does not meet such requirements may, nevertheless in the discretion of the court, be allowed to maintain the action or proceeding on preliminary showing to the court, by application and upon such verified statements and depositions as may be required by the court, that there is a strong prima facie case in favor of the claim asserted on behalf of the corporation and that without the action serious injustice will result.
(c) Security for costs.--In any action or proceeding instituted or maintained by less than the smaller of 50 members of any class or 5% of the members of any class of the corporation, the corporation in whose right the action or proceeding is brought shall be entitled at any stage of the proceedings to require the plaintiffs to give security for the reasonable expenses, including attorney fees, that may be incurred by the corporation in connection therewith or for which it may become liable pursuant to section 5743 (relating to mandatory indemnification), but only insofar as relates to actions by or in the right of the corporation, to which security the corporation shall have recourse in such amount as the court determines upon the termination of the action or proceeding. The amount of security may from time to time be increased or
decreased in the discretion of the court upon showing that the security provided has or is likely to become inadequate or excessive. The security may be denied or limited by the court if the court finds after an evidentiary hearing that undue hardship on plaintiffs and serious injustice would result.
(d) Failure to maintain ownership.--If a plaintiff loses the right to maintain a derivative action under subsection
(a)(2), the court may entertain a motion to substitute the corporation as the named plaintiff.
(e) Cross reference.--See section 6146 (relating to provisions applicable to all foreign corporations). (June 22, 2001, P.L.418, No.34, eff. 60 days; Nov. 21, 2016, P.L.1328, No.170, eff. 90 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsec. (a), relettered former subsec. (d) to subsec. (e) and added present subsec.
(d). 2016 Amendment. Act 170 amended the section heading and subsec. (c). 2001 Amendment. Act 34 added section 5782. Cross References. Section 5782 is referred to in sections 5781, 6146 of this title.
15 Pa.C.S. § 5783 Special litigation committee.
(a) General rule.--If a nonprofit corporation or the board of directors receives a demand to bring an action to enforce a right of the corporation, or if a derivative action is commenced before demand has been made on the corporation or the board, the board may appoint a special litigation committee to investigate the claims asserted in the demand or action and to determine on behalf of the corporation or recommend to the board whether pursuing any of the claims asserted is in the best interests of the corporation. The corporation must deliver a notice in record form to the person making the demand, or to the plaintiff if a derivative action has been commenced, promptly after the appointment of a committee under this section notifying the person making the demand or the plaintiff that a committee has been appointed and identifying by name the members of the committee.
(b) Discovery stay.--If the board of directors appoints a special litigation committee and an action is commenced before a determination has been made under subsection (e):
(1) On motion by the nonprofit corporation, or the committee made in the name of the corporation, the court shall stay discovery for the time reasonably necessary to permit the committee to complete its investigation, except for good cause shown.
(2) The time for the defendants to plead shall be tolled until the process provided for under subsection (f) has been completed.
(c) Composition of committee.--A special litigation committee shall be composed of two or more individuals who:
(1) are not interested in the claims asserted in the demand or action;
(2) are capable as a group of objective judgment in the circumstances; and
(3) may, but need not, be members, directors or members of an other body.
(c.1) Committee members who are not directors or members of an other body.--A member of a special litigation committee who is not a director or member of an other body, when acting as a member of the committee, is subject to the liabilities
imposed, and entitled to the rights and immunities conferred by Subchapters B (relating to fiduciary duty) and D (relating to indemnification) and other provisions of law upon directors of a corporation.
(d) Appointment of committee.--A special litigation committee may be appointed:
(1) by a majority of the directors not named as actual or potential parties in the demand or action; or
(2) if all the directors are named as actual or potential parties in the demand or action, by a majority of:
(i) the members of an other body not named as parties in the proceeding if the other body has the authority to appoint a special litigation committee; or
(ii) the directors so named.
(e) Determination.--After appropriate investigation by a special litigation committee, the committee may determine, or the committee may recommend to the board of directors that the board determine that it is in the best interests of the nonprofit corporation that:
(1) 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;
(2) an action based on some or all of the claims asserted in the demand be brought by the corporation;
(3) some or all of the claims asserted in the demand be settled on terms determined or recommended by the committee;
(4) an action not be brought based on any of the claims asserted in the demand;
(5) an action already commenced continue under the control of:
(i) the plaintiff;
(ii) the corporation; or
(iii) the committee;
(6) some or all the claims asserted in an action already commenced be settled on terms determined or recommended by the committee; or
(7) an action already commenced be dismissed.
(f) Court review and action.--If a special litigation committee is appointed and a derivative action is commenced before or after the committee makes a determination under subsection (e) or the board of directors determines under subsection (e) to accept the recommendation of the committee:
(1) The nonprofit corporation or the committee shall file with the court after a determination is made under subsection (e) a statement of the determination and a report of the committee supporting the determination. The corporation or the committee shall serve each party with a copy of the determination and report. If the corporation or the committee moves to file the report under seal, the report shall be served on the parties subject to an appropriate stipulation agreed to by the parties or a protective order issued by the court.
(2) The corporation or the committee shall file with the court a motion, pleading or notice consistent with the determination under subsection (e).
(3) If the determination is one described in subsection
(e)(2), (3), (4), (5)(ii), (6) or (7), the court shall determine whether the members of the committee met the qualifications required under subsection (c)(1) and (2) and whether the committee conducted its investigation and made
its determination or recommendation in good faith, independently and with reasonable care. The plaintiff has the burden of proving that the committee did not meet those qualifications or act in the required manner. If the court finds that the members of the committee met the qualifications required under subsection (c)(1) and (2) and that the committee acted in good faith, independently and with reasonable care, the court shall enforce the determination of the committee or the board. Otherwise, the court shall:
(i) dissolve any stay of discovery entered under subsection (b);
(ii) allow the action to continue under the control of the plaintiff; and
(iii) permit the defendants to file preliminary objections, other appropriate pleadings and motions.
(g) Attorney General.--Nothing in this section limits the rights, powers and duties of the Attorney General under other applicable law with respect to a nonprofit corporation.
(h) Interest of a defendant.--The fact that a person is named as a defendant does not make the person interested in the claims asserted in a demand or action for purposes of subsection
(c)(1) if the claims against the person:
(1) are based only on an allegation that the person approved of or acquiesced in the transaction or conduct that is the subject of the claims; and
(2) do not otherwise allege with particularity facts that, if true, raise a significant prospect that the person would be adjudged liable. (Nov. 21, 2016, P.L.1328, No.170, eff. 90 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsecs. (a), (b)(1), (e) intro. par., (3) and (6) and (f) and added subsecs. (c.1) and
(h). 2016 Amendment. Act 170 added section 5783. Cross References. Section 5783 is referred to in section 5781 of this title.
15 Pa.C.S. § 5784 Proceeds and expenses.
(a) Proceeds.--Except as provided in subsection (b):
(1) any proceeds or other benefits of a derivative action, whether by judgment, compromise or settlement, belong to the nonprofit corporation and not to the plaintiff; and
(2) if the plaintiff or its counsel receives any proceeds, the proceeds shall be remitted immediately to the corporation.
(b) Expenses.--If a derivative action is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney fees and costs, from the recovery of the nonprofit corporation, but in no event shall the attorney fees awarded exceed a reasonable proportion of the value of the relief, including nonpecuniary relief, obtained by the plaintiff for the corporation. (Nov. 21, 2016, P.L.1328, No.170, eff. 90 days) 2016 Amendment. Act 170 added section 5784.
15 Pa.C.S. § 5791 Corporate action subject to subchapter.
(a) General rule.--This subchapter shall apply to, and the term "corporate action" in this subchapter shall mean any of the following actions:
(1) The election, appointment, designation or other selection and the suspension, removal or expulsion of members, directors, members of an other body or officers of a nonprofit corporation.
(2) The taking of any action on any matter that is required under this subpart or under any other provision of law to be, or that under the bylaws may be, submitted for action to the members, directors, members of an other body or officers of a nonprofit corporation.
(b) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (July 9, 2013, P.L.476, No.67, eff. 60 days)
15 Pa.C.S. § 5792 Proceedings prior to corporate action.
(a) General rule.--Where under applicable law or the bylaws of a nonprofit corporation there has been a failure to hold a meeting to take corporate action and the failure has continued for 30 days after the designated or appropriate date, the court may summarily order a meeting to be held upon the application of any person entitled, either alone or in conjunction with other persons similarly seeking relief under this section, to call a meeting to consider the corporate action in issue.
(b) Conduct of meeting.--The court may determine the right to vote at the meeting of persons claiming that right, may appoint a master to hold the meeting under such orders and powers as the court deems proper and may take any action required to give due notice of the meeting and to convene and conduct the meeting in the interests of justice.
(c) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (July 9, 2013, P.L.476, No.67, eff. 60 days) Cross References. Section 5792 is referred to in section 5793 of this title.
15 Pa.C.S. § 5793 Review of contested corporate action.
(a) General rule.--Upon application of any person aggrieved by any corporate action, the court may hear and determine the validity of the corporate action.
(b) Powers and procedures.--By entering an appropriate order, the court may enforce the production of any books, papers and records of the corporation and other relevant evidence that may relate to the issue. The court shall provide for notice of the pendency of the proceedings under this section to all persons affected thereby. If it is determined that no valid corporate action has been taken, the court may order a meeting to be held in accordance with section 5792 (relating to proceedings prior to corporate action).
(c) Cross reference.--See section 6145 (relating to applicability of certain safeguards to foreign domiciliary corporations). (Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 2013, P.L.476, No.67, eff. 60 days)
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=15Fetched: 10/16/2026