15 Pa.C.S. Ch. 2

in effect

15 Pa.C.S. § 2 Contents of articles of Young Men's Christian Associations (Repealed).

2013 Repeal. Section 2 was repealed July 9, 2013, P.L.476, No.67, effective 60 days. Explanatory Note. Section 215 of the Nonprofit Corporation Law of 1933 required that the articles of incorporation contain the names and addresses of members of a board of trustees and a prescribed statement of purpose.

15 Pa.C.S. § 201 Definition of term "insurance corporation." As used in this division, the term "insurance corporation" means any domestic insurance company of any of the classes described in section 201 or 701(3) of the act of May 17, 1921 (P.L.682, No.284), known as The Insurance Company Law of 1921, or incorporated under the acts of April 28, 1903 (P.L.329, No.259), April 20, 1927 (P.L.317, No.190), June 24, 1939 (P.L.686, No.320), June 20, 1947 (P.L.687, No.298), June 28,

1951 (P.L.941, No.184), July 15, 1957 (P.L.929, No.401), or any similar act relating to the incorporation or reincorporation of limited life insurance companies. The term does not include any of the following: (1) A hospital plan corporation subject to 40 Pa.C.S. Ch. 61 (relating to hospital plan corporations). (2) A professional health service corporation subject to 40 Pa.C.S. Ch. 63 (relating to professional health services plan corporations). (3) A fraternal benefit society subject to the act of July 29, 1977 (P.L.105, No.38), known as the Fraternal Benefit Society Code. (4) A health maintenance organization subject to the act of December 29, 1972 (P.L.1701, No.364), known as the Health Maintenance Organization Act.

15 Pa.C.S. § 202 Corporate powers.

(a) General rule.--No insurance corporation shall transact any other business other than that specified in its original or amended articles of incorporation or charter or authorized by statute regulating the business of the corporation. (b) Ancillary activities.--With the prior approval of the Insurance Department, an insurance corporation may, independently of its insurance business and in addition to authority conferred by any other statute regulating the business of the corporation, provide services of the kinds it performs in the normal conduct of the business for which it is incorporated, including, but not limited to, consultative, administrative, investment, actuarial, loss prevention, data processing, accounting, claims and collection services. The Insurance Department shall take into account the effect of the provision of such services on the insurance business of the corporation and the risks inherent in the provision of such services by the corporation. (c) Subsidiaries.--Subsections (a) and (b) shall not affect the power of an insurance corporation to hold, own and control subsidiaries engaged in other businesses as authorized by law.

15 Pa.C.S. § 203 Authorization to do business.

No insurance corporation incorporated after June 19, 1991, shall have power to engage in the business of insurance until it shall have received a certificate from the Insurance Department authorizing the corporation to commence business.

15 Pa.C.S. § 204 Amendment of articles.

(a) General rule.--Any amendment of the articles of incorporation or charter of any insurance corporation that may be effected only by action or with the approval of the shareholders or members (other than an amendment authorizing or creating a new class or series of shares or increasing the authorized number of any previously authorized class or series of shares) shall become effective only if approved by the Insurance Department. See 15 Pa.C.S. § 103 (relating to subordination of title to regulatory laws). (b) Amendments not requiring approval of Insurance Department.--The Department of State shall forward to the Insurance Department a copy of any amendment of the articles of incorporation or charter of any insurance corporation that becomes effective without the approval of the Insurance Department. (c) Reduction in capital stock.--The capital stock of an insurance corporation shall not be reduced below the minimum amount of capital stock required by law for the formation of the corporation.

15 Pa.C.S. § 205 Other fundamental transactions.

(a) General rule.--Any plan of merger, consolidation, exchange, asset transfer, division or conversion of any insurance corporation, any recapitalization or voluntary dissolution of any insurance corporation or any issuance of shares by any insurance corporation in exchange for shares of another insurance company shall become effective only if approved by the Insurance Department. See 15 Pa.C.S. § 103 (relating to subordination of title to regulatory laws). (b) Standards.--A share exchange or similar transaction shall be approved if it is in accordance with law and the terms and conditions are fair. A reduction in capital stock shall be approved if it is in accordance with law and consistent with the interests of the policyholders and creditors. A merger or consolidation of a title insurance company or the acquisition of substantially all the assets or stock of a title insurance company or abstract company by a title insurance company shall be approved if it is in accordance with law, not inequitable to the shareholders of any title insurance or abstract company involved and will not substantially reduce the security of and service to be rendered to policyholders of the domestic title insurance company in this Commonwealth or elsewhere. Any other transaction subject to subsection (a) shall be approved if it is in accordance with law and not injurious to the interests of the policyholders and creditors. (c) Approval of compensation.--No director, officer, agent or employee of any title insurance company or abstract company party to any merger, consolidation or acquisition subject to subsection (a) shall receive any fee, commission, compensation or other valuable consideration whatsoever for in any manner aiding, promoting or assisting therein except as set forth in the terms of the transaction submitted to the Insurance Department for approval. (d) Transactions with foreign corporations.--Any foreign insurance company participating in or resulting from any transaction subject to subsection (a) shall engage in the transaction only with the approval of the insurance supervising officials of the jurisdiction in which such foreign insurance company is incorporated or is to be incorporated. A change in domicile of an insurance corporation to another jurisdiction may be effected only with the consent of the Insurance Department. A foreign insurance company that is a surviving or resulting corporation in any transaction subject to subsection (a) shall not be deemed to hold a certificate of authority to do an insurance business within this Commonwealth solely by reason of the approval by the Insurance Department and consummation of the transaction. (e) Mergers of stock and mutual insurance companies.--A mutual insurance company shall not merge or consolidate with an insurance corporation organized on a stock share basis. (f) Dissolution of mutual companies.--Assets of mutual life insurance companies, derived from a health and accident business, other than those properly credited to the members or policyholders on policies covering such business, and the assets of mutual companies, other than mutual life companies, which may not be properly credited to policyholders and members, shall be escheated to the Commonwealth upon the dissolution of such companies. (g) Definition.--As used in this section, the term "recapitalization" includes any reduction in stated capital and excludes any new or additional share authorization for which approval by the Insurance Department is not required by section 204.

15 Pa.C.S. § 206 Increases in capital stock.

Within 30 days after any increase in the capital stock of an insurance corporation, the corporation shall report the increase to the Insurance Department on a form for that purpose prescribed by regulation by the department.

15 Pa.C.S. § 207 Administrative procedure.

(a) General rule.--Every application for a certificate of authority or other approval by the Insurance Department under this division shall be made to the department in writing and shall be in such form as the procedural regulations of the department may require. (b) Standards for approval.--A certificate of authority or other approval under this division shall be issued by order of the department only if and when the department shall find and determine that the application complies with the provisions of this division and the procedural regulations of the department thereunder. (c) Procedure before department.--For the purpose of enabling the department to make the finding or determination required by subsection (b), the department shall afford reasonable notice and opportunity for hearing, which shall be public, and, before or after any such hearing, it may make such inquiries, audits and investigations, and may require the submission of such supplemental studies and information, as it may deem necessary or proper to enable it to reach a finding or determination. The department, in granting a certificate of authority or other approval, may impose such conditions as it may deem to be just and reasonable. In every case the department shall make a finding or determination in writing, stating whether or not the application has been approved, and, if it has been approved in part only, specifying the part which has been approved and the part which has been denied. Any holder of a certificate of authority or other approval, exercising the authority conferred thereby, shall be deemed to have waived any and all objections to the terms and conditions of such certificate or other approval. (d) Judicial review.--Orders of the department upon an application for a certificate of authority or other approval under this section shall be subject to judicial review in the manner and within the time provided or prescribed by law.

15 Pa.C.S. § 208 Existing powers preserved.

Nothing in this act shall impair the power of any insurance corporation to transact business to the same extent as if this act had not been enacted.

15 Pa.C.S. § 209 Registration of name of nonregistered foreign association.

(a) General rule.--A nonregistered foreign association may register a name that is available for use by a registered foreign association pursuant to section 206 (relating to requirements for foreign association names) by delivering to the department for filing an application for registration of name, signed by the association, setting forth: (1) The name of the association. (2) The address, including street and number, if any, of the principal office of the association. (3) The name being registered. (b) Annual renewal.--An association that has in effect the registration of a name may renew the registration from year to year by annually delivering to the department for filing an application for renewal setting forth the facts required to be set forth in an original application for registration. A renewal application may be filed between October 1 and December 31 in each year and shall extend the registration for the following calendar year. (c) Use of registered name.--A foreign association whose name registration is effective may register as a foreign association under the registered name or consent in record form to the use of that name by another association. (d) Cross references.--See sections 134 (relating to docketing statement) and 135 (relating to requirements to be met by filed documents). (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 amended subsecs. (a) and (b). Cross References. Section 209 is referred to in sections 202, 208 of this title; section 311 of Title 54 (Names).

15 Pa.C.S. § 210 Registration of name of domestic nonfiling association.

(a) General rule.--A domestic nonfiling association that is not a limited liability partnership may register a name that is available for use by a domestic filing entity under section 202 (relating to requirements for names generally) by delivering to the department for filing an application for registration of name, signed by the association, stating: (1) The name of the association. (2) The address, including street and number, if any, of the principal office of the association. (3) The name being registered. (b) Annual renewal.--A domestic nonfiling association that has in effect a registration of its name may renew the registration from year to year by annually filing an application for renewal stating the facts required to be stated in an original application for registration. A renewal application may be filed between October 1 and December 31 in each year and shall extend the registration for the following calendar year. (c) Use of registered name.--A domestic nonfiling association whose name registration is effective may convert under Subchapter E of Chapter 3 (relating to conversion) to a domestic filing entity under the registered name or consent in a signed record to the use of that name by another entity. (d) Cross references.--See sections 134 (relating to docketing statement) and 135 (relating to requirements to be met by filed documents). (July 15, 2024, P.L.728, No.59, eff. 60 days) 2024 Amendment. Act 59 added section 210. Cross References. Section 210 is referred to in section 202 of this title.

15 Pa.C.S. § 221 Definitions.

The following words and phrases when used in this subchapter shall have the meanings given to them in this section unless the context clearly indicates otherwise: "Applicable rule." A statute, rule or regulation regulating the procedures for seeking or obtaining authorization or approval of an entity action. The term includes this title and the provisions of prior organic laws applicable to a domestic entity and an entity action subject to this subchapter. "Date of the defective entity action." The date, or the approximate date if the exact date is unknown, the defective entity action was purported to have become effective. "Defective entity action." An overissue or any other entity action purportedly taken that is and, at the time the entity action was purportedly effective, would have been within the power of the entity, but due to a failure of authorization of the entity action: (1) is void or voidable; (2) cannot be determined not to be void or voidable by the governors of the ratifying entity or previous entity; or (3) otherwise does not operate fully in the manner intended at the time the entity action was purported to have become effective. "Entity action." An action taken by or on behalf of a domestic entity, including any action taken by the incorporator or organizer, the governors or a committee of the governors, an officer or other agent of the entity or the interest holders and any action taken by or on behalf of a previous entity pursuant to a plan or plan agreement providing for the formation or augmentation of the domestic entity. "Failure of authorization." Either: (1) the failure of an entity action to have been authorized, adopted, approved or otherwise effected in compliance with the organic rules, a resolution of the governors, an applicable rule, a plan, a plan agreement or a governance agreement or the disclosure set forth in a proxy or consent solicitation statement regarding the approval or authorization of the entity action; or (2) a circumstance where the governors cannot determine that an entity action was validly authorized, approved or otherwise effected in compliance with paragraph (1). "Formation or augmentation." The formation of an entity pursuant to a plan or the vesting of property, liabilities, rights, privileges, immunities or powers in an entity pursuant to a plan. "Governance agreement." An agreement regarding the governance of an entity or the transfer of interests in the entity to which the entity and at least one interest holder are parties or are stated or intended beneficiaries. "Overissue." The purported issuance: (1) with respect to a domestic business corporation, of: (i) shares of a class or series of a business corporation in excess of the number of shares of the class or series the corporation has the power to issue under its articles of incorporation at the time of the issuance; or (ii) shares of any class or series that is not at the time authorized for issuance by the articles of incorporation of a business corporation; or (2) with respect to any type of domestic entity other than a business corporation, of: (i) interests of any type in excess of the number of interests of that type the entity has the power to issue under its organic rules at the time of the issuance; or (ii) interests of any type that is not at the time authorized for issuance by the organic rules of the entity. "Plan." A plan as defined in section 312 (relating to definitions) or a plan of asset transfer under section 1932 (relating to voluntary transfer of corporate assets) or other sale, lease, exchange or other disposition of all or substantially all assets, in each case approved or adopted or implemented by an entity or by a previous entity. "Plan agreement." An agreement providing for the adoption or implementation of a plan to which the entity is a party or providing for the formation or augmentation of the entity. "Previous entity." In the case of ratification of the formation or augmentation of a domestic entity pursuant to a plan, each entity that adopted, approved or implemented the plan, other than the ratifying entity. "Putative interests." The shares or interests of any class, series or type, including shares or interests issued upon exercise of rights, options, warrants or other securities convertible into shares or interests, that purportedly were created or issued as a result of a defective entity action. "Ratifying entity." The domestic entity whose governors or interest holders have ratified a defective entity action or who seek review under section 228 (relating to judicial proceedings regarding validity of entity actions) of a defective entity action that has not been ratified. "Valid interests." The shares or interests of any class, series or type that have been duly authorized and validly issued in accordance with all applicable rules, including as a result of ratification or validation under this subchapter. "Validation effective time." With respect to a defective entity action ratified under this subchapter, the later of: (1) the time at which the ratification of the defective entity action is approved in accordance with this subchapter by either: (i) the interest holders; or (ii) the governors, if approval of the interest holders is not required; and (2) the time at which any statement of validation filed in accordance with section 227 (relating to statement of validation) becomes effective. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 221.

15 Pa.C.S. § 222 Nonexclusivity.

Ratification or validation under this subchapter is not the exclusive means of ratifying or validating a defective entity action, and the absence or failure of ratification or validation in accordance with this subchapter does not, of itself, affect the validity or effectiveness of any entity action properly ratified under common law or otherwise, nor does it create a presumption that an entity action is or was a defective entity action or void or voidable. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 222.

15 Pa.C.S. § 223 Ratification of defective entity actions.

(a) Action by governors.--To ratify a defective entity action under this subchapter other than the ratification of an election of the initial governors under subsection (b), the governors of the ratifying entity must take an action, in accordance with section 224 (relating to action on ratification), stating: (1) the defective entity action to be ratified and, if the defective entity action involved the issuance of putative interests, the number and type of putative interests purportedly issued; (2) the date of the defective entity action; (3) the nature of the failure of authorization with respect to the defective entity action to be ratified; and (4) that the governors approve the ratification of the defective entity action. (b) Election of initial governors.--In the event that the defective entity action to be ratified relates to the election of the initial governors of an entity, a majority of the persons who, at the time of the ratification, are exercising the powers of the governors may take an action stating: (1) the name of each person who first took action in the name of the entity as the initial governors of the entity; (2) the earlier of the date on which each person first took action or was purported to have been elected as an initial governor; and (3) that the ratification of the election of each person as an initial governor is approved. (c) Action by interest holders.--If any provision of the organic rules, a resolution of the governors, an applicable rule, a plan, a plan agreement or a governance agreement requires action by the interest holders or would have required action by the interest holders of the entity or of a previous entity at the date of the occurrence of the defective entity action, and that required action by the interest holders has not previously been obtained, the ratification of the defective entity action approved in the action taken by the governors under subsection (a) shall be submitted to the interest holders for action in accordance with section 224. (d) Abandonment of ratification.--Unless otherwise provided in the action taken by the governors under subsection (a), after the action by the governors has been taken and, whether or not the action has been approved by the interest holders, the governors may abandon the ratification at any time before the validation effective time without further action of the interest holders. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 223. Cross References. Section 223 is referred to in sections 224, 225 of this title.

15 Pa.C.S. § 224 Action on ratification.

(a) Quorum and required vote of governors.--The quorum and voting requirements applicable to a ratifying action by the governors under section 223 (relating to ratification of defective entity actions) shall be the quorum and voting requirements applicable to the entity action proposed to be ratified at the time the ratifying action is taken. (b) Notice to interest holders.--If the ratification of the defective entity action requires action by the interest holders under section 223(c), and if the action is to be taken at a meeting, the entity must give notice to each holder of interests, regardless of whether entitled to vote, as of the record date for notice of the meeting and as of the date of the occurrence of the defective entity action. If the ratification relates to an overissue, the entity must give notice to the holders of both valid and putative interests. The entity is not required to give notice as otherwise required by this subsection to holders of valid or putative interests whose identities or addresses for notice cannot be determined from the records of the entity. The notice must state that the purpose, or one of the purposes, of the meeting is to consider ratification of a defective entity action and must be accompanied by: (1) either a copy of the action taken by the governors in accordance with section 223 or the information required by section 223(a)(1), (2), (3) and (4); and (2) a statement that any claim that the ratification of the defective entity action and any putative interests issued as a result of the defective entity action should not be effective, or should be effective only on certain conditions, must be brought within 120 days after the applicable validation effective time. (c) Quorum and required vote of interest holders.--Except as provided in subsection (d) with respect to the voting requirements to ratify the election of governors, the quorum and voting requirements applicable to the approval by the interest holders required by section 223(c) shall be the quorum and voting requirements applicable to the entity action proposed to be ratified at the time of the interest holder approval, except that the presence or approval of interests of any class or series of which no interests are then outstanding, or of any person that is no longer an interest holder, shall not be required. (d) Election of governors.--Action by interest holders ratifying the election of governors requires either: (1) that the votes cast within the voting group favoring ratification exceed the votes cast opposing ratification of the election at a meeting at which a quorum is present; or (2) in the case of directors or a class of directors of a business corporation elected by cumulative voting, that the votes cast against ratification not be sufficient to elect one or more directors to the board or to the class. (e) Putative interests.--The following apply to putative interests: (1) Putative interests on the record date for determining the interest holders entitled to vote on any matter submitted to interest holders under section 223(c) shall be entitled to vote and shall be counted for quorum purposes in any vote to approve the ratification of the matter if: (i) they are shares of a registered corporation described in section 2502(1) (relating to registered corporation status); and (ii) they have been held of record in fungible bulk by a registered clearing agency or its nominee, acting as securities intermediary. (2) In all other cases, putative interests on the record date for determining the interest holders entitled to vote on any matter submitted to interest holders under section 223(c), and without giving effect to any ratification of putative interests that becomes effective as a result of the vote, are not entitled to vote and do not count for quorum purposes in any vote to approve the ratification of a defective entity action. (f) Required amendment.--If the approval under this section of putative interests would result in an overissue, in addition to the approval required by section 223, approval of an amendment to the organic rules of the entity to increase the number of interests of an authorized class or series or to authorize the creation of a class or series of interests so there will be no over issue is also required. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 224. Cross References. Section 224 is referred to in sections 223, 225, 228, 1911 of this title.

15 Pa.C.S. § 225 Optional notice.

(a) General rule.--If interest holder approval is not required under section 223(c) (relating to ratification of defective entity actions) or if notice has not been given in accordance with section 224(b) (relating to action on ratification), the ratifying entity nonetheless may give notice of an action taken under section 223 to each interest holder, including the holders of both valid and putative interests, regardless of whether entitled to vote, as of both: (1) the date of the action by the governors; and (2) the date of the defective entity action ratified. (b) Contents.--The notice shall contain: (1) either a copy of the action taken by the governors in accordance with section 223(a) or (b) or the information required by section 223(a)(1), (2), (3) and (4) or 223(b)(1), (2) and (3), as applicable; and (2) a statement that any claim that the ratification of the defective entity action and any putative interests issued as a result of the defective entity action should not be effective, or should be effective only on certain conditions, must be brought within 120 days after giving notice. (c) Exception.--Notice under this section is not required to be given to holders of valid and putative interests whose identities or addresses for notice cannot be determined from the records of the entity. (d) Notice by registered corporations.--Notice given by a registered corporation under this section may be given by means of a publicly available filing with the Securities and Exchange Commission. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 225. Cross References. Section 225 is referred to in section 228 of this title.

15 Pa.C.S. § 226 Effect of ratification.

(a) General rule.--A defective entity action is not void or voidable, or deprived of full effect, as a result of its failure of authorization if ratified in accordance with this subchapter, unless the court determines under section 228 (relating to judicial proceedings regarding validity of entity actions) that the ratification was not valid. (b) Specific aspects of validation.--Subject to a court determination under section 228 that the ratification was not valid, from and after the validation effective time of a defective entity action, and without regard to the 120-day period during which a claim may be brought under section 228: (1) The defective entity action is not void or voidable, or deprived of full effect, as a result of its failure of authorization and is duly authorized and a valid entity action effective as of the date when the defective entity action was taken. (2) The issuance of each putative interest or fraction of a putative interest purportedly issued pursuant to the defective entity action is not void or voidable, and each putative interest or fraction of a putative interest is an identical, duly authorized and validly issued interest or fraction of an interest as of the time it was purportedly issued. (3) Any entity action taken subsequent to the defective entity action in reliance on the defective entity action having been validly effected is duly authorized and valid as of the time taken. Any subsequent defective entity action resulting directly or indirectly from the original defective entity action, if the failure of authorization of the subsequent defective entity action relates solely to the defective entity action ratified under this subchapter, is duly authorized and valid as of the time taken. (4) If a document was previously filed by the department in respect of the defective entity action, any statement in the document to the effect that the defective entity action was validly approved in accordance with applicable rules is deemed stricken from the document. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 226.

15 Pa.C.S. § 227 Statement of validation.

(a) General rule.--If a defective entity action ratified under this subchapter would have required under any other section of this title a filing in accordance with this title, the ratifying entity shall deliver to the department for filing a statement of validation in accordance with this section, regardless of whether a filing was previously made in respect of the defective entity action and in lieu of a filing otherwise required by this title. The statement of validation shall serve to amend or substitute for any other filing with respect to the defective entity action required by this title. (b) Contents.--The statement of validation must be signed by the ratifying entity and set forth: (1) the name of the ratifying entity; (2) subject to section 109 (relating to name of commercial registered office provider in lieu of registered address), the address of its registered office, including street and number, if any, in this Commonwealth; (3) the defective entity action that is the subject of the statement of validation, including, in the case of any defective entity action involving the issuance of putative interests, the number and type of putative interests issued and the date or dates upon which the putative interests were purported to have been issued; (4) the date of the defective entity action; (5) the nature of the failure of authorization in respect of the defective entity action; (6) a statement that the defective entity action was ratified in accordance with this subchapter, including the date on which the governors ratified the defective entity action and the date, if any, on which the interest holders approved the ratification of the defective entity action; and (7) the following information with respect to previous documents delivered to the department by the ratifying entity or by a previous entity: (i) if a document was previously filed by the department in respect to the defective entity action and no changes to the filing are required to give effect to the ratification of the defective entity action, the statement of validation must: (A) state the name of the entity filing the statement of validation and the statute under which it was incorporated or formed; (B) state the name, title and filing date of the filing previously made and any previous statement of correction to that filing; and (C) have attached a copy of the filing previously made, together with any previous statement of correction to that filing. (ii) if a document was previously filed by the department in respect to the defective entity action and the filing requires a change to give effect to the ratification of the defective entity action, the statement of validation must: (A) state the name of the entity filing the statement of validation and the statute under which it was incorporated or formed; (B) state the name, title and filing date of the filing previously made and any previous statement of correction to that filing; (C) have attached a filing containing all of the information required to be included under the applicable section or sections of this title to give effect to the defective entity action; and (D) state the date and time that the filing attached to the statement of validation is deemed to have become effective; or (iii) if a document was not previously filed by the department in respect to the defective entity action and the defective entity action would have required a filing under any other section of this title, the statement of validation must: (A) state the name of the entity filing the statement of validation and the statute under which it was incorporated or formed; (B) have attached a document containing all of the information required to be included under the applicable section or sections of this title to give effect to the defective entity action; and (C) state the date and time that the document is deemed to have become effective. (c) Additional filing fee.--In addition to the filing fee required under section 153 (relating to fee schedule) for the statement of validation, if the statement of validation relates to a situation described in subsection (b)(7)(iii), the entity shall also pay a fee equal to the filing fee for that document required by section 153 at the time the statement of validation is delivered for filing. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 227. Cross References. Section 227 is referred to in sections 153, 221 of this title.

15 Pa.C.S. § 228 Judicial proceedings regarding validity of entity actions.

(a) Standing.--Subject to subsection (f), review of a ratification under this subchapter or of a defective entity action may be commenced in the court by: (1) the ratifying entity; or (2) a person that, at the time of the defective action or its ratification, was: (i) a successor to the ratifying entity; (ii) a governor of the ratifying entity; (iii) an interest holder or beneficial owner of an interest in the ratifying entity or in a previous entity; or (iv) materially and adversely affected by the ratification. (b) Parties.--No other party in addition to the ratifying entity need be joined in order for the court to adjudicate the matter. In an action filed by the ratifying entity, the court may require notice of the action be provided to other persons specified by the court and permit such other persons to intervene in the action. (c) Determination by the court.--In an action under this section, the court may: (1) determine the validity and effectiveness of a ratification under this subchapter; (2) determine the validity and effectiveness of any defective entity action not ratified under this subchapter; and (3) establish conditions upon the validity or effectiveness of a ratification or defective entity action reviewed by the court. (d) Time limitation.--Notwithstanding any other provision of applicable law, an action asserting that the ratification of a defective entity action and any putative interests issued as a result of the ratification of the defective entity action should not be valid must be brought within 120 days after notice has been given as provided in section 224(b) (relating to action on ratification) or 225 (relating to optional notice). (e) Effect on validation effective time.--The validation effective time shall not be affected by the filing or pendency of a judicial proceeding under this section or otherwise, unless otherwise ordered by the court. (f) Exclusivity.--An action to review a ratification under this subchapter may be brought only by a person identified in subsection (a) and only in the court. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 228. Cross References. Section 228 is referred to in sections 221, 226 of this title.

15 Pa.C.S. § 229 Limitation on voiding certain defective entity actions.

(a) Bar on voiding certain defective entity actions.--Subject to subsection (d), after the expiration of the applicable period set forth in subsection (c): (1) a defective entity action other than an overissue is not void or voidable as the result of the failure of authorization and is a valid entity action effective as of the date of the defective entity action; (2) any entity action taken subsequent to the defective entity action in reliance on the defective entity action having been validly effected is valid as of the time taken; and (3) any subsequent defective entity action resulting directly or indirectly from the original defective entity action is duly authorized and valid as of the time taken, if the failure of authorization of the subsequent defective entity action relates solely to the defective entity action referred to in paragraph (1). (b) Bar on voiding certain overissues.--Subject to subsection (d), after the expiration of the applicable period set forth in subsection (c): (1) an overissue is not void or voidable on the basis of having been in excess of the number of interests of the class or series that the domestic entity had the power to issue or on the basis of the entity's lack of authority to issue interests of the class or series, and is a valid entity action effective as of the date of the overissue; (2) the putative interests are duly authorized and validly issued valid interests; (3) any entity action taken subsequent to the overissue in reliance on the overissue having been validly effected is valid as of the time taken; and (4) any subsequent defective entity action resulting directly or indirectly from the original overissue is duly authorized and valid as of the time taken, if the failure of authorization of the subsequent defective entity action relates solely to the defective entity action referred to in paragraph (1). (c) Applicable period.--The applicable period under this section shall be the shortest of: (1) in the case of a defective entity action taken by a registered corporation, two years from the date when the registered corporation, or any successor or any person directly or indirectly owning all the shares of the registered corporation or of any successor to the registered corporation, has disclosed the defective entity action in a public filing with the Securities and Exchange Commission; (2) six years from the date when: (i) the defective entity action is set forth in or implemented or purported to be implemented through the public organic record of the entity taking the action; or (ii) disclosure in record form of the occurrence of the defective entity action is received by the person or persons whose authorization would have been necessary for the entity action not to have been defective; or (iii) in the case of an overissue of shares of a business corporation, disclosure in record form is given to all shareholders in the manner set forth in section 1702 (relating to manner of giving notice) of the fact of the issuance of the putative interests or of the existence of the putative interests resulting from the overissue; and (3) 21 years after the defective entity action. (d) Application to court to void defective entity action.--To the extent that relief is available under other applicable law, a person entitled to assert under applicable law that a defective entity action is void or voidable may, before the expiration of the applicable period set forth in this section, file an action for relief declaring or otherwise establishing that the defective entity action is void or voidable. If such an action is filed, the operation of subsection (a) or (b) shall be suspended until the final resolution of the action, and, to the extent that relief is obtained, subsections (a) and (b) shall not apply. (e) Other relief not affected.--The operation of subsections (a) and (b) and the time periods set forth in subsection (c) do not affect the availability of relief under applicable law other than this subchapter relating to a defective entity action not predicated on: (1) a failure of authorization under this title relating thereto; (2) a lack of power or authority under section 1521 (relating to authorized shares) or the organic rules resulting in an overissue; or (3) the asserted void or voidable status of the defective entity action. (f) No tolling.--The operation of subsection (c) is not tolled by reason of any person's unawareness of the failure of authorization of the defective entity action or other grounds, other than, in the case of subsection (c)(1) and (2), active and deliberate fraud, concealment or forgery proven by clear and convincing evidence. (g) Presumptions.--For purposes of this section, the governors and interest holders of the entity are deemed to have acted in reliance on the defective entity action in authorizing subsequent entity actions unless clear and convincing evidence demonstrates a lack of such reliance. For purposes of subsection (c)(2)(ii) and (iii), a contemporaneous record in record form of the giving of disclosure by a governor, officer or agent of the entity is presumptive evidence of the giving and receipt of such disclosure. (h) Amendment of organic rules following overissue.--After the expiration of the applicable period applicable to an overissue, the domestic entity may, and within a reasonable period after a request in record form of a holder of formerly putative interests resulting from an overissue must, adopt an amendment to its organic rules: (1) increasing the number of interests of the class or series that includes the formerly putative interests to the minimum number necessary for the entity's organic rules to set forth the power of the entity to have issued the total number of issued interests of the class or series held by all interest holders; or (2) otherwise amending its organic rules to the extent necessary to authorize the creation and issuance of the class or series of formerly putative interests. (i) Effectiveness of section.--In the case of a defective entity action occurring before January 3, 2023: (1) the operation of subsections (a) and (b) is suspended until January 3, 2024, notwithstanding any expiration of the applicable period set forth in subsection (c); (2) despite any expiration of the applicable period set forth in subsection (c), a person entitled to assert under applicable law that a defective entity action is void or voidable may file an action under subsection (d) if the action is filed on or before January 3, 2024; (3) any action pending on January 3, 2023, seeking relief on the grounds that a defective entity action is void or voidable, including any relief that may be obtained in the action, is not affected by this section; (4) any final judgment relating to the defective entity action that had become no longer subject to appeal before January 3, 2023, is not affected by this section; and (5) this section shall otherwise apply with full retroactive effect to a defective entity action. (Nov. 3, 2022, P.L.1791, No.122, eff. 60 days) 2022 Amendment. Act 122 added section 229. Cross References. Section 229 is referred to in section 1914 of this title.

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