A major overhaul of Pennsylvania’s entity laws went into effect on July 1, 2015. The Association Transactions Act, which is similar to the Model Entity Transactions Act, replaces or reconfigures much of the dated legislation contained in Title 15, Corporations and Unincorporated Associations, and streamlines applicable provisions for more modern entity types. The Act consolidates and clarifies regulations surrounding entity transactions and makes it easier for all entity types to execute these transactions.
Specifically, the Act modifies or creates legislation to oversee five types of transactions: mergers, conversions, interest exchanges, divisions and domestication. Previously, the types of entities eligible for some of these transactions were limited, but the Act gives businesses much more flexibility. Simplifying these costly and time-consuming transactions is a huge win for Pennsylvania businesses.
This is a particular benefit to businesses looking to convert their entity type, who previously would have had to either dissolve or merge with another entity and reform as a different type. Divisions have also become less complicated, as spin-off entities no longer need to be the same type as the parent entity. Divisions are useful for businesses looking to attribute assets or liabilities to separate subsidiaries, but they are still only available in certain jurisdictions.
New Laws Beneficial for Businesses in Pennsylvania
In addition to the transaction governance laws, the Act also introduces several new types of filings that will be available to businesses. A Statement of Abandonment allows a document given to the Department of State to be withdrawn before taking effect. A Statement of Conversion can be used to convert an existing association to a different type of association. A Transfer of Registration is helpful to registered foreign entities, allowing them to easily merge with non-registered entities or convert their entity type. The Statement of Interest Exchange remains functionally the same as the previous version of the form, but it can now be used for any type of entity.
Existing Pennsylvania businesses will benefit from the clear, consolidated framework for various types of transactions, but the Act could also help to bring new business to the state. The cost-saving and red tape-cutting measures in the Act will make Pennsylvania more attractive to businesses. Provisions in the Act extend the ability to domesticate an entity across all entity types, which will allow businesses to move into Pennsylvania more easily.
Philadelphia Business Lawyers at the Law Offices of Sidkoff, Pincus & Green Help Businesses Achieve Their Transaction Goals
If you are looking into transaction options for your business, call Philadelphia business lawyers at the Law Offices of Sidkoff, Pincus & Green. Our legal team has the knowledge and experience to guide you through the process, including reviewing all applicable legislation and helping you choose the strategy that is right for your business needs. With offices conveniently located in Center City, Philadelphia, we serve businesses both in the Philadelphia area and across the country. Call us today at 215-574-0600 or contact us online to review your options with a qualified business transaction lawyer.