Pennsylvania Business Corporations
These are Pennsylvania corporations organized for profit. A corporation is a legal entity created under state statutory law that acts as a legal person. It has all rights, privileges and responsibilities of a natural person; possessing the attributes of limited liability, centralized management, continuity of life and fee transferability of interest. A corporation is the most complex form of business organization. The corporation owns the business and in turn, the corporation issues shares of stock to individuals investing in the corporation. Business activities are restricted to those designated in the articles.
To form a business corporation in Pennsylvania, Articles of Incorporation – For Profit [DSCB:15-1306/2102/2303/2702/2903/3101/3303/7102], accompanied by a docketing statement [DSCB:15-134A] should be filed with the Bureau of Corporations and Charitable Organizations. Please see the forms and instructions, available on the Bureau’s Registration Forms page for detailed information about the application.
Articles of Incorporation are not required by law to be prepared by an attorney. However,because of complex legal issues involved when starting any business, including tax considerations, it is advisable to seek legal counsel before filing to
assure that all legal consequences receive proper consideration.
Several types of specialized corporations may be incorporated under Pennsylvania law. All of these business corporation ancillaries may be formed as such at the time of filing of articles of incorporation or may elect specialized status by amendment of existing articles with the requisite vote of the shareholders.
Nonstock corporations – Chapter 21 of the Business Corporation Law
No shares of stock are issued for this
business corporation. References to “shares,”
“shareholder,” “share register,” “share ledger,”
“transfer book for shares,” “number of shares entitled to
vote” or “class of shares” shall mean memberships, member,
membership register, membership ledger, membership transfer book, number of
votes entitled to be cast or class of members, respectively. A nonstock
corporation may be simultaneously subject to this chapter and one or more other
A domestic insurance corporation that is a
mutual insurance company must be a nonstock corporation.
Statutory close corporations – Chapter 23 of the Business Corporation Law
The articles of a statutory close corporation must provide that neither the corporation nor any shareholder shall make an offering of any of its shares of any class that would constitute a “public offering” within the meaning of the Securities Act of 1933.
Note: “Closely held corporation” is defined as a business corporation that:
(1) has not more than 30 shareholders; or
(2) is a statutory close corporation.
This chapter may be applicable to all types of business corporations, other than a management corporation.
Registered corporations – Chapter 25 of the Business Corporation Law
A registered corporation is a domestic business corporation that is registered with the Securities and Exchange Commission and subject to reporting obligations under the Exchange Act. A registered corporation may be simultaneously subject to this chapter and one or more other chapters.
Management corporations – Chapter 27 of the Business Corporation Law
The terms “compensation” and “benefits” shall mean amounts taxable, either currently or on a deferred basis, to a director or officer of the corporation under the Internal Revenue Code of 1986. This chapter may be applicable to all types of business corporations, other than a statutory close corporation or a professional corporation.
Professional corporations – Chapter 29 of the Business Corporation Law
This chapter authorizes licensed persons to render professional services by means of a professional corporation in all cases. This chapter may be applicable to all types of business corporations, other than management corporations.
Insurance corporations – Chapter 31 of the Business Corporation Law
An insurance corporation is a domestic business corporation that is engaged in the business of writing insurance or reinsurance as principal and as such is subject to regulation by the Pennsylvania Insurance Department.
Benefit corporations – Chapter 33 of the Business Corporation Law
These are Pennsylvania business corporations organized for profit, with a corporate purpose of creating a general public benefit, in addition to any other purposes they have as a business corporation. A general public benefit is defined as a material positive impact on society and the environment, taken as a whole and assessed against a third-party standard, from the business and operations of a benefit corporation. A benefit corporation may also have as a purpose the creation of one or more specific public benefits. These include:
(1) providing low-income or underserved individuals or communities with beneficial products or services;
(2) promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
(3) preserving the environment;
(4) improving human health;
(5) promoting the arts, sciences or advancement of knowledge;
(6) promoting economic development through support of initiatives that increase access to capital for emerging and growing technology enterprises, facilitate the transfer and commercial adoption of new technologies, provide technical and business support to emerging and growing technology enterprises or form support partnerships that support those objectives;
(7) increasing the flow of capital to entities with a public benefit purpose; and
(8) the accomplishment of any other particular benefit for society or the environment. A benefit corporation offers entrepreneurs and investors the option to build, and invest in, businesses that operate in a socially and environmentally responsible manner.
Each year, the benefit corporation must prepare and distribute to its shareholders an Annual Benefit Report [DSCB:15-3331] describing its efforts to create public benefit during the preceding year. The report must be filed with the Department of State, thus making it a matter of public record. The report must also be posted on any public website maintained by the corporation.
Publication of either the intent to file or the actual filing of Articles of Incorporation must be made in two newspapers of general circulation, one a legal journal , if possible. Proofs of the advertising are not required to be sent to the Bureau but should be filed with the minutes of the corporation. The advertisements must contain the name of the proposed corporation and a statement that the corporation is to be or has been incorporated under the provisions of the Business Corporation Law of 1988.