Business owners who plan to start corporations in Pennsylvania should know the incorporation laws of the state. The incorporation process varies depending on the type of corporation: business corporation, nonprofit corporation or foreign business corporation. Businesses should understand the naming, filing and organizational steps required for incorporation. A Pennsylvania attorney who represents clients in business formation matters may become a helpful resource for personalized advice.
Incorporation Laws in Pennsylvania
The Pennsylvania Code establishes incorporation requirements in Title 15, "Corporations and Unincorporated Associations." The code sections in Title 15 set guidelines for many aspects of incorporation, including the establishment of a corporation with its company name and filing requirements, the structure of the corporate board, regulations for corporate directors and shareholders, tax information and other related topics. Many aspects of incorporation have their own specific sections within Title 15. For example, section 1303 sets the state's requirements for corporate names. Title 15 also explains the role of the Pennsylvania Department of State, which oversees business formation across the state and reviews the filings to incorporate new businesses under state law.
A for-profit business corporation operates a distinct legal entity that owns the business itself, while issuing shares to the corporation's stockholders. Pennsylvania's business laws include many requirements to start and operate a for-profit corporation. Title 15 of the Pennsylvania Code sets the requirements to be followed by the corporation. For example, section 1306 discusses the Articles of Incorporation to be filed with the Pennsylvania Department of State by the incorporators. Chapter 15 of Title 15 contains the state's laws regarding corporate duties and obligations, issuance of corporate shares and shareholder rights, while chapter 17 contains the requirements for directors and board members of the corporation. Board members and directors should understand their roles before the organization incorporates.
A nonprofit corporation differs from a for-profit business corporation in that the nonprofit organization's shareholders don't receive the corporation's pecuniary profits. The nonprofit corporation can't confer any financial benefits to its members except payment of salaries and benefits. The Pennsylvania Code includes separate provisions regarding the establishment and operation of a nonprofit organization under state law. Chapters 51 and 53 of Title 15 contain a number of provisions specifically related to nonprofit corporations. Section 5301(a), for example, lists the acceptable purposes for which an individual or business may incorporate a nonprofit organization in the state -- these purposes include charitable, cultural, educational and literary endeavors.
Foreign Business Corporations
Businesses located in another state or country may choose to incorporate in Pennsylvania as foreign business corporations. State law permits a foreign business corporation to incorporate in Pennsylvania as either a for-profit or nonprofit organization. The Pennsylvania Code includes some provisions specifically related to foreign business corporations. Chapter 41 of Title 15 discusses the requirements that foreign business corporations must meet, including the code sections related to filing as a corporation in Pennsylvania. The chapter also discusses the notification and change-of-address procedures if an incorporated organization later chooses to withdraw from doing business in the state.
- Citizen Media Law Project: Forming a Corporation in Pennsylvania
- Pennsylvania General Assembly: Title 15 - Corporations and Unincorporated Associations
- Pennsylvania Department of State: Pennsylvania Business Corporations
- Pennsylvania Department of State: Pennsylvania Nonprofit Corporations
- Pennsylvania Department of State: Foreign Business Corporations
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