Pennsylvania Business Law Changes July 2015

Important changes to Pennsylvania business law are taking effect July 1, 2015 that could impact your business. These changes will improve the structure of the current Pennsylvania business law by removing some inconsistencies and redundancies, and provide entities with more flexibility in conducting transactions. These changes were the result of work done by a committee of the Pennsylvania Bar Association that Chuck serves on. Chuck spoke about some of these changes at a Pennsylvania Bar Institute seminar on the new law. This new law is based on the Model Entity Transactions Act (META).

What may be important to you. The new law will create some opportunities. For example, the new law:

1. Will allow a general partnership to convert to a limited partnership. Under a general partnership, the general partners generally have unlimited liability. By converting to a limited partnership, the partners will be able to limit their personal liability prospectively. In addition, if a general partnership owns real estate, it will continue to own that real estate after a conversion and will not be assessed realty transfer taxes upon the conversion.

2. Will allow a professional practice who currently operates through a restricted professional services company (a type of limited liability company) to change to a corporation and avoid paying the annual registration fees in the future.

3. Provides a new procedure, an “interest exchange,” that will permit indirect acquisitions of businesses without requiring multiple steps, such as a triangular merger where an acquiring company forms a subsidiary and merges an acquired company into the subsidiary. Such excess actions will not be needed.

Chuck will be happy to help you with any structuring or changes you may wish to make based on this new law as well as speak to any groups who may be interested in learning more about this new law.