What Is Pennsylvania Business Corporation Law?
Pennsylvania business corporation law refers to the legal requirements and regulations surrounding corporations in Pennsylvania.3 min read
Pennsylvania business corporation law refers to the legal requirements and regulations surrounding corporations in Pennsylvania. Corporate law can vary depending on the state in which you choose to form your business. However, there are some aspects that are the same across all states.
What Is Pennsylvania Business Corporation Law?
In 1988, the official Pennsylvania Business Corporation Law defined all Pennsylvania corporations, also called domestic corporations, as businesses incorporated for profit under the laws of the Commonwealth of Pennsylvania. Anyone of legal adult age or any businesses are able to incorporate in the state of Pennsylvania. Once incorporated, these businesses are legally allowed to conduct lawful business within the state.
Corporations in Pennsylvania are required to keep a registered agent or a registered office in the state for the main purpose of receiving due process. The registered agent office and the corporation's place of business can be the same or different addresses. This state also gives its corporations perpetual life, unless their articles of incorporation state otherwise. This means the business can continue doing business indefinitely, as long as it's in good standing with the state.
The legal rights of corporations and individuals are actually quite similar. Both can:
- Sue and be sued.
- Buy and sell property.
- Give and take loans.
- Start another business.
Pennsylvania Corporate Naming Requirements
A corporation's name doesn't have to be in English, but is does need to be in Roman characters and numerals or Arabic numerals. It also must have the word "corporation" included, or something similar, such as:
The name of a corporation must also make its business purpose clear and not mislead potential clients or customers into thinking the business has licenses or certifications it doesn't have. For instance, a hair salon cannot be named "The Post Office." Corporations cannot use names that suggest they are a government agency, insurance seller, bank, credit union, or trust, unless it has fulfilled the proper requirements and certifications to do business as such.
This is good practice not only for the state but also for the company itself. When considering a name for your business, you want to get people's attention and make it clear what you offer. If it's too hard for them to figure it out, they'll move on.
Necessary Documents for Forming a Corporation
Once the articles of incorporation are filed for a business, it becomes a legal corporation and can start conducting business. These articles must be filed with the Pennsylvania Department of State's business division. This can be done:
- Via mail
- In person.
You'll need to pay a $125 filing fee for the articles of incorporation and an additional $70 if you want things expedited.
You'll first need to conduct a business name search to make sure the name you've decided on for your corporation is available for use. The articles of incorporation should include the following information:
- Business name.
- Business address (must be in the state of Pennsylvania).
- Registered agent information.
- Whether the corporation will run on a stock share or nonstock basis.
- Statement of duration (if not perpetual).
Corporations are also required to create bylaws. These are similar to an LLC's operating agreement. They should spell out how various decisions and issues regarding the business should be handled. Bylaws are accepted by all the owners of the corporation during their organizational meeting. You'll also need to publish an intent to file or the articles themselves in two generally circulated newspapers and, if possible, a legal journal.
Corporate Board of Directors
All corporations must have a board of directors. The corporation's shareholders vote these directors to the board. This process should be spelled out in the bylaws. The bylaws might also state certain qualifications for directors and how long their terms last, how to vote in new directors, etc. Corporate directors do not need to be residents of the state in which the corporation is registered, nor do they need to be shareholders in the corporation itself, unless the bylaws state differently.
The board of directors should hold and run annual shareholder meetings, but they don't have to take place in the state. Some states require annual shareholder meetings in order for the business to remain in good standing.
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