Senate Bill 304 updates Pennsylvania's business and nonprofit laws by completing the codification of the Business and Nonprofit Corporation Law and establishing a uniform law governing unincorporated nonprofit associations. It makes minor changes to the Nonprofit Corporation Law to align it with consistent language in the Business Corporation Law. It also enacts the Uniform Unincorporated Nonprofit Association Act to establish a coherent body of law governing the internal affairs of unincorporated nonprofit associations for the first time in Pennsylvania.

2. Senate Bill 304 (Act No. 2013-67) signed by the
governor July 11 and effective September 11,
updates Title 15 and Title 54 to complete the
codification of the Business and Nonprofit
Corporation Law and creates a coherent body of
statutory law governing the internal affairs of
unincorporated nonprofit associations through the
enactment of the Uniform Unincorporated Nonprofit
Association Act.

3. The General Association Act of 1988, which codified the
Business Law (BCL), only included a partial codification of the
Nonprofit Corporation Law (NCL). While sections relating to
nonprofit corporations were renumbered in 1988 to fit within
the statutory scheme of the BCL, no changes were made to
make the language relating to nonprofit corporations
consistent with the language relating to corporations generally.
Various amendments to the BCL in 1990, 1992 and 1994
made corresponding changes to the NCL. This piecemeal
approach has left more than half of the Nonprofit Corporation
Law with language that differs from the Business Corporation
Law.

4. SB 304 ensures Pennsylvania’s business laws governing
for-profit and not-for-profit organizations will be consistent
with one another by making minor changes to the language
of the NPCL to conform the wording of the NPCL to the
language of the BCL.
These changes help avoid any implication that minor
differences in language are intended to produce a
substantive difference in interpretation. Senate Bill 204 adds
a number of provisions permitting nonprofit corporations to
use modern electronic communications technology for
purposes such as notice of meetings of directors and
members, acting by consent without a meeting, etc., which
business corporations have been permitted to do since
1988.

5. An unincorporated nonprofit association is a nonprofit
organization that is not a charitable trust or a nonprofit
corporation or any other type of association organized under
statutory law that is authorized to engage in nonprofit activities.
There are thousands of unincorporated nonprofit association’s
in the United States. They range from local neighborhood to
national associations with large memberships. Their members
may be individuals, corporations, other legal entities or a mix.
They are all associations that for one reason or another cannot
or have not chosen to become a nonprofit association.

6. Pennsylvania law does not currently have a coherent body of
statutory law governing the internal affairs of unincorporated
nonprofit associations. Enactment of the Uniform
Unincorporated Nonprofit Association Act will fill that void.
The bill defines as unincorporated nonprofit association as a
“nonprofit association” consisting of two or more members
joined for one or more common, nonprofit and lawful purposes.
The bill recognizes nonprofit associations as legal entities
separate from their members and managers.

7. • A nonprofit association has the same powers as an individual
to do all of the things necessary or convenient to carry on its
purposes, and may engage in profit-making activities with
restrictions on how those profits are used.
• A nonprofit association may acquire, hold, encumber or
transfer an interest in real or personal property. Real property
may be transferred on behalf of a nonprofit association if the
person is authorized to do so in a statement of authority.
• A debt, obligation, or other liability of a nonprofit association
whether arising from a contract or tort is solely that of the
association and does not become that of its members or
managers.

8. • A nonprofit association may sue and sued in its own
name.
• A judgment or order against a nonprofit association is not
by itself a judgment or order against a member or
manager.
• The nonprofit association may appoint an agent for the
purpose of receiving service of process. The Department
of State shall receive notice of the appointment. An action
against a nonprofit association does not abate merely
because there has been a change in members or
managers. A member is not an agent of the nonprofit
association solely because of being a member.

9. • A nonprofit association must have the approval of its
members to admit, suspend, dismiss or expel a member;
select or dismiss a manager; adopt, amend or repeal the
governing principles; sell, lease, exchange or otherwise
dispose of all or substantially all of the associations’
activities; and determine the policy and purposes of the
association.
• Members of an unincorporated nonprofit association do
not have fiduciary duties to the nonprofit association or
other members by virtue of their statues as members.
They do, however, have an obligation of good faith and
fair dealing.