5957 - Effect of division.
§ 5957. Effect of division. (a) Multiple resulting corporations.--Upon the division becoming effective, the dividing corporation shall be subdivided into the distinct and independent resulting corporations named in the plan of division and, if the dividing corporation is not to survive the division, the existence of the dividing corporation shall cease. The resulting corporations, if they are domestic nonprofit corporations, shall not thereby acquire authority to engage in any business or exercise any right that a corporation may not be incorporated under this subpart to engage in or exercise. Any resulting foreign nonprofit corporation that is stated in the articles of division to be a qualified foreign nonprofit corporation shall be a qualified foreign nonprofit corporation under Article C (relating to foreign nonprofit corporations), and the articles of division shall be deemed to be the application for a certificate of authority and the certificate of authority issued thereon of the corporation. (b) Property rights; allocations of assets and liabilities.-- (1) Except as otherwise provided by order, if any, obtained pursuant to section 5547(b) (relating to nondiversion of certain property): (i) All the property, real, personal and mixed, and franchises of the dividing corporation, and all debts due on whatever account to it, including subscriptions for membership and other choses in action belonging to it, shall, to the extent allocations of assets are contemplated by the plan of division, be deemed without further action to be allocated to and vested in the resulting corporations on such a manner and basis and with such effect as is specified in the plan, or per capita among the resulting corporations, as tenants in common, if no specification is made in the plan, and the title to any real estate, or interest therein, vested in any of the corporations shall not revert or be in any way impaired by reason of the division. (ii) Upon the division becoming effective, the resulting corporations shall each thenceforth be responsible as separate and distinct corporations only for such liabilities as each corporation may undertake or incur in its own name, but shall be liable for the liabilities of the dividing corporation in the manner and on the basis provided in paragraphs (4) and (5). (iii) Liens upon the property of the dividing corporation shall not be impaired by the division. (iv) To the extent allocations of liabilities are contemplated by the plan of division, the liabilities of the dividing corporation shall be deemed without further action to be allocated to and become the liabilities of the resulting corporations on such a manner and basis and with such effect as is specified in the plan; and one or more, but less than all, of the resulting corporations shall be free of the liabilities of the dividing corporation to the extent, if any, specified in the plan, if in either case: (A) no fraud on members without voting rights or violation of law shall be effected thereby; and (B) the plan does not constitute a fraudulent transfer under 12 Pa.C.S. Ch. 51 (relating to fraudulent transfers). (v) If the conditions in subparagraph (iv) for freeing one or more of the resulting corporations from the liabilities of the dividing corporation or for allocating some or all of the liabilities of the dividing corporation are not satisfied, the liabilities of the dividing corporation as to which those conditions are not satisfied shall not be affected by the division nor shall the rights of creditors thereunder be impaired by the division and any claim existing or action or proceeding pending by or against the corporation with respect to those liabilities may be prosecuted to judgment as if the division had not taken place, or the resulting corporations may be proceeded against or substituted in place of the dividing corporation as joint and several obligors on those liabilities, regardless of any provision of the plan of division apportioning the liabilities of the dividing corporation. (2) It shall not be necessary for a plan of division to list each individual asset or liability of the dividing corporation to be allocated to a new corporation so long as those assets and liabilities are described in a reasonable manner. (3) Each new corporation shall hold any assets and liabilities allocated to it as the successor to the dividing corporation, and those assets and liabilities shall not be deemed to have been assigned to the new corporation in any manner, whether directly or indirectly or by operation of law. (c) Taxes.--Any taxes, interest, penalties and public accounts of the Commonwealth claimed against the dividing corporation that are settled, assessed or determined prior to or after the division shall be the liability of any of the resulting corporations and, together with interest thereon, shall be a lien against the franchises and property, both real and personal, of all the corporations. Upon the application of the dividing corporation, the Department of Revenue, with the concurrence of the Office of Employment Security of the Department of Labor and Industry, shall release one or more, but less than all, of the resulting corporations from liability and liens for all taxes, interest, penalties and public accounts of the dividing corporation due the Commonwealth for periods prior to the effective date of the division if those departments are satisfied that the public revenues will be adequately secured. (d) Articles of surviving corporation.--The articles of incorporation of the surviving corporation, if there be one, shall be deemed to be amended to the extent, if any, that changes in its articles are stated in the plan of division. (e) Articles of new corporations.--The statements that are set forth in the plan of division with respect to each new domestic nonprofit corporation and that are required or permitted to be set forth in restated articles of incorporation of corporations incorporated under this subpart, or the articles of incorporation of each new corporation set forth therein, shall be deemed to be the articles of incorporation of each new corporation. (f) Directors and officers.--Unless otherwise provided in the plan, the directors and officers of the dividing corporation shall be the initial directors and officers of each of the resulting corporations. (g) Disposition of memberships.--Unless otherwise provided in the plan, the memberships and other securities or obligations, if any, of each new corporation resulting from the division shall be distributable to: (1) the surviving corporation if the dividing corporation survives the division; or (2) the members of the dividing corporation pro rata in any other case. (h) Conflict of laws.--It is the intent of the General Assembly that: (1) The effect of a division of a domestic business corporation shall be governed solely by the laws of this Commonwealth and any other jurisdiction under the laws of which any of the resulting corporations is incorporated. (2) The effect of a division on the assets and liabilities of the dividing corporation shall be governed solely by the laws of this Commonwealth and any other jurisdiction under the laws of which any of the resulting corporations is incorporated. (3) The validity of any allocations of assets or liabilities by a plan of division of a domestic business corporation, regardless of whether or not any of the new corporations is a foreign business corporation, shall be governed solely by the laws of this Commonwealth. (4) In addition to the express provisions of this subsection, this subchapter shall otherwise generally be granted the protection of full faith and credit under the Constitution of the United States. (Apr. 28, 1978, P.L.202, No.53, eff. 60 days; Nov. 1, 1979, P.L.255, No.86, eff. Jan. 1, 1980; Dec. 21, 1988, P.L.1444, No.177, eff. Oct. 1, 1989; July 9, 1992, P.L.507, No.97, eff. 1 year; June 22, 2001, P.L.418, No.34, eff. 60 days)