2010 Pennsylvania Code
Title 15 - CORPORATIONS AND UNINCORPORATED ASSOCIATIONS
Chapter 19 - Fundamental Changes
1957 - Effect of division.

     § 1957.  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 business 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 business corporation that
     is stated in the articles of division to be a qualified foreign
     business corporation shall be a qualified foreign business
     corporation under Article D (relating to foreign business
     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)  (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
            shares and other choses in action belonging to it, shall
            (except as otherwise provided in paragraph (2)), 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 subparagraphs (iv) and (v).
                (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 minority shareholders or
                shareholders 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.
                (vi)  The conditions in subparagraph (iv) for freeing
            one or more of the resulting corporations from the
            liabilities of the dividing corporation and for
            allocating some or all of the liabilities of the dividing
            corporation shall be conclusively deemed to have been
            satisfied if the plan of division has been approved by
            the Department of Banking, the Insurance Department or
            the Pennsylvania Public Utility Commission in a final
            order issued after August 21, 2001, that has become not
            subject to further appeal.
            (2)  (i)  The allocation of any fee or freehold interest
            or leasehold having a remaining term of 30 years or more
            in any tract or parcel of real property situate in this
            Commonwealth owned by a dividing corporation (including
            property owned by a foreign business corporation dividing
            solely under the law of another jurisdiction) to a new
            corporation resulting from the division shall not be
            effective until one of the following documents is filed
            in the office for the recording of deeds of the county,
            or each of them, in which the tract or parcel is
            situated:
                    (A)  A deed, lease or other instrument of
                confirmation describing the tract or parcel.
                    (B)  A duly executed duplicate original copy of
                the articles of division.
                    (C)  A copy of the articles of division certified
                by the Department of State.
                    (D)  A declaration of acquisition setting forth
                the value of real estate holdings in such county of
                the corporation as an acquired company.
                (ii)  The provisions of 75 Pa.C.S. § 1114 (relating
            to transfer of vehicle by operation of law) shall not be
            applicable to an allocation of ownership of any motor
            vehicle, trailer or semitrailer to a new corporation
            under this section or under a similar law of any other
            jurisdiction but any such allocation shall be effective
            only upon compliance with the requirements of 75 Pa.C.S.
            § 1116 (relating to issuance of new certificate following
            transfer).
            (3)  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.
            (4)  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 business 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 shares.--Unless otherwise provided in the
     plan, the shares 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 holders of the common or other residuary shares
        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.
     (Dec. 19, 1990, P.L.834, No.198, eff. imd.; July 9, 1992,
     P.L.507, No.97, eff. 1 year; Dec. 18, 1992, P.L.1333, No.169,
     eff. 60 days; June 22, 2001, P.L.418, No.34, eff. 60 days)

        2001 Amendment.  Act 34 amended subsecs. (b) and (c) and
     added subsec. (h).
        1990 Amendment.  Act 198 added subsec. (g).