Greenleaf Business Law Bills Pass Senate Judiciary Committee

HARRISBURG – Two bills sponsored by Sen. Stewart J. Greenleaf to amend the Associations Code were approved by the Senate Judiciary Committee.

Senate Bill 392 would revise the laws relating to limited liability partnerships (LLPs) and limited liability companies (LLCs) by providing general partners in a restricted LLP the same protection from liability as shareholders in a professional corporation or members of LLCs already have.  This would give owners of large and small professional practices the same liability protection and bring Pennsylvania's LLP law into conformity with laws of 36 other states that provide LLPs with full liability protection.  Additionally, the legislation adds requirements that LLPs and LLCs provide public notice through legal advertising when they are formed and when they are dissolved and makes a number of minor changes to bring Pennsylvania's law into line with revisions in federal tax law.

Under the bill, the annual registration fee paid by restricted LLPs would be raised to equal the fee currently paid by LLCs in recognition of the fact that both entities would be entitled to the same type of liability shield.  A "restricted professional partnership" is a limited liability partnership that provides one or more of the following services: chiropractic, dentistry, law, medicine and surgery, optometry, osteopathic medicine and surgery, podiatric medicine, public accounting, psychology or veterinary medicine. 

The LLP form of business is used primarily by large professional firms that have found it too complex to convert their practices to professional corporations or professional LLCs.  The LLC form of business is used mainly by smaller professional practices.  Under current law, a general partner in an LLP is not liable for torts committed in the course of the partnership's business if the general partner was not involved in the commission of the tort; however, a general partner in an LLP is liable for all other debts and obligations of the LLP and has less protection from liability than does a shareholder in a corporation or a member in an LLC.

Senate Bill 393 amends the Associations Code to complete the codification of the Nonprofit Corporation Law.  Under the bill, the law would be revised to update it and make it consistent with the Business Corporation Law.  In addition, the legislation adds the Uniform Unincorporated Nonprofit Association Act to govern the organization and operation of nonprofit entities that choose not to incorporate.  The measure also contains provisions recommended by the Pennsylvania Department of State to make it easier for people to do business with the Corporation Bureau.