Navigating Pennsylvania's business law reforms: Key changes affecting nonprofits

By JohnCarlos R. Tavares, CPA

Pennsylvania recently implemented sweeping changes to its business corporation law under Act 122 of 2022, impacting many entities, including nonprofit corporations.

The revisions to Title 15 and Title 54 of Pennsylvania's Consolidated Statutes introduce several noteworthy alterations while retaining specific existing provisions.

Let's explore the key changes related to reporting and their implications for nonprofit organizations operating in the state.

5 Main Changes Impacting Nonprofits

1. Annual Reports Now Required: Previously, annual reports (old Form DSCB:15-5110) were only required if there had been a change in principal officers in the prior year. However, under the new law, annual reports must be filed every year. Nonprofit corporations are exempt from filing fees.
2. New Due Dates: The due date for annual reports now depends on the entity type. Nonprofit corporations are required to file their annual reports before July 1 each year. These changes will take effect on January 3, 2024.
3. Address Change: Nonprofits can use the annual report (free to nonprofits) to change the registered office address of a nonprofit corporation. Previously, this required a separate form and a $5 fee. Address changes listed on the annual report get updated in the articles of incorporation as part of the process.
4. Consequences for Non-Filing: Failure to file the annual report within six months of the due date can result in administrative dissolution of the corporation. A three-year phase-in period is in place, with the new administrative dissolution rule initially applying to annual reports due by the July 1, 2027 deadline. Following the six-month grace period, organizations have an additional 60 days to remedy the non-filing after receiving notice from the Department of State. The state anticipates March 2028 as the earliest instances of administrative dissolution for nonprofit corporations.
5. Elimination of Decennial Filing Requirement: The requirement to file decennial reports (old Form DSCB: 54-503), applicable only in years ending in the number '1' if no filings were made within a 10-year period, has been eliminated. Failure to file the decennial report previously resulted in forfeiture of the exclusive right to the organization's name.

New annual reporting form (Form 15-5110)

The new annual report form includes several essential pieces of information, including:

• Organization's name
• Jurisdiction of formation
• Address of registered office
• Name of at least one board member
• Names and titles of principal officers
• Address of principal office
• Pennsylvania Department of State entity number

Dissolving and reinstating a nonprofit organization

In cases of administrative dissolution, a nonprofit corporation can no longer engage in activities except for winding up and liquidating its assets or applying for reinstatement.

Interestingly, tax clearances are not required for administrative dissolution, potentially providing a simpler dissolution route for some organizations. However, directors retain ongoing obligations to the organization even after administrative dissolution.

Reinstatement, on the other hand, is a straightforward process that allows retroactive reinstatement back to the date of administrative dissolution, with no specific deadline. If another entity has already claimed the dissolved nonprofit's name during the period of dissolution, the reinstating nonprofit corporation must select a new name.

Ensuring compliance

Pennsylvania's recent revisions to its business corporation law have significant implications for nonprofits within the state.

To ensure compliance with the new regulations, organizations should take the following steps:

• Inventory all entities, including affiliates.
• Check entity listings on the Pennsylvania Department of State website.
• Update registered office addresses/agents with the Department of State.
• Register to use the online filing system provided by the Department of State.
• Establish a designated email account and set up automatic forwarding for communication with the Department of State.
• Set reminders for the annual filing requirements.

The recent changes are extensive and can be confusing. The Boyer & Ritter team keeps track of the latest developments and is ready to help your nonprofit follow the new regulations to avoid compliance issues. 

JohnCarlos Tavares is a supervisor and an experienced member of the firm’s Nonprofit Practice Group. Reach JohnCarlos at 717-761-7210 or jctavares@cpabr.com.