February 20, 2023
Pennsylvania Act 122 became effective as of January 2, 2023, resulting in several significant changes to Title 15 of the Pennsylvania Consolidated Statutes governing Pennsylvania entities. Of these changes, perhaps the most substantial change is that entities organized or authorized to do business in Pennsylvania are now required to file and deliver an annual report to the PA Department of State.
For the past several years, Pennsylvania is one of the only states still relying on decennial reporting requirements for domestic and foreign entities. Currently, Pennsylvania entities are only required to file with the Pennsylvania Corporations Bureau once every ten years to confirm their corporate existence. However, every other state has since abandoned this ten-year rule as it leaves a considerable amount of uncertainty as to whether certain businesses are still active and operating. Thanks to the enactment of Act 122, Pennsylvania is finally joining every other state and will now require annual reporting requirements for all entities to facilitate a more accurate and effective system.
Act 122 amends Title 15 of the Pennsylvania Consolidated Statutes to implement annual reporting requirements for entities organized or authorized to do business in Pennsylvania. Section 146 of Title 15 stipulates that on an annual basis, domestic business corporations, domestic nonprofit corporations, domestic limited liability partnerships, domestic electing partnerships that are not limited partnerships, domestic limited partnerships (including limited liability partnerships), domestic limited liability companies, domestic professional associations, domestic business trusts, and all registered foreign associations must file and deliver an annual report to the PA Department of State containing the following information:
· The entity’s name and jurisdiction of formation;
· The entity’s registered office address;
· The name of at least one governor (director, member, manager, partner, etc);
· The names and titles of the persons who are the entity’s principal officers;
· The address of the entity’s principal office; and
· The entity’s EIN or similar identifier issued by the PA Department of State
Annual reports can be filed online at Business Filing Services and will cost $7.00 per filing. Nonprofit corporations, however, are exempt from the filing fee.
Although the Act was signed into effect earlier this year, the reporting requirement will not go into effect until January 2, 2024, in an attempt to give Pennsylvania businesses some time to adjust to the new requirements. Beginning in 2024, the filing deadlines are staggered throughout the year based on the type of entity. For example, the filing deadline for all nonprofit and for-profit corporations (domestic and foreign) is June 30th of each year. The filing deadline for all limited liability companies (domestic and foreign) is September 30th of each year and any other domestic filing entities or foreign filing entities are required to file by December 31st of each year. The PA Department of State will provide notice to each entity or association reminding them of their deadline to file at least two months before the deadline.
Failure to comply with the new reporting requirements can result in significant penalties for Pennsylvania entities. Fortunately, the Act implements a phase-in period where penalties for failing to comply with the annual filing reports will not be triggered until January 4, 2027. Following this transition period, failure to file may result in administrative dissolution, administrative cancellation, or administrative termination with the loss of the right to the registered name.
Should you or your businesses have any questions concerning the new reporting requirements or any general corporate governance or compliance matters, please contact one of our attorneys.