The state of Delaware recently acted to amend its LLC Act, LP Act and GP Act (the LP Act together with the GP Act, the “Partnership Acts”). In general, the amendments are similar across these acts and are primarily intended to add clarity. The most significant updates clarify (i) what types of foreign entities may serve as a Delaware registered agent, (ii) the use of electronic signatures, (iii) the availability of appraisal rights, (iv) the need to update the name of a registered series and the naming requirements, (v) the admission of member, and (vi) the use of electronic record keeping.
The amendments to the LLC Act and the Partnership Acts clarify the type of foreign entities that may serve as a Delaware registered agent for service of process. Under the revised language, the foreign entities that may serve as a registered agent are a foreign corporation, a foreign limited liability partnership, a foreign limited partnership (including a foreign limited liability limited partnership), a foreign limited liability company, or a foreign statutory trust. Under these revisions, a foreign general partnership may not serve as a Delaware registered agent.
Each of the LLC Act and the Partnership Acts include a section that permits electronic signatures, making electronic signatures valid where a person had the intent to authenticate or adopt a document. The amendments clarify that electronic signatures are also valid to execute a document, in addition to authentication and adoption, and that a person may execute a document using any type of signature identified in the section.
No Statutory Appraisal Rights
The amendments to the LLC Act and the Partnership Acts clarify that no appraisal rights are available with respect to a limited liability company interest or partnership interest unless provided for in the enumerated documents.
Registered Series Naming Requirements
A few years ago the LLC Act and LP Act were amended to provide for a “registered series”. In order to form a registered series, a certificate of registered series must be filed with its name. Such name must begin with the name of the related limited liability company or limited partnership and be distinguishable from the names in the records of the Secretary of State of any corporation, partnership, limited partnership, statutory trust, limited liability company or registered series reserved, registered, formed or organized under the laws of the State of Delaware. The amendments clarify that if there is a name change to the related limited liability company or limited partnership, the name of the related registered series must also be updated. In addition, the amendments add that the name of the registered series must also be distinguishable from any registered series of a limited liability company and registered series of a limited partnership in the Secretary of State’s records.
Admission of a Member or Limited Partner
The amendments update sections of the LLC Act and LP Act to eliminate any statutory requirement that a member’s or limited partner’s admission after formation is subject to the admission being reflected in the records of the limited liability company or limited partnership, as applicable. The amendments also clarify that admission of an assignee of a limited liability company interest or a limited partnership interest is controlled by Sections 18-704(a) of the LLC Act and 18-704(a) of the LP Act, respectively.
Books and Records in Electronic Form
The LLC Act and Partnership Acts provide that the records may be maintained in any form other than written form as long as such form is capable of conversion into written form within a reasonable time. The amendments update the LLC Act and the Partnership Acts to clarify that records may be kept in any form other than paper form (including electronic form) if such form is capable of conversion into paper form within a reasonable amount of time.
If you have questions about any of the above amendments, please contact Ross Antonacci (firstname.lastname@example.org; 302.888.6914), Nicholas Caggiano (email@example.com; 302.888.6845), Shannon Frazier (firstname.lastname@example.org; 302.888.6916), Lewis Ledyard (email@example.com; 302.888.6869), Michael Ledyard (firstname.lastname@example.org; 302.888.6917), Jonathan Strauss (email@example.com; 302.888.6848), or Rebecca Kilmon (firstname.lastname@example.org; 302.888.6486).