Delaware recently approved amendments to three Delaware statutes, collectively known as the Alternative Entity Statutes:
- the Delaware Limited Liability Company Act (LLCA)
- the Delaware Revised Uniform Partnership Act (DRUPA)
- the Delaware Revised Uniform Limited Partnership Act (DRULPA)
In general, the amendments are similar across these acts and primarily add or clarify information involving:
- Certain definitions of each act
- Service of process on managers of an LLC
- Signatures on certificates
- The process concerning domestication and conversion
- Execution, filing and recording of statements and certificates
The amendments have been approved by the legislature, signed by the Governor, and will become law on August 1, 2022.
The first amendment to the LLCA seeks to update the defined term “limited liability company agreement” in order to confirm that any registered or protected series of an LLC is bound by the LLC agreement of such limited liability company regardless of whether the series executed the LLC agreement. Although the revised language specifically refers to a registered or protected series, it is not intended to imply that other references to LLCs in the LLCA do not include protected or registered series thereof. The amendment to the definition of “limited liability company agreement” also inserts a new clause to confirm that an LLC agreement may include or incorporate multiple documents that may govern the business or affairs of the LLC or any of its series.
The first DRUPA amendment seeks to update the definition of “partnership agreement” to confirm that a partnership agreement may include or incorporate multiple documents that may govern the business or affairs of the partnership.
The first amendment of the DRULPA seeks to alter the definition of “partnership agreement” to confirm that any registered series or protected series of a limited partnership is bound by the partnership agreement of such limited partnership regardless of whether the series executed the partnership agreement. This amendment is not intended to imply that other references to “limited partnership” in DRULPA do not include protected series or registered series thereof (to the extent required by the context). The definition is also amended to insert a new clause to confirm that a partnership agreement may include or incorporate multiple documents that may govern the business or affairs of the limited partnership or any of its series.
Service of Process on Managers of an LLC
The LLCA amendments also update information pertaining to service of process on managers and liquidating trustees. The amendments provide that when service of process is being effected on a manager or liquidating trustee, the Prothonotary or Register of Chancery of the court where the civil action is pending must address the required copies and statements to the manager or liquidating trustee at the principal place of business of the LLC, if the address is known, and to the manager’s or liquidating trustee’s last known address rather than to the registered office of the LLC.
Signature on a Certificate of Limited Liability Company or Partnership Interest
The amendments clarify that a signature on a certificate of limited liability company interest or partnership interest may be executed by either a manual, facsimile, or electronic signature.
The LLCA, DRUPA and DRULPA amendments propose language clarifying that the execution of a certificate by an authorized person constitutes an oath or affirmation that, to the best of such person’s knowledge and belief, the facts stated in the certificate are true at the time the certificate becomes effective, not at the time such certificate or statement is executed. This change addresses the scenario when a certificate or statement, executed by an authorized person, is filed with the Secretary of State but lists a future effective date. In such a scenario, the previous statutory wording addressed the truthfulness of the statements in the certificate at the time of execution but left open the question of its truthfulness at the time of its effectiveness.
Domestication and Conversion
The amendments also update language concerning the process for approving a certificate of domestication and certificate of conversion. The language provides that prior to the appropriate certificate becoming effective, the certificate must be approved in the manner provided for by either the document governing such entity’s internal affairs and the conduct of its business or by applicable law governing such entity prior to domestication or conversion, as appropriate, and approval of the LLC or partnership agreement must be given by the same authorization required to approve either the domestication or conversion. Such approvals are required to occur prior to the time a certificate of domestication or conversion becomes effective.
Both the DRULPA and LLCA amendments seek to clarify the information concerning the revival of a domestic LLC or limited partnership. The amendment states that any registered series that is not canceled and any protected series that is not terminated and wound up are revived with the same force as if the certificate of formation of the LLC or certificate of limited partnership had not been canceled.
The amendments are intended to keep the statutes current to maintain national preeminence.
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), Lew Ledyard (email@example.com; 302.888.6869), Jonathan Strauss (firstname.lastname@example.org; 302.888.6848), or Rebecca Kilmon (email@example.com; 302.888.6486).
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