SB 183

Abstract

This bill continues the practice of amending periodically the Delaware Limited Liability Company Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act. Section 1. This section amends Section 18-101 of the Act to include definitions for "series," "protected series" established in accordance with Section 18-215(b) of the Act, and "registered series" formed in accordance with Section 18-218 of the Act. Section 2. This section amends Section 18-102(3) of the Act to provide that the name of a limited liability company must be such as to distinguish it from the name of any registered series. Section 3. This section amends Section 18-102(4) of the Act to confirm that the name of a limited liability company may contain the words "public benefit." Section 4. This section amends Section 18-103 of the Act to provide that the exclusive right to the use of a name for a registered series may be reserved by a person intending to form a registered series of a limited liability company in accordance with Section 18-218 of the Act and to adopt that name pursuant to Section 18-218(e) of the Act. Section 5. This section amends Section 18-104 of the Act to include references to protected series of a limited liability company established in accordance with Section 18-215 of the Act and registered series of a limited liability company formed in accordance with Section 18-218 of the Act, as appropriate. Section 6. This section amends Section 18-104(g) of the Act to provide specific statutory authority for domestic limited liability companies to use networks of electronic databases (examples of which are described currently as "distributed ledgers" or a "blockchain") for the creation and maintenance of limited lability company records and for certain "electronic transmissions." Sections 7, 10, 12, 14, 15, and 30 through 33. These sections amend Sections 18-105, 18-203, 18-206, 18-207, 18-208, 18-1107, 18-1108 and 18-1109 of the Act and add a new Section 18-1110 of the Act to include references to protected series of a limited liability company established in accordance with Section 18-215 of the Act and registered series of a limited liability company formed in accordance with Section 18-218 of the Act, as appropriate. Section 8. This section adds new Section 18-112 of the Act to provide that, upon motion by the Attorney General, the Court of Chancery may cancel the certificate of formation of any domestic limited liability company for abuse or misuse of its limited liability company powers, privileges or existence. Section 9. This section amends Section 18-203(a) of the Act to include a reference to new Section 18-112 of the Act. Section 11. This section amends Section 18-206 of the Act to include references to new Section 18-112 of the Act and a certificate of division. Section 13. This section amends Section 18-207 of the Act to include a reference to new Section 18-1202 of the Act. Section 16. This section amends Section 18-209(a) of the Act relating to merger and consolidation to include a cross-reference to new Section 18-217 of the Act which refers to "other business entity," as defined in Section 18-209(a) of the Act. Section 17. This section amends Section 18-209(a) of the Act relating to merger and consolidation to include a cross-reference to new Sections 18-219, 18-220 and 18-221 of the Act which refer to "other business entity," as defined in Section 18-209(a) of the Act. Section 18. This section amends Section 18-211(b) of the Act relating to a corrected certificate to clarify that the fee payable to the Secretary of State for filing a certificate of correction pursuant to Section 18-1105 of the Act shall be paid with the filing of a corrected certificate pursuant to Section 18-211(b) of the Act. Section 19. This section amends Section 18-215 of the Act relating to series of limited liability companies to clarify certain provisions, including those relating to a protected series. Section 20. This section adds new Section 18-217 of the Act to enable a limited liability company to divide into one or more newly formed limited liability companies with the dividing company continuing its existence or terminating its existence, as the case may be. Section 21. This section adds new Section 18-218 of the Act to authorize the formation of a registered series by complying with Section 18-218 of the Act. Registered series are associations and formed by the filing of a certificate of registered series and, therefore, have the attributes required to be "registered organizations" under the Uniform Commercial Code. Registered series formed under Section 18-218 of the Act also have the same rights and powers and the same inter-series limitation on liability as protected series established under Section 18-215(b) of the Act. Section 22. This section adds new Section 18-219 of the Act to enable a protected series of a limited liability company to convert to a registered series of such limited liability company. Section 23. This section adds new Section 18-220 of the Act to enable a registered series of a limited liability company to convert to a protected series of such limited liability company. Section 24. This section adds new Section 18-221 of the Act to provide that one or more registered series of a limited liability company may merge or consolidate with or into one or more other registered series of such limited liability company. Sections 25 through 27. These sections amend Sections 18-302(d), 18-305(d) and 18-404(d) of the Act to provide specific statutory authority for domestic limited liability companies to use networks of electronic databases (examples of which are described currently as "distributed ledgers" or a "blockchain") for the creation and maintenance of limited lability company records and for certain "electronic transmissions." Section 28. This section amends Section 18-1105(a) of the Act to provide the fee payable to the Secretary of State for the filing of a certificate of division under Section 18-217 of the Act. Section 29. This section amends Section 18-1105(a) of the Act to provide for the fee payable to the Secretary of State for the filing of certain certificates pursuant to Sections 18-218, 18-219, 18-220 and 18-221 of the Act and to provide for the fee payable to the Secretary of State for the issuance of a good standing certificate for a registered series of a limited liability company and a certificate which lists all of the registered series formed by a limited liability company. Section 34. This section adds a new subchapter XII providing for the formation of statutory public benefit limited liability companies which, like public benefit corporations, are intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner. Section 35. This section provides that the proposed amendments in Sections 3, 6, 8, 9, 11, 13, 16, 18, 20, 25 through 28 and 34 of this Act shall become effective August 1, 2018. The proposed amendments in Sections 1, 2, 4, 5, 7, 10, 12, 14, 15, 17, 19, 21 through 24 and 29 through 33 of this Act shall become effective August 1, 2019.