SB 113

Abstract

This Act continues the practice of amending periodically the Delaware Limited Liability Company Act (the “LLC Act”) to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments to the LLC Act: Section 1 amends § 18-204(a) of the LLC Act to clarify that certificates required by the LLC Act to be filed in the office of the Secretary of State are to be executed in the manner set forth in § 18-204(a). Section 2 amends § 18-205(a) of the LLC Act to clarify that a failure or refusal to execute any certificate required by the LLC Act is subject to § 18-205(a) of the LLC Act. Section 3 amends § 18-209(f) of the LLC Act. Currently, § 18-209(f) of the LLC Act permits a duly approved agreement of merger or consolidation or plan of merger to effect any amendment to a limited liability company agreement or effect the adoption of a new limited liability company agreement. This amendment to § 18-209(f) confirms that an amendment to a limited liability company agreement or adoption of a new limited liability company agreement effected pursuant to § 18-209(f) of the LLC Act may be effected only with respect to the limited liability company agreement of the surviving or resulting limited liability company and not with respect to the limited liability company agreement of a constituent limited liability company that is not the surviving or resulting limited liability company. Section 4 amends § 18-215 of the LLC Act. Currently, § 18-806 of the LLC Act permits revocation of dissolution of a limited liability company prior to the filing of a certificate of cancellation of the certificate of formation in the office of the Secretary of State; however, the LLC Act does not currently address revocation of termination of a protected series prior to the completion of the winding up of the protected series. This amendment adds a new §18-215(d) to permit revocation of termination of a protected series prior to the completion of the winding up of the protected series. Section 5 amends § 18-217(h) of the LLC Act. Currently, among other requirements, a certificate of division must state the name and business address of the division contact and the name and address of the division company where the plan of division is on file. Because this information may change over time, this amendment permits or requires the filing of a certificate of amendment of certificate of division to amend the name or business address of the division contact or the name and address of the division company where the plan of division is on file. The requirement to update such information in a certificate of division ends after the expiration of a period of 6 years following the effective date of the division. Section 5 also amends § 18-217(l)(1) of the LLC Act to clarify that pursuant to a division, a dividing company is divided into distinct and independent division companies as such term is used in the LLC Act. Finally, Section 5 also amends § 18-217(l)(9) of the LLC Act. Currently, under § 18-217 of the LLC Act, a dividing company does not need to survive a division. This amendment confirms that a dividing company need not be a surviving company. Section 6 amends § 18-218 of the LLC Act. Currently, § 18-806 of the LLC Act permits revocation of dissolution of a limited liability company prior to the filing of a certificate of cancellation of the certificate of formation in the office of the Secretary of State; however, the LLC Act does not currently address revocation of dissolution of a registered series prior to the filing of a certificate of cancellation of the certificate of registered series in the office of the Secretary of State. This amendment adds a new § 18-218(f) to permit revocation of dissolution of a registered series prior to the filing of a certificate of cancellation of the certificate of registered series in the office of the Secretary of State. Section 7 adds a new § 18-506 to the LLC Act to clarify that a subscription for a limited liability company interest may be irrevocable if the subscription states it is irrevocable to the extent provided by the terms of the subscription. Section 8 amends § 18-1105(a)(3) of the LLC Act to specify the fee payable to the Secretary of State to file a certificate of amendment of certificate of division. Section 9 amends § 18-1107(k) of the LLC Act to acknowledge that certificates of amendment of certificate of division should be accepted for filing by the Secretary of State if at least 1 division company is in good standing at the time of such filings. Section 10 provides that the amendments to the LLC Act take effect August 1, 2023. This Act requires a greater than majority vote for passage because § 11 of Article VIII of the Delaware Constitution requires the affirmative vote of three-fifths of the members elected to each house of the General Assembly to impose or levy a tax or license fee.