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Delaware State Senate Acts to Amend Laws Relating to Delaware Partnerships and Foreign Limited Liability Partnerships

SYNOPSIS
Section 1. This section amends § 15-101(8) of the Act to confirm that a limited liability partnership under the Act refers to a domestic partnership.

Section 2. This section amends § 15-101(12) of the Act to confirm that a partner of a partnership and a transferee of an economic interest are bound by the partnership agreement.

Section 3. This section amends § 15-306(d) of the Act to confirm the application of this section only to the practice of law in Delaware.

Section 4. This section amends the Act to add a new § 15-409 of the Act to clarify the circumstances under which partners and liquidating trustees of a partnership may rely on the records of, or information relating to, the partnership.

Sections 5, 6, 7, 8, 9, 10 and 11. These sections amend § 15-504 of the Act to clarify the nature of a charging order and provide that a charging order is the sole method by which a judgment creditor may satisfy a judgment out of a partner’s or partner’s transferee’s interest in a partnership. Attachment, garnishment, foreclosure or like remedies are not available to the judgment creditor and a judgment creditor does not have any right to become or to exercise any rights or powers of a partner (other than the right to receive the distribution or distributions to which the partner would otherwise have been entitled, to the extent charged).

Sections 12, 13, 14, 15, 16, 17, 18, 19, 26, 27, 28 and 29. These sections amend §§ 15-901 and 15-1001 of the Act to clarify the procedures for forming a limited liability partnership, causing an existing partnership to become a limited liability partnership and converting an other entity to a domestic partnership or a limited liability partnership.

Sections 20 and 23. These sections amend § 15-901(g) and § 15-904(i) of the Act to confirm that these sections of the Act address the effect of conversion and domestication, respectively, as a matter of Delaware law.

Section 21. This section amends § 15-901(j) of the Act to confirm that a person is admitted as a partner of a partnership in connection with a conversion as provided in the partnership agreement.

Section 22. This section amends § 15-902(k) of the Act to clarify the way in which a person is admitted as a partner of a partnership pursuant to a merger or conversion.

Section 24. This section amends § 15-904(k) of the Act to confirm that a person is admitted as a partner of a partnership in connection with a domestication as provided in the partnership agreement.

Section 25. This section amends § 15-905(b) of the Act to conform the approval requirements for the transfer of a domestic partnership to the requirements for the conversion of a domestic partnership.

Section 30. This section amends § 15-1003(c) of the Act to clarify the provisions relating to revocation of a statement of qualification or statement of foreign qualification.

Section 31. This section amends § 15-1003(e) of the Act to extend the period during which a partnership’s statement of qualification or statement of foreign qualification may be reinstated.

Sections 32, 33, 34, 35, 36 and 37. These sections amend § 15-1104(a) of the Act to identify certain additional activities of a foreign partnership in the State of Delaware that will not constitute doing business for purposes of Subchapter XI of the Act.

Sections 38, 39, 40 and 41. These sections amend §§ 15-1209 and 15-1210 of the Act to confirm that the cancellation of a statement of partnership existence cancels the statement of partnership existence and not the partnership and the revival of a statement of partnership existence revives the statement of partnership existence and not the partnership

Section 42. This section provides that the proposed amendments of the Act shall become effective on August 1, 2005.

Author: Senator Vaughn

Amendments to the Delaware Revised Uniform Limited Partnership Act

This Act continues the practice of amending periodically the Delaware Revised Uniform Limited Partnership 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 amends § 17-101(12) of the Act to confirm that a partner of a limited partnership and an assignee of an interest in a limited partnership are bound by the partnership agreement.

Section 2 amends § 17-106(a) of the Act to expand the permitted purposes of a limited partnership.

Section 3 amends § 17-211(g) of the Act to increase the flexibility permitted in the Act regarding amendments to partnership agreements and the adoption of new partnership agreements in connection with mergers and consolidations.

Sections 4 and 6 amend § 17-215(i) and § 17-217(g) of the Act to confirm that these sections of the Act address the effect of domestication and conversion, respectively, as a matter of Delaware law.

Section 5 amends § 17-216(b) to conform the approval requirements for the transfer of a domestic limited partnership to the requirements for the conversion of a domestic limited partnership.

Section 7 amends § 17-301(b)(3) of the Act to clarify the way in which a person is admitted as a partner of a limited partnership pursuant to a merger or consolidation.
Section 8 amends § 17-301(c) of the Act to confirm that a person is admitted as a partner of a limited partnership in connection with a domestication or a conversion as provided in the partnership agreement.

Section 9 amends the Act to add a new § 17-407 to clarify the circumstances under which limited partners, general partners and liquidating trustees of a limited partnership may rely on the records of, or information relating to, the limited partnership.

Sections 10, 11, 12, 13, 14, 15 and 16 amend § 17-703 to clarify the nature of a charging order and provide that a charging order is the sole method by which a judgment creditor may satisfy a judgment out of the partnership interest of a partner or partner’s assignee. Attachment, garnishment, foreclosure or like remedies are not available to the judgment creditor and a judgment creditor does not have any right to become or to exercise any rights or powers of a partner (other than the right to receive the distribution or distributions to which the partner would otherwise have been entitled, to the extent charged).

Section 17 amends the Act to add a new § 17-806 to provide, under certain circumstances, for the revocation of the dissolution of a limited partnership.

Sections 18 and 19 amend the Act to add a new § 17-912 to identify the activities of a foreign limited partnership in the State of Delaware that will not constitute doing business for purposes of Subchapter IX of the Act and move former subsection (b) of § 17-902 of the Act to new § 17-912.

Section 20 provides that the proposed amendments of the Act shall become effective on August 1, 2005.

This Act was submitted for sponsorship and consideration by the General Assembly by the Delaware Bar Association.

Delaware Corporate Laws continue to evolve

Section 1. The amendments to Section 141(d) provide that the certificate of incorporation may confer greater or lesser voting powers on one or more directors, whether or not such director or directors is or are separately elected by the holders of any class or series of stock.

Section 2. The amendment to Section 158 eliminates the requirement that a corporation with uncertificated shares issue a certificate for such shares upon the request of the holder of such shares. Notwithstanding this amendment, a corporation with uncertificated shares still is permitted to issue a certificate upon the request of a holder, but the corporation is not obligated to do so.

Section 3. The amendment to Section 251(g)(7)(ii) now permits the organizational documents of the surviving entity to be amended to eliminate a classified board provision or any other provision authorized by subsection (d) of Section 141 of Title 8.

Sections 4 through 18. The amendments to Section 265 provide for the conversion of an other entity, including a non-Delaware other entity, to a Delaware corporation. The addition of subsection (f) makes it clear that upon conversion to a corporation, the corporation is a continuation of the existence of the converting other entity. The addition of subsection (j) confirms the flexibility permitted in the Code regarding a conversion to a domestic corporation.

Sections 19 through 27. The amendments to Section 266 provide for the conversion of a Delaware corporation to an other entity, including a non-Delaware other entity. The amendments to subsections (e) and (f) and the addition of subsection (h) clarify the effects of a conversion of a Delaware corporation to an other entity. New subsection (g) confirms the flexibility permitted in this section regarding a conversion of a domestic corporation. New subsection (i) provides that if a converting Delaware corporation has no outstanding capital stock, no vote of stockholders is required to authorize the conversion.

Section 28. Section 271 has been amended to add new subsection (c). The purpose of subsection (c) is to provide that (i) no stockholder vote is required for a sale, lease or exchange of assets to or with a direct or indirect wholly-owned and controlled subsidiary, and (ii) the assets of such a subsidiary are to be treated as assets of its ultimate parent for purposes of applying, at the parent level, the requirements set forth in subsection (a). The amendment is not intended to address the application of subsection (a) to a sale, lease or exchange of assets by, or to or with, a subsidiary that is not wholly-owned and controlled, directly or indirectly, by the ultimate parent.

Sections 29 through 45. The amendments to Section 388 provide that any non-United States entity may domesticate in Delaware. New subsections (i) and (j) clarify the effects of a domestication of a non-United States entity as a Delaware corporation. New subsection (k) confirms the flexibility permitted in the Code regarding a domestication as a Delaware corporation.

Sections 46 through 66. The amendments to Section 389 reflect the newly defined terms “non-United States entity” and “foreign jurisdiction” in Section 388, Title 8, Delaware Code.

Sections 67 through 79. The amendments to Section 390 create two types of filings under Section 390: a certificate of transfer when the Delaware corporation is not to continue its existence in Delaware and a certificate of transfer and domestic continuance when the Delaware corporation elects to continue its existence as a Delaware corporation. The amendments confirm that so long as a corporation continues to exist as a corporation of the State of Delaware the resulting entity is the same entity as existed prior to transfer. The amendments to subsections (d) and (e) and new subsection (f) clarify the effects of a transfer of a Delaware corporation. New subsection (g) confirms the flexibility permitted in the Code regarding a transfer of a Delaware corporation. New subsection (h) provides that if a transferring Delaware corporation has no outstanding capital stock, no vote of stockholders is required to authorize the transfer.

Section 80. This section provides for an effective date of August 1, 2005.