CHAPTER 386
FORMERLY
SENATE BILL NO. 364
AN ACT TO AMEND CHAPTER 17, TITLE 6 OF THE DELAWARE CODE RELATING TO THE CREATION, REGULATION, OPERATION AND DISSOLUTION OF DOMESTIC LIMITED PARTNERSHIPS AND THE REGISTRATION AND REGULATION OF FOREIGN LIMITED PARTNERSHIPS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each house thereof concurring therein):
Section 1. Amend § 17-102(3), Chapter 17, Title 6 of the Delaware Code by deleting the word "registered" in all three places where it appears before the words "limited liability partnership".
Section 2. Amend § 17-109(d), Chapter 17, Title 6 of the Delaware Code by adding the following sentence to the end of subsection (d) thereof: "Except by agreeing to arbitrate any arbitrable matter in a specified jurisdiction or in the State of Delaware, a limited partner may not waive its right to maintain a legal action or proceeding in the courts of the State of Delaware with respect to matters relating to the organization or internal affairs of a limited partnership."
Section 3. Amend § 17-203, Chapter 17, Title 6 of the Delaware Code by deleting the words ", or upon the conversion of a domestic limited partnership approved in accordance with § 17-219 of this title" from the first sentence thereof.
Section 4. Amend § 17-203, Chapter 17, Title 6 of the Delaware Code by deleting the words "or upon the conversion of a domestic limited partnership approved in accordance with § 17-219 of this title" from the second sentence thereof.
Section 5. Amend § 17-203, Chapter 17, Title 6 of the Delaware Code by deleting subsection (5) of the second sentence thereof, by adding the word "and" after the ";" at the end of subsection (4) of the second sentence thereof and by renumbering existing subsection (6) as subsection (5) of the second sentence thereof.
Section 6. Amend § 17-211(a), Chapter 17, Title 6 of the Delaware Code by deleting the word "registered" in both places where it appears before the words "limited liability".
Section 7. Amend § 17-215(a), Chapter 17, Title 6 of the Delaware Code by deleting the word "registered" in both places where it appears before the words "limited liability".
Section 8. Amend § 17-215, Chapter 17, Title 6 of the Delaware Code by deleting subsection (h) in its entirety and by substituting in lieu thereof the following new subsection (h):
“(h) When any domestication shall have become effective under this section, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the non-United States entity that has been domesticated, and all property, real, personal and mixed, and all debts due to such non-United States entity, as well as all other things and causes of action belonging to such non-United States entity, shall remain vested in the domestic limited partnership to which such non-United States entity has been domesticated and shall be the property of such domestic limited partnership, and the title to any real property vested by deed or otherwise in such non-United States entity shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such non-United States entity shall be preserved unimpaired, and all debts, liabilities and duties of the non-United States entity that has been domesticated shall remain attached to the domestic limited partnership to which such non-United States entity has been domesticated, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a domestic limited partnership. The rights, privileges, powers and interests in property of the non-United States entity, as well as the debts, liabilities and duties of the non-United States entity, shall not be deemed, as a consequence of the domestication, to have been transferred to the domestic limited partnership to which such non-United States entity has domesticated for any purpose of the laws of the State of Delaware.”
Section 9. Amend § 17-216, Chapter 17, Title 6 of the Delaware Code by adding at the end of subsection (d) thereof a new sentence reading as follows:
“Unless otherwise agreed, the transfer or domestication of a limited partnership out of the State of Delaware in accordance with this section shall not require such limited partnership to wind up its affairs under § 17-803 of this title or pay its liabilities and distribute its assets under § 17-804 of this title.”
Section 10. Amend § 17-217(a), Chapter 17, Title 6 of the Delaware Code by deleting the word "registered" in both places where it appears before the words "limited liability".
Section 11. Amend § 17-217, Chapter 17, Title 6 of the Delaware Code by deleting subsection (f) in its entirety and by substituting in lieu thereof the following new subsection (f):
“(f) When any conversion shall have become effective under this section, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the other entity that has converted, and all property, real, personal and mixed, and all debts due to such other entity, as well as all other things and causes of action belonging to such other entity, shall remain vested in the domestic limited partnership to which such other entity has converted and shall be the property of such domestic limited partnership, and the title to any real property vested by deed or otherwise in such other entity shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such other entity shall be preserved unimpaired, and all debts, liabilities and duties of the other entity that has converted shall remain attached to the domestic limited partnership to which such other entity has converted, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a domestic limited partnership. The rights, privileges, powers and interests in property of the other entity, as well as the debts, liabilities and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have been transferred to the domestic limited partnership to which such other entity has converted for any purpose of the laws of the State of Delaware.”
Section 12. Amend § 17-217, Chapter 17, Title 6 of the Delaware Code by redesignating existing subsection (i) thereof as a new subsection (j) and adding the following as a substitute subsection (i):
"(i) In connection with a conversion hereunder, rights or securities of, or interests in, the other entity which is to be converted to a domestic limited partnership may be exchanged for or converted into cash, property, rights or securities of, or interests in, such domestic limited partnership or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, another domestic limited partnership or other entity."
Section 13. Amend §17-218(b), Chapter 17, Title 6 of the Delaware Code by inserting the words "(directly or indirectly, including through a nominee or otherwise)" immediately after the word "held".
Section 14. Amend § 17-218(i), Chapter 17, Title 6 of the Delaware Code by deleting the words "; provided that a" immediately after the words "subsection (b) of this section" and by inserting in lieu thereof the words ". A", and by inserting immediately prior to the third to last sentence thereof the following new sentence: "For purposes of the immediately preceding sentence, the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program."
Section 15. Amend §17-218(j), Chapter 17, Title 6 of the Delaware Code by inserting in subsection (3) thereof the words "affirmative vote or" immediately prior to the words "written consent of".
Section 16. Amend §17-218(j), Chapter 17, Title 6 of the Delaware Code by deleting subsection (5) in its entirety, by inserting the word "or" after the ";" at the end of subsection (4), and by renumbering subsection (6) as subsection (5).
Section 17. Amend § 17-218(k), Chapter 17, Title 6 of the Delaware Code by deleting the third sentence thereof in its entirety and by substituting in lieu thereof the following new sentence: "The persons winding up the affairs of a series shall provide for the claims and obligations of the series and distribute the assets of the series as provided in § 17-804 of this title, which section shall apply to the winding up and distribution of assets of a series."
Section 18. Amend § 17-219, Chapter 17, Title 6 of the Delaware Code by deleting the word "registered" where it appears before the words "limited liability partnership" in the first sentence thereof.
Section 19. Amend § 17-219, Chapter 17, Title 6 of the Delaware Code by adding at the end thereof two new sentences reading as follows:
“Unless otherwise agreed, the conversion of a domestic limited partnership to another business form pursuant to this section shall not require such limited partnership to wind up its affairs under § 17-803 of this title or pay its liabilities and distribute its assets under § 17-804 of this title. In connection with a conversion of a domestic limited partnership to another business form pursuant to this section, rights or securities of, or interests in, the domestic limited partnership which is to be converted may be exchanged for or converted into cash, property, rights or securities of, or interests in, the business form into which the domestic limited partnership is being converted or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, another business form.”
Section 20. Amend §17-302(e), Chapter 17, Title 6 of the Delaware Code by deleting the phrase "interests in the limited partnership" in the first sentence thereof and substituting the phrase "limited partners" in lieu thereof.
Section 21. Amend §17-405(d), Chapter 17, Title 6 of the Delaware Code by adding the words "at which all general partners entitled to vote thereon were present and voted" at the end of the first sentence.
Section 22. Amend § 17-607, Chapter 17, Title 6 of the Delaware Code by adding to the end of subsection (a) thereof a new sentence reading as follows: "For purposes of this subsection (a), the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program."
Section 23. Amend § 17-703, Chapter 17, Title 6 of the Delaware Code by deleting said section together with its heading in its entirety and substituting in lieu thereof the following:
"17-703 Partner's partnership interest subject to charging order.
(a) On application by a judgment creditor of a partner or of a partner's assignee, a court having jurisdiction may charge the partnership interest of the judgment debtor to satisfy the judgment. The court may appoint a receiver of the share of the distributions due or to become due to the judgment debtor in respect of the limited partnership which receiver shall have only the rights of an assignee, and the court may make all other orders, directions, accounts and inquiries the judgment debtor might have made or which the circumstances of the case may require.
(b) A charging order constitutes a lien on the judgment debtor's partnership interest. The court may order a foreclosure of the partnership interest subject to the charging order at any time. The purchaser at the foreclosure sale has only the rights of an assignee.
(c) Unless otherwise provided in a partnership agreement, at any time before foreclosure, a partnership interest charged may be redeemed:
(1) by the judgment debtor;
(2) with property other than partnership property, by one or more of the other partners; or
(3) by the limited partnership with the consent of all of the partners whose interests are not so charged.
(d) This chapter does not deprive a partner of a right under exemption laws with respect to the partner's partnership interest.
(e) This section provides the exclusive remedy by which a judgment creditor of a partner or partner's assignee may satisfy a judgment out of the judgment debtor's partnership interest.
(f) No creditor of a partner shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited partnership."
Section 24. Amend §17-801, Chapter 17, Title 6 of the Delaware Code by deleting subsection (1) in its entirety and by substituting in lieu thereof the following new subsection (1):
"(1) At the time specified in a partnership agreement, but if no such time is set forth in the partnership agreement, then the limited partnership shall have a perpetual existence;"
Section 25. Amend § 17-801, Chapter 17, Title 6 of the Delaware Code by renumbering existing subsection (5) as subsection (6) and by adding the following new subsection (5):
"(5) Upon the happening of events specified in a partnership agreement; or".
Section 26. Amend § 17-804, Chapter 17, Title 6 of the Delaware Code by inserting the following new sentence immediately after the first sentence of subsection (c) thereof: "For purposes of the immediately preceding sentence, the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program."
Section 27. Amend § 17-1101(d), Chapter 17, Title 6 of the Delaware Code by adding the words "or to an other person that is a party to or is otherwise bound by a partnership agreement" after the words "another partner", by deleting the word "a" after the word "under" in subsection (1) thereof and by substituting in lieu thereof the word "the", by adding the words "or to any such other person" after the words "other partner" in subsection (1) thereof, by deleting the word "such" after the words "the provisions of" in subsection (1) thereof and by substituting in lieu thereof the word "the" and by deleting the word "a" after the words "by provisions in" in subsection (2) thereof and by substituting in lieu thereof the word "the".
Section 28. This Act shall become effective August 1, 2000.