Delaware General Assembly

CHAPTER 383

FORMERLY

SENATE BILL NO. 297

AS AMENDED BY

SENATE AMENDMENT NO. 1

AND

HOUSE AMENDMENT NO. 1

Section 1. Amend § 101(21), Title 5 of the Delaware Code, by inserting the words “or limited liability company” after the word “corporation”.

Section 2. Amend § 702, Title 5 of the Delaware Code, by inserting after “Every corporation” in the first sentence the words “(but not including a limited liability company)” and by inserting after the first sentence the following sentence:

“Every limited liability company created under this chapter shall be deemed to be subject to and entitled to the benefit of this Code and any other general statutes of this State making provision for the regulation of trust companies, or for the regulation and governance of limited liability companies formed under Title 6 of this Code, where the same are not inconsistent with the express provisions of this chapter.”

Section 3. Amend § 703, Title 5 of the Delaware Code, by inserting the words “and limited liability company” after the word “corporation” wherever it appears, and by deleting the words “whose charter or certificate of incorporation” and replacing them with the words “whose charter, certificate of incorporation or certificate of formation”.

Section 4. Amend Chapter 7, Title 5 of the Delaware Code, by inserting a new Section 706 to read as follows:

Ҥ 706 Limited liability companies as trust companies, conversions.

(a) Notwithstanding any other provision of law to the contrary, a trust company, including a limited purpose trust company, may be a limited liability company and any trust company that is a limited liability company shall have all the powers and privileges of, and, except to the extent expressly otherwise provided in this Code, shall be subject to all the duties, restrictions and liabilities of, a trust company that is a corporation. Except to the extent expressly otherwise provided in this Code, a trust company that is a limited liability company shall be subject to all of the same laws and regulations of this State that relate to a trust company that is a corporation.

(b) Unless another intention clearly appears or unless the context requires a different meaning, any terms used in this Code that apply to a trust company that is a corporation shall be construed to apply in the same manner, or in a manner as similar as possible given the context, to a trust company that is a limited liability company, and without limiting the generality of the foregoing, each reference in this Code to:

(1) ‘capital stock’ or ‘stock’ that refers to the stock of a trust company that is a corporation shall also refer to the limited liability company interests in a trust company that is a limited liability company and, correspondingly, each reference in this Code to ‘common stock’, ‘preferred stock’ and ‘voting stock’ that refers to common stock, preferred stock and voting stock, respectively, of a trust company that is a corporation shall also refer to common limited liability company interests, preferred limited liability company interests and voting limited liability company interests, respectively, in a trust company that is a limited liability company;

(2) ‘certificate of incorporation’ or ‘charter’ that refers to the certificate of incorporation, charter or articles of association, as applicable, of a trust company that is a corporation shall also refer to the certificate of formation and/or articles of association, as applicable, of a trust company that is a limited liability company;

(3) ‘corporate’ that relates to a trust company that is a corporation shall mean ‘limited liability company’ in relation to a trust company that is a limited liability company;

(4) ‘corporation’ that refers to a trust company that is a corporation shall also refer to a trust company that is a limited liability company; provided, that nothing in this chapter shall be construed to affect the status of a trust company that is a limited liability company as a limited liability company rather than a corporation;

(5) ‘director’ or ‘board of directors’ that refers to a director or the board of directors of a trust company that is a corporation shall also refer to a manager or the board of managers of a trust company that is a limited liability company;

(6) ‘dividends’ that refers to dividends of a trust company that is a corporation shall also refer to distributions of a trust company that is a limited liability company;

(7) ‘incorporator’ that refers to an incorporator of a trust company that is a corporation shall also refer to an initial member of a trust company that is a limited liability company;

(8) ‘incorporated’ or ‘incorporation’ that refers to a trust company that is a corporation shall refer to the formation status or formation of a trust company that is a limited liability company; provided that, notwithstanding the foregoing, a trust company that is a limited liability company is formed rather than incorporated;

(9) ‘shares’ that refers to the shares of stock of a trust company that is a corporation shall also refer to the units into which the limited liability company interests in a trust company that is a limited liability company are divided; and

(10) ‘stockholder’ or ‘shareholder’ that refers to a stockholder of a trust company that is a corporation shall also refer to a member of a trust company that is a limited liability company.

(c) The limited liability company agreement of a trust company that is a limited liability company shall be comprised solely of the articles of association of the trust company and the bylaws of the trust company and shall be subject to the approval of the State Bank Commissioner as to form and substance. The bylaws of a trust company that is a limited liability company shall not contain any provision that is inconsistent with the articles of association of the trust company. The business and affairs of a trust company that is a limited liability company shall be managed by or under the direction of a board of managers, which shall be designated as a “board of directors” and each manager shall be a natural person and shall be designated as a ‘director’. Each member of a trust company that is a limited liability company shall be designated as a ‘stockholder.’ The limited liability company interests in a trust company that is a limited liability company shall be designated as ‘stock.’ The units into which limited liability company interests in a trust company that is a limited liability company are divided shall be designated as ‘shares.’

(d) With the prior approval of the State Bank Commissioner, a trust company that is a corporation may convert to a trust company that is a limited liability company by following the applicable procedures set forth in Title 6 and Title 8 of this Code for the conversion of a corporation incorporated under Chapter 1 of Title 8 of this Code to a limited liability company formed under Chapter 18 of Title 6 of this Code, provided, that, in lieu of filing in the office of the Secretary of State a certificate of formation that complies with § 18-201 of Title 6 of this Code pursuant to § 18-214 of Title 6 of this Code, articles of organization of the limited liability company that comply with § 730 of this title shall be filed in the office of the Secretary of State and, upon the filing of a certificate of conversion to limited liability company as required by § 18-214 of Title 6 of this Code and the articles of organization as required by § 730 of this title, the Secretary of State shall issue a certificate of formation for such limited liability company pursuant to § 731 of this title. Such a conversion shall be subject to, and shall have all of the effects provided for under, § 18-214 of Title 6 of this Code and § 266 of Title 8 of this Code to the extent the same are not inconsistent with the express provisions of this chapter.

(e) With the prior approval of the State Bank Commissioner, a trust company that is a limited liability company may convert to a trust company that is a corporation by following the applicable procedures set forth in Title 6 and Title 8 of this Code for the conversion of a limited liability company formed under Chapter 18 of Title 6 of this Code to a corporation incorporated under Chapter 1 of Title 8 of this Code, provided, that, in lieu of filing in the office of the Secretary of State a certificate of incorporation pursuant to § 265 of Title 8 of this Code, articles of organization of the corporation that comply with § 730 of this title shall be filed in the office of the Secretary of State and, upon the filing of a certificate of conversion to corporation as required by § 265 of Title 8 of this Code and the articles of organization as required by § 730 of this title, the Secretary of State shall issue a certificate of incorporation for such corporation pursuant to § 731 of this title. Such a conversion shall be subject to, and shall have all of the effects provided for under, § 265 of Title 8 of this Code and § 18-216 of Title 6 of this Code to the extent the same are not inconsistent with the express provisions of this chapter.”

Section 6. Amend §731, Title 5 of the Delaware Code, by relettering subsection (b) as subsection (c), relettering subsection (c) as subsection (d), and inserting a new subsection (b) to read as follows:

STATE OF DELAWARE

Be it known that whereas (the name(s) of the incorporator(s)) [has executed articles of association for the purpose][have associated themselves with the intention] of forming a limited liability company under the name of (the name of the limited liability company), for the purpose (the purpose declared in the articles of association), with a capital stock of (the amount fixed in the articles of association), and having its place of business in (the city or town where its place of business will be located) and [has][have] complied with the statutes of this State in such case made and provided, as appears from the articles of organization of the limited liability company, duly approved by the State Bank Commissioner and on file in this office; now, therefore, I (the name of the Secretary of State), Secretary of the State of Delaware, do hereby certify that (the name(s) of the incorporator(s)), [his][her][its][their] associates and successors, are legally formed and established as, and [is][are] hereby made, an existing limited liability company under the name of (name of the limited liability company), with the powers, rights and privileges, and subject to the limitations, duties and restrictions which by law appertain thereto.

Witness my official signature hereunto subscribed, and the great Seal of the State of Delaware hereunto affixed, this......... . day of........ . in the year... . (the date of the filing of the articles of organization).”

Section 7. Amend § 731, Title 5 of the Delaware Code, by amending the first sentence of subsection (c) (as relettered pursuant to Section 6 above) to read as follows: “The Secretary of State shall sign the certificate of incorporation or certificate of formation, as applicable, and cause the Great Seal of the State to be thereto affixed and shall deliver the same to the corporation or the limited liability company, as applicable, together with a certified copy of the articles of organization and the endorsement of the State Bank Commissioner thereon, upon payment of the costs and charges therefor.”

Section 8. Amend §732, Title 5 of the Delaware Code by striking said section in its entirety and substituting a new “§732” in lieu thereof as follows:

Ҥ732. Commencement of corporate existence.

Upon the issuance of the certificate of incorporation or certificate of formation by the Secretary of State and the recording of the certificate and articles of organization as provided in § 731 of this title, the corporation or limited liability company named in such certificate and articles of organization shall from the date of the certificate be and constitute a corporation or limited liability company, for the purposes and by the name set forth in the certificate, subject to dissolution, termination or the revocation or forfeiture of the franchise under this chapter or under this Code or any other statute of this State relating to the dissolution or termination of or to the revocation or forfeiture of the charter or franchise of banks or trust companies; but the corporation or limited liability company shall not have the right to do any business until it has secured from the State Bank Commissioner of this State the certificate provided for in § 733 of this title.”

Section 9. Amend § 749(a), Title 5 of the Delaware Code, by deleting the words “charters or certificates of incorporation” and replacing them with “charters, certificates of incorporation, certificates of formation or articles of association”.

Section 10. Amend § 749(b), Title 5 of the Delaware Code, by deleting the words “charter or certificate of incorporation” in the first sentence and replacing them with “charter, certificate of incorporation or articles of association”.

Section 11. Amend§ 749(b), Title 5 of the Delaware Code, by inserting the words “or, in the case of a trust company that is a limited liability company, its certificate of formation or articles of association relating to regulation and governance of limited liability companies formed under Title 6, in each case” after the words “under Title 8,” in the first sentence.

Section 12. Amend § 749(b), Title 5 of the Delaware Code, by deleting the words “certificate of incorporation” in the third sentence and replacing them with the words “charter, certificate of incorporation, certificate of formation or articles of association adopted”.

Section 13. Amend § 749(c), Title 5 of the Delaware Code, by inserting the words “or, in the case of a trust company that is a limited liability company, as prescribed in Chapter 18 of Title 6 for the amendment of the certificate of formation or limited liability company agreement of a limited liability company” at the end of the first sentence after the words “capital stock”.