CHAPTER 335
FORMERLY
SENATE BILL NO. 308
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 38, TITLE 12 OF THE DELAWARE CODE RELATING TO BUSINESS TRUSTS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each house thereof concurring therein):
Section 1. Amend Section 3801, Title 12 of the Delaware Code by inserting a new subsection (g) thereto to read as follows:
"(g) 'Foreign business trust' means a business trust formed under the laws of any state or under the laws of any foreign country or other foreign jurisdiction and denominated as such under the laws of such state or foreign country or other foreign jurisdiction."
Section 2. Amend Subsection 3804(a), Title 12 of the Delaware Code by inserting the following words at the end of the last sentence of such subsection:
"or any other series thereof, and, unless otherwise provided in the governing instrument, none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the business trust generally or any other series thereof shall be enforceable against the assets of such series"
Section 3. Amend Subsection 3804(e), Title 12 of the Delaware Code by striking said subsection in its entirety and substituting in lieu thereof a new subsection to read as follows:
"(e) In the governing instrument of the business trust or other writing, a trustee or beneficial owner may consent to be subject to the non-exclusive jurisdiction of the courts of, or arbitration in, a specified jurisdiction, or the exclusive jurisdiction of the courts of the State, or the exclusivity of arbitration in a specified jurisdiction or the State, and to be served with legal process in the manner prescribed in such governing instrument of the business trust or other writing."
Section 5. Amend Subsection 3806(a), Title 12 of the Delaware Code by inserting a new sentence at the end of said subsection to read as follows: "To the extent provided in the governing instrument of a business trust, neither the power to give direction to a trustee or other persons nor the exercise thereof by any person (including a beneficial owner) shall cause such person to have duties (including fiduciary duties) or liabilities relating thereto to the business trust or to a beneficial owner thereof"
Section 6. Amend Subsection 3807(b), Title 12 of the Delaware Code by inserting the words "if notice that the business trust is or will become an investment company as referenced in this sentence is set forth in the certificate of trust of the business trust and " immediately before the words "if and for so long as such business trust" in such subsection.
Section 7. Amend Section 3808, Title 12 of the Delaware Code by inserting new subsections (f) and (g) thereto to read as follows:
(f) Except to the extent otherwise provided in the governing instrument of the business trust, a series established in accordance with § 3804(a) may be dissolved and its affairs wound up without causing the dissolution of the business trust or any other series thereof. Unless otherwise provided in the governing instrument of the business trust, the dissolution, winding up, liquidation or termination of the business trust or any series thereof shall not affect the limitation of liability with respect to a series established in accordance with § 3804(a). A series established in accordance with § 3804(a) is dissolved and its affairs shall be wound up at the time or upon the happening of events specified in the governing instrument of the business trust. Except to the extent otherwise provided in the governing instrument of a business trust, the death, incapacity, dissolution, termination or bankruptcy of a beneficial owner of such series shall not result in the termination or dissolution of such series and such series may not be terminated or revoked by a beneficial owner of such series or other person except in accordance with the terms of the governing instrument of the business trust.
(g) Upon dissolution of a series of a business trust, the persons who under the governing instrument of the business trust are responsible for winding up such series' affairs may, in the name of the business trust and for and on behalf of the business trust and such series, take all actions with respect to the series as are permitted under § 3808(d) and shall provide for the claims and obligations of the series and distribute the assets of the series as provided under § 3808(e). Any person, including any trustee, who under the governing instrument is responsible for winding up such series' affairs who has complied with § 3808(e) shall not be personally liable to the claimants of the dissolved series by reason of such person's actions in winding up the series."
Section 8. Amend Subsection 3811(a)(1), Title 12 of the Delaware Code by inserting the words "or a certificate of conversion" immediately after the words "certificate of trust" in such subsection.
Section 9. Amend Subsection 3814(a), Title 12 of the Delaware Code by inserting the words ", foreign business trust" after the words "foreign limited partnership" in such subsection.
Section 10. Amend Title 12 of the Delaware Code by adding the following new sections thereto and by redesignating Sections 3820, 3821 and 3822 as Sections 3822, 3823 and 3824, respectively:
"§3820. Conversion of certain entities to a business trust.
(a) As used in this section, the term 'other entity' means a foreign business trust, a non-United States corporation (as such term is defined in § 388(a) of Title 8 of the Delaware Code), a business association, a real estate investment trust or any other unincorporated business, including a foreign or domestic partnership (whether general (including a registered limited liability partnership) or limited (including a registered limited liability limited partnership)), or a foreign or domestic limited liability company.
(b) Any other entity may convert to a domestic business trust by complying with subsection (h) of this section and filing in the Office of the Secretary of State in accordance with § 3812 of this chapter:
(1) A certificate of conversion to business trust that has been executed by the trustees in accordance with § 3811 of this chapter; and
(2) A certificate of trust that complies with § 3810 of this chapter and has been executed by the trustees in accordance with § 3811 of this chapter.
(c) The certificate of conversion to business trust shall state:
(1) The date on which and jurisdiction where the other entity was first created, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic business trust;
(2) The name of the other entity immediately prior to the filing of the certificate of conversion to business trust;
(3) The name of the business trust as set forth in its certificate of trust filed in accordance with subsection (b) of this section; and
(4) The future effective date or time (which shall be a date or time certain) of the conversion to a business trust if it is not to be effective upon the filing of the certificate of conversion to business trust and the certificate of trust.
(d) Upon the filing in the Office of the Secretary of State of the certificate of conversion to business trust and the certificate of trust or upon the future effective date or time of the certificate of conversion to business trust and the certificate of trust, the other entity shall be converted into a business trust and the business trust shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding § 3810(a)(2) of this chapter, the existence of the business trust shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.
(e) The conversion of any other entity into a domestic business trust shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic business trust, or the personal liability of any person incurred prior to such conversion.
(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 be vested in the domestic business trust and shall thereafter be the property of the domestic business trust as they were of the other entity that has converted, 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 thenceforth attach to the domestic business trust, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.
(g) Unless otherwise agreed, or as required under applicable non-Delaware law, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of such other entity and shall constitute a continuation of the existence of the converting other entity in the form of a domestic business trust.
(h) Prior to filing a certificate of conversion to business trust with the Office of the Secretary of State, the conversion shall be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the other entity and the conduct of its business or by applicable law, as appropriate, and a governing instrument shall be approved by the same authorization required to approve the conversion.
(i) The provisions of this section shall not be construed to limit the accomplishment of a change in the law governing, or the domicile of, an other entity to the State of Delaware by any other means provided for in an agreement governing the internal affairs of the other entity or as otherwise permitted by law, including by the amendment of an agreement governing the internal affairs of the other entity.
3821. Approval of conversion of a business trust.
A business trust may convert to a common-law trust, a general partnership (including a registered limited liability partnership), a limited partnership (including a registered limited liability limited partnership) or a limited liability company organized, formed or created under the laws of the State of Delaware, upon the authorization of such conversion in accordance with this section. If the governing instrument specifies the manner of authorizing a conversion of the business trust, the conversion shall be authorized as specified in the governing instrument. If the governing instrument does not specify the manner of authorizing a conversion of the business trust and does not prohibit a conversion of the business trust, the conversion shall be authorized in the same manner as is specified in the governing instrument for authorizing a merger or consolidation that involves the business trust as a constituent party to the merger or consolidation. If the governing instrument does not specify the manner of authorizing a conversion of the business trust or a merger or consolidation that involves the business trust as a constituent party and does not prohibit a conversion of the business trust, the conversion shall be authorized by the approval by all of the beneficial owners and all of the trustees. When the conversion of a business trust shall have become effective, the business trust shall file a certificate of cancellation in the Office of the Secretary of State in accordance with § 3810(d) of this chapter."
Section 11. Amend Title 12 of the Delaware Code by adding the following new sections thereto:
"Subchapter II. Foreign Business Trusts
§ 3851. Law governing.
(a) Subject to the Constitution of the State of Delaware:
(1) The laws of the state, territory, possession, or other jurisdiction or country under which a foreign business trust is organized govern its organization and internal affairs and the liability of its beneficial owners and trustees; and
(2) A foreign business trust may not be denied registration by reason of any difference between those laws and the laws of the State of Delaware.
§ 3852. Registration required; application.
(a) Before doing business in the State of Delaware, a foreign business trust shall register with the Secretary of State. In order to register, a foreign business trust shall submit to the Secretary of State:
(1) A copy executed by a trustee or other authorized person of an application for registration as a foreign business trust, setting forth:
a. The name of the foreign business trust and, if different, the name under which it proposes to register and do business in the State of Delaware;
b. The state, territory, possession or other jurisdiction or country where formed, the date of its formation and a statement from a trustee or other authorized person that, as of the date of filing, the foreign business trust validly exists as a business trust under the laws of the jurisdiction of its formation.
c. The nature of the business or purposes to be conducted or promoted in the State of Delaware;
d. The address of the registered office and the name and address of the registered agent for service of process required to be maintained by § 3854(b) of this chapter;
e. A statement that the Secretary of State is appointed the agent of the trust for service of process under the circumstances set forth in § 3860(b) of this chapter; and
. The date on which the foreign business trust first did, or intends to do, business in the State of Delaware.
(2) A fee as set forth in § 3862 of this chapter shall be paid.
(b) A person shall not be deemed to be doing business in the State of Delaware solely by reason of being a trustee or a beneficial owner of a foreign business trust.
§ 3853. Issuance of registration.
(a) If the Secretary of State finds that an application for registration conforms to law and all requisite fees have been paid, he shall:
(1) Certify that the application has been filed in his office by endorsing upon the original application the word "Filed", and the date and hour of the filing. This endorsement is conclusive of the date and time of its filing in the absence of actual fraud;
(2) File and index the endorsed application.
(b) The Secretary of State shall prepare and return to the person who filed the application or his representative a copy of the original signed application, similarly endorsed, and shall certify such copy as a true copy of the original signed application.
(c) The filing of the application with the Secretary of State shall make it unnecessary to file any other documents under Chapter 31 of this title.
§ 3854. Name; registered office; registered agent.
(a) A foreign business trust may register with the Secretary of State under any name (whether or not it is the name under which it is registered in the jurisdiction of its formation) that could be registered by a domestic business trust; provided, however, that a foreign business trust may register under any name which is not such as to distinguish it upon the records in the Office of the Secretary of State from the name of any domestic or foreign corporation, business trust, limited liability company or limited partnership reserved, registered or organized under the laws of the State of Delaware with the written consent of the other corporation, business trust, limited liability company or limited partnership, which written consent shall be filed with the Secretary of State.
() Each foreign business trust shall have and maintain in the State of Delaware:
(1) A registered office which may but need not be a place of its business in the State of Delaware; and
(2) A registered agent for service of process on the foreign business trust, which agent may be either an individual resident of the State of Delaware whose business office is identical with the foreign business trust's registered office, or a domestic corporation, or a domestic limited partnership, or a business trust, or a domestic limited liability company, or a foreign corporation, or a foreign limited partnership, or a foreign business trust, or a foreign limited liability company authorized to do business in the State of Delaware having a business office identical with such registered office, which is generally open during normal business hours to accept service of process and otherwise perform the functions of a registered agent.
(c) A registered agent may change the address of the registered office of the foreign business trust(s) for which he is registered agent to another address in the State of Delaware by paying a fee as set forth in § 3862 of this chapter and filing with the Secretary of State a certificate, executed by such registered agent, setting forth the names of all the foreign business trusts represented by such registered agent, and the address at which such registered agent has maintained the registered office for each of such foreign business trusts, and further certifying to the new address to which each such registered office will be changed on a given day, and at which new address such registered agent will thereafter maintain the registered office for each of the foreign business trusts recited in the certificate. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under his hand and seal of office, and thereafter, or until further change of address, as authorized by law, the registered office in the State of Delaware of each of the foreign business trusts recited in the certificate shall be located at the new address of the registered agent thereof as given in the certificate. In the event of a change of name of any person acting as a registered agent of a foreign business trust, such registered agent shall file with the Secretary of State a certificate, executed by such registered agent, setting forth the new name of such registered agent, the name of such registered agent before it was changed, the names of all the foreign business trusts represented by such registered agent, and the address at which such registered agent has maintained the registered office for each of such foreign business trusts, and shall pay a fee as set forth in § 3862 of this chapter. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under his hand and seal of office. Filing a certificate under this section shall be deemed to be an amendment of the application of each foreign business trust affected thereby and each foreign business trust shall not be required to take any further action with respect thereto, to amend its application under § 3855 of this chapter. Any registered agent filing a certificate under this section shall promptly, upon such filing, deliver a copy of any such certificate to each foreign business trust affected thereby.
(d) The registered agent of 1 or more foreign business trusts may resign and appoint a successor registered agent by paying a fee as set forth in § 3862 of this chapter and filing a certificate with the Secretary of State, stating that it resigns and the name and address of the successor registered agent. There shall be attached to such certificate a statement executed by each affected foreign business trust ratifying and approving such change of registered agent. Upon such filing, the successor registered agent shall become the registered agent of such foreign business trust as has ratified and approved such substitution and the successor registered agent's address, as stated in such certificate, shall become the address of each such foreign business trust's registered office in the State of Delaware. The Secretary of State shall furnish to the successor registered agent a certified copy of the certificate of resignation. Filing of such certificate of resignation shall be deemed to be an amendment of the application of each foreign business trust affected thereby and each such foreign business trust shall not be required to take any further action with respect thereto, to amend its application under § 3855 of this chapter.
(e) The registered agent of a foreign business trust may resign without appointing a successor registered agent by paying a fee as set forth in § 3862 of this chapter and filing a certificate with the Secretary of State stating that it resigns as registered agent for the foreign business trust identified in the certificate, but such resignation shall not become effective until 120 days after the certificate is filed. There shall be attached to such certificate an affidavit of such registered agent,' if an individual, or of the president, a vice-president or the secretary thereof if a corporation, that at least 30 days prior to and on or about the date of the filing of said certificate, notices were sent by certified or registered mail to the foreign business trusts for which such registered agent is resigning as registered agent, at the principal office thereof within or outside the State of Delaware, if known to such registered agent or, if not, to the last known address of the attorney or other individual at whose request such registered agent was appointed for such foreign business trust, of the resignation of such registered agent. After receipt of the notice of the resignation of its registered agent, the foreign business trust for which such registered agent was acting shall obtain and designate a new registered agent, to take the place of the registered agent so resigning. If such foreign business trust fails to obtain and designate a new registered agent as aforesaid prior to the expiration of the period of 120 days after the filing by the registered agent of the certificate of resignation, such foreign business trust shall not be permitted to do business in the State of Delaware and its registration shall be deemed to be canceled. After the resignation of the registered agent shall have become effective as provided in this section and if no new registered agent shall have been obtained and designated in the time and manner aforesaid, service of legal process against the foreign business trust for which the resigned registered agent had been acting shall thereafter be upon the Secretary of State in accordance with § 3861 of this chapter.
§ 3855. Amendments to application.
If any statement in the application for registration of a foreign business trust was false when made or any arrangements or other facts described have changed, making the application false in any respect, the foreign business trust shall promptly file in the Office of the Secretary of State a certificate, executed by a trustee or other authorized person, correcting such statement, together with a fee as set forth in § 3862 of this chapter.
§ 3856. Cancellation of registration.
A foreign business trust may cancel its registration by filing with the Secretary of State a certificate of cancellation, executed by a trustee or other authorized person, together with a fee as set forth in § 3862 of this chapter, A cancellation does not terminate the authority of the Secretary of State to accept service of process on the foreign business trust with respect to causes or action arising out of the doing of business in the State of Delaware.
§ 3857. Doing business without registration.
(a) A foreign business trust doing business in the State of Delaware may not maintain
any action, suit or proceeding in the State of Delaware until it has registered in the State of Delaware, and has paid to the State of Delaware all fees and penalties for the years or parts thereof, during which it did business in the State of Delaware without having registered.
(b) The failure of a foreign business trust to register in the State of Delaware does not impair:
(1) The validity of any contract or act of the foreign business trust;
(2) The right of any other party to the contract to maintain any action, suit or proceeding on the contract; or
(3) Prevent the foreign business trust from defending any action, suit or proceeding in any court of the State of Delaware.
(c) A beneficial owner or a trustee of a foreign business trust is not liable for the obligations of the foreign business trust solely by reason of the business trust's having done business in the State of Delaware without registration.
(d) Any foreign business trust doing business in the State of Delaware without first having registered shall be fined and shall pay to the Secretary of State $200.00 for each year or part thereof during which the foreign business trust failed to register in the State of Delaware.
3858. Foreign business trusts doing business without having qualified; injunctions.
The Court of Chancery shall have jurisdiction to enjoin any foreign business trust, or any agent thereof, from doing any business in the State of Delaware if such foreign business trust has failed to register tinder this subchapter or if such foreign business trust has secured a certificate of the Secretary of State tinder § 3853 of this chapter on the basis of false or misleading representations. The Attorney General shall, upon his own motion or upon the relation of proper parties, proceed for this purpose by complaint in any county in which such foreign business trust is doing or has done business.
§ 3859. Execution; liability.
Section 3811(c) of this chapter shall be applicable to foreign business trusts as if they were domestic business trusts.
§ 3860. Service of process on registered foreign business trusts.
(a) Service of legal process upon any foreign business trust shall be made by
delivering a copy personally to any trustee of the foreign business trust in the State of Delaware or the registered agent of the foreign business trust in the State of Delaware, or by leaving it at the dwelling house or usual place of abode in the State of Delaware of any such trustee or registered agent (if the registered agent be an individual), or at the registered office or other place of business of the foreign business trust in the State of Delaware, If the registered agent be a corporation, service of process upon it as such may be made by serving, in the State of Delaware, a copy thereof on the president, vice-president, secretary, assistant secretary or any director of the corporate registered agent. Service by copy left at the dwelling house or usual place of abode of any trustee or registered agent, or at the registered office or other place of business of the foreign business trust in the State of Delaware, to be effective must be delivered thereat at least 6 days before the return date of the process, and in the presence of an adult person, and the officer serving the process shall distinctly state the manner of service in his return thereto. Process returnable forthwith must be delivered personally to the trustee or registered agent.
(b) In case the officer whose duty it is to serve legal process cannot by due diligence serve the process in any manner provided for by subsection (a) of this section, it shall be lawful to serve the process against the foreign business trust upon the Secretary of State, and such service shall be as effectual for all intents and purposes as if made in any of the ways provided for in subsection (a) hereof. In the event service is effected through the Secretary of State in accordance with this subsection, the Secretary of State shall forthwith notify the foreign business trust by letter, certified mail, return receipt requested, directed to the foreign business trust at its last registered office. Such letter shall enclose a copy of the process and any other papers served on the Secretary of State pursuant to this subsection. It shall be the duty of the plaintiff in the event of such service to serve process and any other papers in duplicate, to notify the Secretary of State that service is being effected pursuant to this subsection, and to pay to the Secretary of State the sum of $50.00 for the use of the State of Delaware, which sum shall be taxed as a part of the costs in the proceeding if the plaintiff shall prevail therein. The Secretary of State shall maintain an alphabetical record of any such service setting forth the name of the plaintiff and defendant, the title, docket number and nature of the proceeding in which process has been served upon him, the fact that service has been effected pursuant to this subsection, the return date thereof and the day and hour when the service was made. The Secretary of State shall not be required to retain such information for a period longer than 5 years from his receipt of the service of process.
§ 3861. Service of process on unregistered foreign business trusts.
(a) Any foreign business trust which shall do business in the State of Delaware without having registered under § 3852 of this chapter shall be deemed to have thereby appointed and constituted the Secretary of State of the State of Delaware its agent for the acceptance of legal process in any civil action, suit or proceeding against it in any state or federal court in the State of Delaware arising or growing out of any business done by it within the State of Delaware. The doing of business in the State of Delaware by such foreign business trust shall be a signification of the agreement of such foreign business trust that any such process when so served shall be of the same legal force and validity as if served upon an authorized manager or agent personally within the State of Delaware.
(b) Whenever the words 'doing business', 'the doing of business' or 'business done in this State', by any such foreign business trust are used in this section, they shall mean the course or practice of carrying on any business activities in the State of Delaware, including, without limiting the generality of the foregoing, the solicitation of business or orders in the State of Delaware; provided, however such words shall be deemed to have the same meaning as similar words of like import in § 371 of Title 8 of the Delaware Code, but the requirement of such foreign business trust to register under § 3852 of this chapter shall be subject to the same exceptions as are set forth in § 373 of Title 8 of the Delaware Code.
(c) In the event of service upon the Secretary of State in accordance with subsection (a) of this section, the Secretary of State shall forthwith notify the foreign business trust thereof by letter, certified mail, return receipt requested, directed to the foreign business trust at the address furnished to the Secretary of State by the plaintiff in such action, suit or proceeding. Such letter shall enclose a copy of the process and any other papers served upon the Secretary of State. It shall be the duty of the plaintiff in the event of such service to serve process and any other papers in duplicate, to notify the Secretary of State that service is being made pursuant to this subsection, and to pay to the Secretary of State the sum of $50.00 for the use of the State of Delaware, which sum shall be taxed as part of the costs in the proceeding, if the plaintiff shall prevail therein. The Secretary of State shall maintain an alphabetical record of any such process setting forth the name of the plaintiff and defendant, the title, docket number and nature of the proceeding in which process has been served upon him, the return date thereof, and the day and hour when the service was made. The Secretary of State shall not be required to retain such information for a period longer than 5 years from his receipt of the service of process.
§ 3862. Fees.
(a) No document required to be filed under this subchapter shall be effective until the
applicable fee required by this section is paid. The following fees shall be paid to and collected by the Secretary of State for the use of the State of Delaware:
(1) Upon receipt for filing of an application for registration as a foreign business trust under § 3852 of this title, a certificate under § 3855 of this title or a certificate of cancellation under § 3856 of this title, a fee in the amount of $50.00.
(2) Upon the receipt for filing of a certificate under § 3854(c) of this title, a fee in the amount of $50.00, upon the receipt for filing of a certificate under § 3854(d) of this title, a fee in the amount of $50.00 and a further fee of $2.00 for each foreign business trust affected by such certificate, and upon the receipt for filing of a certificate under § 3854(e) of this title, a fee in the amount of $2.50."
Approved June 29, 1998