SPONSOR: |
Rep. Walker & Rep. M. Smith & Sen. Henry
& Sen. Townsend |
|
Reps.
Brady, J. Johnson, Mitchell, Paradee, Potter, Smyk, Wilson; Sens. Lavelle,
McDowell, Simpson |
HOUSE OF REPRESENTATIVES 147th GENERAL ASSEMBLY |
HOUSE BILL NO. 126 |
AN ACT TO AMEND CHAPTER 18, TITLE 6 OF THE DELAWARE CODE RELATING TO THE CREATION, REGULATION, OPERATION AND DISSOLUTION OF DOMESTIC LIMITED LIABILITY COMPANIES AND THE REGISTRATION AND REGULATION OF FOREIGN LIMITED LIABILITY COMPANIES. |
Section 1. Amend
§ 18-209(b), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(b) Pursuant to an
agreement of merger or consolidation, 1 or more domestic limited liability
companies may merge or consolidate with or into 1 or more domestic limited
liability companies or 1 or more other business entities formed or organized
under the laws of the State of Delaware or any other state or the United States
or any foreign country or other foreign jurisdiction, or any combination
thereof, with such domestic limited liability company or other business
entity as the agreement shall provide
being the surviving or resulting domestic limited liability company or other
business entity. Unless otherwise provided
in the limited liability company agreement, an agreement of merger or consolidation
or a plan of merger shall be approved by each domestic limited liability
company which is to merger or consolidate by the members or, if there is more
than one class or group of members, then by each class or group of members, in
either case, by members who own more than 50 percent of the then current
percentage or other interest in the profits of the domestic limited liability
company owned by all of the members or by the members in each class or group,
as appropriate. In connection with a
merger or consolidation hereunder, rights or securities of, or interests in, a
domestic limited liability company or other business entity which is a
constituent party to the merger or consolidation may be exchanged for or
converted into cash, property, rights or securities of, or interests in, the
surviving or resulting domestic limited liability company or other business
entity or, in addition to or in lieu thereof, may be exchanged for or converted
into cash, property, rights or securities of, or interests in, a domestic
limited liability company or other business entity which is not the surviving
or resulting limited liability company or other business entity in the merger
or consolidation, may remain outstanding or may be cancelled. Notwithstanding prior approval, an agreement
of merger or consolidation or a plan of merger may be terminated or amended
pursuant to a provision for such termination or amendment contained in the
agreement of merger or consolidation or plan of merger.
Section 2. Amend
§ 18-212(j), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(j) In connection with
a domestication hereunder, rights or securities of, or interests in, the
non-United States entity that is to be domesticated as a domestic limited
liability company may be exchanged for or converted into cash, property, rights
or securities of, or interests in, such domestic limited liability company 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
liability company or other entity, may remain outstanding or may be
cancelled.
Section 3. Amend
§ 18-213(f), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(f) In connection with
a transfer or domestication or continuance of a domestic limited liability
company to or in another jurisdiction pursuant to subsection (a) of this
section, rights or securities of, or interests in, such limited liability
company may be exchanged for or converted into cash, property, rights or
securities of , or interests in, the entity or business form in which the
limited liability company will exist in such other jurisdiction as a
consequence of the transfer or domestication or continuance 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 entity or business form,
may remain outstanding or may be cancelled.
Section 4. Amend
§ 18-214(i), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(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 liability company may be
exchanged for or converted into cash, property, or rights or securities of or
interests in such domestic limited liability company or, in addition to or in
lieu thereof, may be exchanged for or converted into cash, property, or rights
or securities of or interests in another domestic limited liability company or
other entity, may remain outstanding or may be cancelled.
Section 5. Amend
§ 18-216(d), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(d) In connection with
a conversion of a domestic limited liability company to another entity or
business form pursuant to this section, rights or securities of or interests in
the domestic limited liability company which is to be converted may be
exchanged for or converted into cash, property, rights or securities of or
interests in the entity or business form into which the domestic limited
liability company 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 entity or business form, may remain outstanding or
may be cancelled.
Section 6. Amend
§ 18-703(d), Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
(d) The entry of a
charging order is the exclusive remedy by which a judgment creditor of a member
or a member's assignee may satisfy a judgment out of the judgment debtor's
limited liability company interest and attachment, garnishment, foreclosure
or other legal or equitable remedies are not available to the judgment
creditor, whether the limited liability company has 1 member or more than 1
member.
Section 7. Amend
§ 18-1101, Title 6 of the Delaware Code by inserting a new subparagraph
(j) at the end thereof as shown by underlining as follows:
(j) The provisions
of this chapter shall apply whether a limited liability company has 1 member or
more than 1 member.
Section 8. Amend
§ 18-1104, Title 6 of the Delaware Code by making insertions as shown by
underlining as follows:
In any case not
provided for in this chapter, the rules of law and equity, including the
rules of law and equity relating to fiduciary duties and the law merchant,
shall govern.
Section 9. This Act shall become effective August 1, 2013.
SYNOPSIS
This bill continues the practice of amending periodically the Delaware Limited Liability Company 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 the provisions of the Act relating to mergers to confirm that rights
or securities of, or interests in, a constituent party that is the surviving
entity in a merger may remain outstanding in connection with the merger. Sections 2, 3, 4 and 5 amend the
provisions of the Act relating to domestication, transfer, continuance and
conversion to confirm that in connection with a domestication, transfer,
continuance or conversion, rights or securities of, or interests in, an
entity that is domesticating or converting to a limited liability company and
rights or securities of, or interests in, a limited liability company that is
transferring to or domesticating or continuing in another jurisdiction or
converting to a different type of entity or another jurisdiction may remain
outstanding in connection with such domestication, transfer, continuance or
conversion. Section 6
amends § 18-703(d) of the Act to confirm that a charging order is the sole
and exclusive remedy by which a judgment creditor of a member or a member's
assignee may satisfy a judgment out of the judgment debtor's limited
liability company interest and that attachment, garnishment, foreclosure or
other legal or equitable remedies are not available to the judgment creditor,
whether the limited liability company has 1 member or more than 1 member. Section 7
amends § 18-1101 of the Act by adding a new subsection (j) that confirms that
the provisions of the Act shall apply whether a limited liability company has
1 member or more than 1 member. Section 8amends
Section 18-1104 to confirm that in some circumstances fiduciary duties not
explicitly provided for in the limited liability company agreement
apply. For example, a manager of a
manager-managed limited liability company would ordinarily have fiduciary
duties even in the absence of a provision in the limited liability company
agreement establishing such duties.
Section 18-1101(c) continues to provide that such duties may be
expanded, restricted or eliminated by the limited liability company
agreement. Section 9 provides that the proposed amendments of the Act shall become effective August 1, 2013. |