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Delaware Enacts Amendments to LLC, LP and Partnership Laws

By: John Morrissey, COGENCY GLOBAL INC. on Fri, Jun 26, 2015
Delware_Limited_Liability_Company_ActOn June 24, 2015, Delaware Governor Markell signed Senate Bill No. 78, Senate Bill No. 77 and Senate Bill No. 76 into law. Senate Bill No. 78 amends the Delaware Limited Liability Company Act (Delaware Code, Title 6, Chapter 18, Sections 18-101-18-1109), Senate Bill No. 77 amends the Delaware Revised Uniform Limited Partnership Act (Delaware Code, Title 6, Chapter 17, Sections 17-101-17-1111) and Senate Bill No. 76 amends the Delaware Revised Uniform Partnership Act (Delaware Code, Title 6, Chapter 15, Sections 15-101-15-1210). (Section number citations refer to sections in these three acts.)

The amendatory legislation will become effective on August 1, 2015, except as noted below.

Highlights of these bills include the following:

 

Provisions Relating to a Power of Attorney Also Apply to a Proxy            

Sections 18-204(c), 17-204(c) and 15-123 are amended to state that provisions which relate to a power of attorney are also applicable to a proxy. These sections state, in part, that for all purposes of the laws of the State of Delaware, unless otherwise provided in a limited liability company/partnership agreement, a power of attorney or proxy with respect to a limited liability company/partnership granted to any person shall be irrevocable if it states that it is irrevocable and it is coupled with an interest sufficient in law to support an irrevocable power or proxy. Such irrevocable power of attorney or proxy, unless otherwise provided therein or in a limited liability company/partnership agreement, shall not be affected by subsequent death, disability, incapacity, dissolution, termination of existence or bankruptcy of, or any other event concerning, the principal. The provisions shall not be construed to limit the enforceability of a power of attorney or proxy that is part of a limited liability company/partnership agreement.

 

Elimination of Default Requirement for Certain Class or Group Votes

Sections in the Delaware Limited Liability Company Act and the Delaware Revised Uniform Limited Partnership Act are amended to eliminate the default requirement for a class or group vote in connection   with dissolution and winding up of an LLC/LP, termination and winding up of a series, transfers or continuances and mergers and consolidations, Certificate of LP Cancellation, revocation of LP dissolution, and certain conversions. Unless otherwise provided in the limited liability company/partnership agreement, a limited liability company whose original Certificate of Formation or a limited partnership whose original Certificate of Limited Partnership was filed with the Secretary of State and effective on or before July 31, 2015, however, shall generally continue to be governed by the default requirements for a class or group vote as in effect on July 31, 2015.

 

Irrevocability of Rights and Powers

Sections 18-407, 17-403(c) and 15-401(l) are amended to state that unless otherwise provided in a limited liability company/partnership agreement, a delegation of rights and powers by a member or manager/general partner/partner shall be irrevocable if the agreement states that it is irrevocable.

 

Elimination of Surplus Language

Sections 18-603, 17-603, 15-202(f), 15-401(m), 15-407(d), 15-407(e), 15-807(h) and 15-902(b) are amended to eliminate surplus language.

 

To view the full text and synopses of these bills, click on the following links:

Senate Bill No. 78 (amendments to Delaware Limited Liability Company Act)

Senate Bill No. 77 (amendments to Delaware Revised Uniform Limited Partnership Act)

Senate Bill No. 76 (amendments to Delaware Revised Uniform Partnership Act)