On July 23rd, 2018, Delaware Governor John Carney signed Senate Bill Number 183 into law, amending the Delaware Limited Liability Company Act (Delaware Code, Title 6, Chapter 18, §18-101 to §18-1109).
Certain provisions of the amendatory legislation are effective on August 1st, 2018 and other provisions are effective on August 1st, 2019.
Let’s look at some of these significant changes.
Establishment of Statutory Public Benefit LLCs
Effective August 1st, 2018, amendments in Senate Bill 183 introduce Subchapter XII to Chapter 18, Title 6 of the Delaware Code that defines and provides for the establishment of statutory public benefit limited liability companies.
A “statutory public benefit limited liability company” is a for-profit LLC that is intended to produce public benefit, and operate in a responsible and sustainable manner. In addition to stating this status in the heading of its Certificate of Formation, a statutory public benefit LLC must further delineate one or more specific public benefits it promotes in the certificate.
The new subchapter also includes rules for amendments, mergers, votes required and duties of members or managers of a statutory public benefit LLC. Section 18-102(4) has been updated to allow LLC names to contain the words “public benefit”.
Limited Liability Company Division
Section 18-217, effective August 1st, 2018, now authorizes a Delaware LLC, pursuant to a plan of division, to divide into two or more Delaware LLCs. A Certificate of Division, along with Certificates of Formation for each resulting company, is required to be filed simultaneously with the office of the Secretary of State.
Subsection (g)(3) of 18-217 mandates the appointment of a division contact, required to maintain a copy of the plan or division for six years from the effective date of the division and respond with division company contact information to written inquiries from creditors of the dividing company.
Section 18-1105(a) is amended to set a Certificate of Division filing fee of $180, payable to the Secretary of State. There is also a filing fee of $70 for each Certificate of Formation.
Use of Electronic Networks or Databases
Starting August 1st, 2018, §18-104(g) concerning registered agents, as well as §18-302(d) and §18-404(d) regarding voting and classes, will recognize the use and/or participation in electronic networks or databases (including those that are distributed) within the term of “electronic transmission” for communications, provided records can be directly reproduced in paper form by a recipient through an automated process.
Section 18-305(d) outlining LLC recordkeeping is amended to include any form of information storage device or electronic networks and/or databases (including those that are distributed) as a viable means of record maintenance, provided information can be converted into written form within a reasonable timeframe.
Fee for Corrected Certificate
Section 18-211(b) is amended to clarify that, as of August 1st, 2018, the filing fee for a corrected certificate shall be equal to the $180 fee for a Certificate of Correction prescribed by §18-1105.
Effective August 1st, 2019, §18-215 is amended to clarify provisions related to protected series and a new section, 18-218, is added to authorize the establishment of registered series. Numerous other sections are amended to included references to registered or protected series, as appropriate.
We will further explore amendments from this bill that go into effect on August 1st, 2019 as the date approaches.
For additional details, please review the full text of Senate Bill Number 183.
Additional Delaware Updates
See also the following Delaware amendments enacted on July 23rd, 2018:
- Delaware General Corporation Law (SB 180)
- Delaware Revised Uniform Limited Partnership Act (SB 182)
- Delaware Revised Uniform Partnership Act (SB 181)
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.