Jurisdictional Updates 8-2-2022

Jurisdictional Updates 8-2-2022

Delaware – Business Entity Legislation Effective August 1

The governor on July 27 signed 5 bills effective August 1 to amend the Delaware business entity statutes and maintain their national preeminence.

Senate Bill 273 (Chapter 377) amends the General Corporation Law to among other things:

  • authorize in certificates of incorporation exculpation clauses limiting or eliminating the monetary liability of certain senior officers and executive officers named in recent SEC filings;
  • reduce the vote required to effect a conversion to another entity from unanimous approval to a majority in voting power of outstanding shares entitled to vote;
  • make appraisal rights available to beneficial owners of stock;
  • facilitate domestications of non-US entities to Delaware corporations and the consummation of other corporate actions without additional board or stockholder approvals; and
  • clarify that the principal place of business address included in the annual franchise tax report may not be the corporation’s registered office, unless the corporation maintains its principal place of business in Delaware and serves as its own registered agent.

A summary of SB 273 can be accessed here and the bill text can be accessed here.

Senate Bill 274 (Chapter 378) amends the Revised Uniform Limited Partnership Act to among other things:

  • confirm that a signature on a certificate of partnership interest may be a manual, facsimile, or electronic signature; 
  • clarify that the execution of a certificate by a person who is authorized to execute the certificate constitutes an oath or affirmation that, to the best of such person’s knowledge and belief, the facts stated therein shall be true at the time such certificate becomes effective, not at the time such certificate is executed;  
  • provide that approval of a conversion of another entity to an LP by a document, instrument, agreement or other writing, governing the internal affairs of the other entity and the conduct of its business or by applicable law, and the approval of the partnership agreement by the same authorization required to approve the conversion are required to occur prior to the time a certificate of conversion to LP becomes effective; and
  • provide that the approval of an LP domestication by a document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-Delaware law, as appropriate, and the approval of the partnership agreement by the same authorization required to approve the domestication, are required to occur prior to the time a certificate of limited partnership domestication becomes effective.

A summary of SB 274 can be accessed here and the bill text can be accessed here.

Senate Bill 275 (Chapter 379) amends the Limited Liability Company Act to among other things:

  • provide that when effecting service of process on a manager or liquidating trustee of a LLC, the Prothonotary or the Register in Chancery shall address the required copies and statements to the manager or liquidating trustee of the LLC at the principal place of business of the LLC (if such address is known) and to the manager’s or liquidating trustee’s address last known to the party desiring to make such service;
  • confirm that a registered series or protected series of an LLC is bound by the LLC agreement whether the series executed the agreement;
  • confirm that a signature on a certificate of LLC interest may be a manual, facsimile, or electronic signature; 
  • clarify that the execution of a certificate by a person who is authorized to execute the certificate constitutes an oath or affirmation that, to the best of such person’s knowledge and belief, the facts stated therein shall be true at the time such certificate becomes effective, not at the time such certificate is executed;  
  • provide that approval of a conversion of to an LLC by a document, instrument, agreement or other writing, governing the internal affairs of the other entity and the conduct of its business or by applicable law, and the approval of the LLC agreement by the same authorization required to approve the conversion are required to occur prior to the time a certificate of conversion to LP becomes effective; and
  • provide that the approval of an LP domestication by a document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-Delaware law, as appropriate, and the approval of the LLC agreement by the same authorization required to approve the domestication, are required to occur prior to the time a certificate of limited partnership domestication becomes effective; and
  • clarify the effect of filing a LLC certificate of revival on any protected series that are not at the time of filing otherwise terminated and wound up and any registered series whose certificates are otherwise cancelled.

A summary of SB 275 can be accessed here and the bill text can be accessed here.

Senate Bill 276 (Chapter 380) amends the Revised Uniform Partnership Act to among other things:

  • confirm that a signature on a certificate of partnership interest may be a manual, facsimile, or electronic signature; 
  • clarify that the execution of a certificate by a person who is authorized to execute the certificate constitutes an oath or affirmation that, to the best of such person’s knowledge and belief, the facts stated therein shall be true at the time such certificate becomes effective, not at the time such certificate is executed;  
  • provide that approval of a conversion of to an LLC by a document, instrument, agreement or other writing, governing the internal affairs of the other entity and the conduct of its business or by applicable law, and the approval of the LLC agreement by the same authorization required to approve the conversion are required to occur prior to the time a certificate of conversion to LP becomes effective; and
  • provide that the approval of a partnership domestication by a document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-Delaware law, as appropriate, and the approval of the LLC agreement by the same authorization required to approve the domestication, are required to occur prior to the time a certificate of limited partnership domestication becomes effective;

A summary of SB 277 may be accessed here and the bill text can be accessed here.

Senate Bill 284 (Chapter 381) amends the Statutory Trust Act to among other things add business development companies to a number of provisions that previously applied only to registered investment companies. A summary of SB 284 can be accessed here and the bill text can be accessed here.