Richards Layton & Finger
 

Amendments to Delaware's LLC and Partnership Acts Adopted

June 29, 2015

Delaware has recently adopted legislation amending the Delaware Limited Liability Company Act (LLC Act), the Delaware Revised Uniform Limited Partnership Act (LP Act) and the Delaware Revised Uniform Partnership Act (GP Act) (collectively, the LLC and Partnership Acts). The following is a brief summary of some of the more significant amendments that affect Delaware limited liability companies (Delaware LLCs), Delaware limited partnerships (Delaware LPs) and Delaware general partnerships (Delaware GPs).

Default Class or Group Voting Requirements Eliminated

The LLC Act and the LP Act have been amended to eliminate the default class or group voting requirements in connection with the merger or consolidation, transfer or continuance, conversion, dissolution and winding up of a Delaware LLC or Delaware LP and the termination and winding up of a series of a Delaware LLC or Delaware LP.  The recent amendments provide that, in connection with the foregoing matters, the default class or group voting requirements under the LLC Act and the LP Act, as in effect on July 31, 2015, will continue to apply to a Delaware LLC or Delaware LP whose original certificate of formation or certificate of limited partnership was filed with the Delaware Secretary of State and is effective on or before July 31, 2015, unless otherwise provided in a limited liability company agreement or partnership agreement.

Additionally, the LP Act has been amended to eliminate the default class or group voting requirements in connection with the revocation of dissolution of a Delaware LP and the conversion of a Delaware LP to a Delaware limited liability limited partnership and to eliminate the default class or group requirement for executing a certificate of cancellation for a Delaware LP that is being wound up by its limited partners. Such default class or group voting and execution requirements were eliminated by the amendments regardless of when an original certificate of limited partnership was filed and effective, unless otherwise provided in a partnership agreement.

In those circumstances in which the default class or group voting and execution requirements have been eliminated by the amendments, the LLC Act and the LP Act will continue to have default voting and execution requirements. However, as a result of the amendments, such default voting and execution requirements will no longer require a class or group vote or, as applicable, execution, in connection with such actions.

Irrevocable Delegation
The LLC and Partnership Acts have been amended to confirm that, unless otherwise provided in a limited liability company agreement or partnership agreement, a delegation of the rights and powers to manage and control the business and affairs of a Delaware LLC, Delaware LP or Delaware GP by a member or manager of a Delaware LLC, a general partner of a Delaware LP or a partner of a Delaware GP shall be irrevocable if such delegation states that it is irrevocable.

Irrevocable Proxy 
In 2010, the LLC and Partnership Acts were amended to clarify when a power of attorney will be irrevocable and the effects of such irrevocability for purposes of the laws of the State of Delaware. The recent amendments to the LLC and Partnership Acts confirm that the provisions of the LLC and Partnership Acts relating to irrevocable powers of attorney also apply to proxies and clarify when a proxy will be irrevocable and the effects of such irrevocability for purposes of the laws of the State of Delaware. The LLC and Partnership Acts have also been amended to confirm that the provisions of the LLC and Partnership Acts addressing powers of attorney and proxies will not be construed to limit the enforceability of a power of attorney or proxy that is part of a limited liability company agreement or a partnership agreement.

The recent amendments reflect Delaware's continuing commitment to maintaining statutes governing Delaware LLCs, Delaware LPs and Delaware GPs that effectively serve the business needs of the national and international business communities. The recent amendments to the LLC Act, LP Act and GP Act are contained in Senate Bill Nos. 78, 77 and 76, respectively (each effective August 1, 2015, except that the amendments to Section 18-1105(a)(5) of the LLC Act, Section 17-1107(a)(5) of the LP Act and Section 15-1207(a)(5) of the GP Act, which confirm that the Delaware Secretary of State may issue public records in the form of photocopies or electronic image copies and need not provide public records in any other form, are effective upon their respective enactments into law).