If, as a Texas resident, you happen to own interest in a Delaware company, please take note of the following amendments to the Delaware’s LLC and Partnership Acts.
In hopes of streamlining management of LLCs, LPs and GPs, Delaware’s state legislature has enacted some legislation scheduled to take effect on August 1st, 2016. Without engaging in a legal analysis of that state’s law, we can report that the changes do include the following:
- Written Approval/Consent No Longer Required: In certain circumstances, LLCs, LPs and GPs—who provide previous consent—are no longer required to obtain written approval and consent to carry out a specified action.
- For example, the dissolution of an LLC, LP or GP no longer needs to be in writing so long as members/partners consent to using a methodology other than writing.
- Additionally, and perhaps equally importantly, members/partners may revoke the dissolution of an LLC, LP or GP without previous written approval so long as mutual consent to the alternative method of communication was consented to. Even the approval of a transaction, ostensibly any transaction, does not need to be in writing. Again, this is to streamline the LLC’s, LP’s, or GP’s operation. Less writing-based hurdles will ostensibly result in smoother transactions for the company.
- Assignees have Rights to Become Members in a Single Member Delaware LLC: Put simply, this amendment allows for a single assignee of a single-member LLC to become a member upon voluntary assignment of all LLC interests to the assignee. This is to protect against accidentally dissolving a Delaware LLC “when the assignee was not provided for in connection with the LLC agreement.”
- Service of Process on a Series of a Delaware LLC or LP: This amendment was to simplify a technical roadblock originally created when Series LLCs and LPs entered the picture. Now, one can provide legal service on a series of an LLC or LP. Before the amendment, one could only provide legal service on the LLC or LP entity itself.
- Liability of a Series of a Delaware LLC or LP: This amendment serves to clarify that an LLC or LP Series has the option to assume liability of:
- debts,
- extra-liabilities,
- obligations, and/or
- expenses regarding the entity itself or another series of the entity.
If you are the owner of a Delaware LLC, but operate in Texas, be sure to also check out the blog “Foreign LLCs” to learn more about which rules you generally are expected to follow from domestic and foreign states.
VLF does not practice in Delaware and has no Delaware-licensed lawyers on staff. However, because small businesses and entrepreneurs are within our usual repertoire, it is important to communicate those areas that might be tangential to our practice, but are important to yours.