In keeping with its tradition of updating its business entity laws annually, on May 30, 2024, Delaware Governor John Carney signed into law HB 339, HB 337, HB 336 and HB 338. These bills take effect on August 1, 2024, and amend Delaware’s Partnerships, LLC and Statutory Trust Acts, respectively. Below are the bills’ highlights. For highlights of the 2024 amendments to Delaware’s General Corporation Law, please see our companion article.
House Bill 339
HB 339 amends the merger provisions in the Delaware Revised Uniform Partnership Act (Title 6 of the Delaware Code.) Under the bill, if a domestic partnership is causing a merger and has not filed a statement of partnership existence, it is required to file the statement. A certificate of ownership and merger is now permitted to include amendments to a surviving domestic partnership's statement of existence and a surviving limited liability partnership's statement of qualification that are desired to be effected by the merger. The amendments may amend and restate the partnership existence of the surviving domestic partnership.
House Bill 337
HB 337 amends the Delaware Revised Uniform Limited Partnership Act (Title 6 of the Delaware Code.) The bill sets new execution requirements in certain circumstances. If a certificate of merger or a certificate of ownership and merger amend the survivor's certificate of limited partnership to reflect the admission of one or more general partners, the certificate must be signed by each new general partner. If the certificate of merger amends the certificate of registered series of the surviving registered series to reflect the association of one or more new general partners (with the surviving registered series), the certificate must be signed by each new general partner.
When a domestic limited partnership is the survivor in a merger, the certificate of ownership and existence is permitted to state any amendments to its certificate of limited partnership. The certificate of ownership and existence in a merger is also permitted to state amendments to the statement of qualification of a surviving domestic limited partnership that is a limited liability limited partnership. The certificate of merger or consolidation of registered series is permitted to state the amendments to the certificate of registered series which are to result from the merger. Provisions relating to revocation of dissolution/termination: Of registered series, protected series and limited partnerships are also amended to add persons whose approval pursuant to the partnership agreement to the list of those whose permission may be needed.
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House Bill 336
HB 336 amends the Delaware Limited Liability Company Act (Title 6 of the Delaware Code). It states that in the event of a merger in which a domestic limited liability company is the surviving entity, a certificate of ownership and merger is permitted to include any amendment to the survivor’s certificate of formation as is desired to be effected by the merger. The amendments are permitted to amend and restate the surviving domestic limited liability company’s certificate of formation.
The bill includes amendments to provisions relating to revocation of termination/dissolution of limited liability companies and protected and registered series of limited liability companies. These amendments add persons whose consent is required for such termination or dissolution (pursuant to the limited liability company agreement) to the list of those for whom permission may be needed.
House Bill 338
HB 338 amends provisions in the Delaware Statutory Trust Act (Title 12 of the Delaware Code). It specifies that a series of a statutory trust as well as a statutory trust are not required to execute the governing instrument. However, a statutory trust, including any series, is bound by its governing instrument whether it executes the instrument. The execution provisions before this amendment only refer to statutory trusts and do not include series.
The bill adds that, except to the extent otherwise provided in the governing instrument of a statutory trust, the trustees of a statutory trust may authorize any of the statutory trust’s beneficial owners to direct how any securities held, directly or indirectly, by the statutory trust shall be voted. The amendatory provision states that a trustee will have no duties or liabilities with respect to the voting of such securities if the trustees have exercised the required standard of care in connection with authorizing the beneficial owners to direct how such securities will be voted.
Under the bill, an agreement of merger or consolidation, may effect an amendment to, or the adoption of, a new, governing instrument of the statutory trust. The statutory trust must be the surviving or resulting statutory trust in the merger or consolidation.
The bill also changes the time of approval for conversion and domestication procedures involving statutory trusts. As amended, the provision on conversion of other businesses to statutory trusts states that a certificate of conversion to a statutory trust (and a governing instrument) must be approved before the time the certificate of conversion becomes effective instead of before the certificate is filed. As amended, the provision on domestication of non-United States entities states that a certificate of statutory trust domestication (and the statutory trust's governing instrument) must be approved before the time the certificate of statutory trust domestication becomes effective instead of before the certificate is filed.
Please see our companion article for a discussion of amendments to Delaware’s corporations code.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
