Each year, the Delaware legislature, guided by drafting committees of the Delaware State Bar Association, improves and updates the various entity law codes to ensure that the laws governing Delawares business organizations remain state of the art.   The 2023 amendments to the Delaware Limited Liability Company Act (the “LLC Act”), Senate Bill 113, the Delaware Revised Uniform Limited Partnership Act (the “LP Act”), Senate Bill 112, and the Delaware Revised Uniform Partnership Act (the “GP Act”), Senate Bill 115, were approved by the Delaware Senate on May 16, 2023, and by the Delaware House on June 27, 2023, and await signature by Delaware Governor John Carney. Once the bills are signed, the amendments will take effect August 1, 2023.  The LP Act amendments largely track the LLC Act amendments, with some variations specific to LPs.   Several changes to the LLC Act and the LP Act are also carried over to the GP Act.  Highlights of the legislation applicable to limited liability companies (“LLCs”), limited partnerships (“LPs”) and general partnerships (“GPs”) follow: 

The Delaware Limited Liability Company Act Amendments (S.B. 113)
 

• Amendment Pursuant to Agreement of Merger.  Section 18-209 of the LLC Act has been amended to confirm that an agreement of merger or consolidation can only amend a limited liability company agreement (an “LLC agreement”) or adopt a new LLC agreement for the surviving LLC in a merger or the resulting LLC in a consolidation, eliminating any implication that the parties to a merger, pursuant to an agreement of merger or consolidation, could amend the LLC agreement of another constituent party to the merger or consolidation.

 

• Revocation of a Series Termination or Dissolution.  Section 18-806 of the LLC Act permits the revocation of the dissolution of an LLC that has dissolved but has not filed a certificate of cancellation.   Because dissolution occurs by operation of law and without a filing, an LLC may inadvertently dissolve.  As a consequence of dissolution, the LLC is no longer authorized to engage in active business; rather, it must wind up its affairs.  In recognition of the fact that a protected series or a registered series similarly may suffer an event of termination or dissolution before the parties are ready to wind up the series, the 2023 LLC Act amendments extend the revocation concept to protected series and registered series.

A protected series terminates upon the occurrence of events specified in LLC Act Section 18-215(b)(9).  New subsection 18-215(d) adopts a procedure to revoke a series termination, provided that (1) the LLC Agreement does not prohibit such revocation, and (2) the limited liability company itself is not then dissolved. Under the new provisions, unless otherwise provided in the LLC Agreement, a series termination can be revoked prior to the completion of winding up of the series by the vote or consent of the members associated with the series, along with any other required approvals, as more particularly described in Section 18-215(d). If a protected series termination was caused by the dissolution of the limited liability company, each series that has not been wound up is automatically restored upon the revocation of such dissolution for the LLC, unless the LLC Agreement prohibits revocation of a series termination.

A parallel provision applies to registered series.  Because a registered series is a legal “person” it dissolves, rather than merely terminating, in accordance with Section 18-218(c)(9).  New subsection 18-218(f) sets forth a procedure for the revocation of dissolution of a registered series similar to the process for revoking termination of a protected series.   Dissolution of a registered series may be revoked so long as no certificate of cancellation has been filed for the registered series, by the vote or consent of the members associated with th