Legislative and Case Law Developments in Delaware’s “Alternative Entities” – Limited Liability Companies, Limited Partnerships and Partnership
The Delaware legislature in its latest session enacted a number of amendments to three of Delaware’s four “alternative entity” statutes – the Delaware Limited Liability Company Act (“DLLCA”), the Delaware Revised Uniform Limited Partnership Act (“DRULPA”) and the Delaware Revised Uniform Partnership Act (“DRUPA”). (No amendments were adopted to the Delaware Statutory Trust Act.) The amendments, which became effective on August 1, 2005, further enhance the utility and flexibility of Delaware law and respond to several issues raised by practitioners. Among other things, the amendments (i) confirm that the governing agreement of an alternative entity is binding on its members, managers, partners and assignees, as applicable, regardless of whether such persons execute the agreement, (ii) confirm that in connection with the admission of a person as a member or partner of a surviving or resulting LLC or partnership pursuant to a merger or consolidation approved in accordance with the applicable alternative entity act, such person is admitted as provided in the agreement of merger or consolidation or, if it does not so provide, as provided in the governing agreement of the alternative entity, (iii) provide that a charging order is the sole remedy that a judgment creditor may obtain against a judgment debtor in respect of the judgment debtor’s interest in a partnership, limited partnership or LLC, (iv) provide a mechanism by which the dissolution of an LLC or a limited partnership can be revoked prior to the filing of a certificate of cancellation and (v) create new protections and expand the existing protections associated with good faith reliance on reports and other information.
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