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SPONSOR: |
Rep. Valihura & Sen. Vaughn & Rep. Wagner |
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Reps. George, Johnson |
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HOUSE OF REPRESENTATIVES 143rd GENERAL ASSEMBLY |
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HOUSE
BILL NO. 151 |
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AN ACT TO AMEND CHAPTER 17, TITLE 6 OF THE DELAWARE CODE RELATING TO THE CREATION, REGULATION, OPERATION AND DISSOLUTION OF DOMESTIC LIMITED PARTNERSHIPS AND THE REGISTRATION AND REGULATION OF FOREIGN LIMITED PARTNERSHIPS. |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF
THE STATE OF
Section 1.
Amend § 17-101(12), Chapter 17, Title 6 of the Delaware Code by deleting
the phrase “, and shall become bound by the partnership agreement” from the
fifth sentence thereof and by inserting the following sentence immediately
following the first sentence thereof: “A partner of a limited partnership or an
assignee of a partnership interest is bound by the partnership agreement
whether or not the partner or assignee executes the partnership agreement.”.
Section 2.
Amend § 17-106(a), Chapter 17, Title 6 of the Delaware Code by deleting in
its entirety the phrase “granting policies of insurance, or assuming insurance
risks or”.
Section 3.
Amend § 17-211(g), Chapter 17, Title 6 of the Delaware Code by deleting
from the first sentence thereof the phrase “Notwithstanding anything to the
contrary contained in a partnership agreement, a partnership agreement
containing a specific reference to this subsection may provide that an”, by substituting
in lieu thereof the word “An”, and by inserting at the end of said subsection the
following:
“Unless otherwise provided in a partnership agreement, a limited
partnership whose original certificate of limited partnership was filed with
the Secretary of State and effective on or prior to
Section 4.
Amend § 17-215(i), Chapter 17, Title 6 of the Delaware Code by deleting
from the second sentence thereof the phrase “or as required under applicable
non-Delaware law” and by substituting in lieu thereof “for all purposes of the
laws of the State of Delaware”, by deleting the word “and” as it appears
therein immediately before “the domestication” in the second sentence thereof,
by inserting a comma (“,”) immediately after the phrase “dissolution of such
non-United States entity” in the second sentence thereof, and by inserting the
words “the domestication” immediately prior to the phrase “shall constitute a
continuation” in the second sentence thereof.
Section 5.
Amend § 17-216(b), Chapter 17, Title 6 of the Delaware Code by deleting
the first sentence thereof in its entirety, by deleting the phrase “If all of the partners of the limited partnership or such
other vote as may be stated in a partnership agreement shall approve the
transfer or domestication described in subsection (a) of this section,” from
the second sentence thereof, and by substituting in lieu thereof the
following:
“If the partnership
agreement specifies the manner of authorizing a transfer or domestication
described in subsection (a) of this section, the transfer or domestication
shall be authorized as specified in the partnership agreement. If the partnership agreement does not specify
the manner of authorizing a transfer or domestication described in subsection
(a) of this section and does not prohibit such a transfer or domestication, the
transfer or domestication shall be authorized in the same manner as is
specified in the partnership agreement for authorizing a merger or
consolidation that involves the limited partnership as a constituent party to
the merger or consolidation. If the
partnership agreement does not specify the manner of authorizing a transfer or
domestication described in subsection (a) of this section or a merger or
consolidation that involves the limited partnership as a constituent party and
does not prohibit such a transfer or domestication, the transfer or
domestication shall be authorized by the approval by (1) all general
partners and (2) the limited partners or, if there is more than 1 class or
group of limited partners, then by each class or group of limited partners, in
either case, by limited partners who own more than 50 percent of the then
current percentage or other interest in the profits of the domestic limited
partnership owned by all of the limited partners or by the limited partners in
each class or group, as appropriate. If
a transfer or domestication described in subsection (a) of this section shall
be authorized as provided in this subsection (b),”.
Section 6.
Amend § 17-217(g), Chapter 17, Title 6 of the Delaware Code by deleting
from the first sentence thereof the phrase “or as required under applicable
non-Delaware law”, by substituting in lieu thereof the phrase “for all purposes
of the laws of the State of Delaware”, by deleting the word “and” as it appears
immediately before the words “the conversion” in the first sentence thereof, by
inserting a comma (“,”) immediately after the phrase “dissolution of such other
entity” in the first sentence thereof, and by inserting the words “the
conversion” immediately prior to the phrase “shall constitute a continuation”
in the first sentence thereof.
Section 7.
Amend § 17-301(b)(3), Chapter 17, Title 6 of the Delaware Code by
deleting said paragraph in its entirety and substituting in lieu thereof the
following:
“(3) In
the case of a person being admitted as a partner of a surviving or resulting
limited partnership pursuant to a merger or consolidation approved in
accordance with § 17-211(b) of this title, as provided in the partnership agreement of the surviving or resulting limited
partnership or in the agreement of merger or consolidation, and in the event of
any inconsistency, the terms of the agreement of merger or consolidation shall
control; and in the case of a person being admitted as a partner of a limited
partnership pursuant to a merger or consolidation in which such limited
partnership is not the surviving or resulting limited partnership in the merger
or consolidation, as provided in the partnership agreement of such limited
partnership.”.
Section 8.
Amend § 17-301(c), Chapter 17, Title 6 of the Delaware Code by deleting
the phrase “at the time provided in and upon compliance with the partnership
agreement” and by substituting in lieu thereof the phrase “as provided in the
partnership agreement”.
Section 9.
Amend Subchapter IV of Chapter 17, Title 6 of the Delaware Code by
adding thereto, immediately following § 17-406, a new § 17-407 to read as
follows:
Ҥ 17-407. Reliance on reports and information by
limited partners, liquidating trustees, and general partners.
(a) A
limited partner or liquidating trustee of a limited partnership shall be fully
protected in relying in good faith upon the records of the limited partnership
and upon information, opinions, reports or statements presented by a general
partner of the limited partnership, an officer or employee of a general partner
of the limited partnership, another liquidating trustee, or committees of the
limited partnership, limited partners or partners, or by any other person as to
matters the limited partner or liquidating trustee reasonably believes are
within such other person’s professional or expert competence, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits or losses of the limited partnership, or the value
and amount of assets or reserves or contracts, agreements or other undertakings
that would be sufficient to pay claims and obligations of the limited
partnership or to make reasonable provision to pay such claims and obligations,
or any other facts pertinent to the existence and amount of assets from which
distributions to partners or creditors might properly be paid.
(b) A
general partner of a limited liability limited partnership shall be fully
protected in relying in good faith upon the records of the limited partnership
and upon information, opinions, reports or statements presented by another
general partner of the limited partnership, an officer or employee of the
limited partnership, a liquidating trustee, or committees of the limited
partnership, limited partners or partners, or by any other person as to matters
the general partner reasonably believes are within such other person’s
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits or
losses of the limited partnership, or the value and amount of assets or
reserves or contracts, agreements or other undertakings that would be
sufficient to pay claims and obligations of the limited partnership or to make
reasonable provision to pay such claims and obligations, or any other facts
pertinent to the existence and amount of assets from which distributions to
partners or creditors might properly be paid.
(c) A
general partner of a limited partnership that is not a limited liability
limited partnership shall be fully protected from liability to the limited
partnership, its partners or other persons party to or otherwise bound by the
partnership agreement in relying in good faith upon the records of the limited
partnership and upon information, opinions, reports or statements presented by
another general partner of the limited partnership, an officer or employee of
the limited partnership, a liquidating trustee, or committees of the limited
partnership, limited partners or partners, or by any other person as to matters
the general partner reasonably believes are within such other person’s
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits or
losses of the limited partnership, or the value and amount of assets or
reserves or contracts, agreements or other undertakings that would be
sufficient to pay claims and obligations of the limited partnership or to make
reasonable provision to pay such claims and obligations, or any other facts
pertinent to the existence and amount of assets from which distributions to
partners or creditors might properly be paid.”.
Section 10.
Amend § 17-703(a), Chapter 17, Title 6 of the Delaware Code by deleting
the second sentence thereof and substituting in lieu thereof the following: “To
the extent so charged, the judgment creditor has only the right to receive any
distribution or distributions to which the judgment debtor would otherwise have
been entitled in respect of such partnership interest.”.
Section 11.
Amend § 17-703(b), Chapter 17, Title 6 of the Delaware Code by deleting
the second and third sentences thereof in their entirety.
Section 12.
Amend § 17-703(c), Chapter 17, Title 6 of the Delaware Code by deleting
said subsection in its entirety.
Section 13.
Amend § 17-703(d), Chapter 17, Title 6 of the Delaware Code by
re-designating said subsection as subsection (c), by inserting the words “or
partner’s assignee” immediately prior to the phrase “of a right”, and by
deleting the word “partner’s” and substituting in lieu thereof the words “judgment
debtor’s”.
Section 14.
Amend § 17-703(e), Chapter 17, Title 6 of the Delaware Code by
re-designating said subsection as subsection (d), by deleting the phrase “This
section provides” and by inserting in lieu thereof the phrase “The entry of a
charging order is”, and by inserting the words “of a” immediately prior to the
words “partner’s assignee”.
Section 15.
Amend § 17-703(f), Chapter 17, Title 6 of the Delaware Code by
re-designating said subsection as subsection (e) and by inserting the words “or
of a partner’s assignee” immediately following the phrase “No creditor of a
partner”.
Section 16.
Amend § 17-703, Chapter 17, Title 6 of the Delaware Code by inserting therein
a new subsection (f) to read as follows:
“(f) The Court of Chancery shall have jurisdiction
to hear and determine any matter relating to any such charging order.”.
Section 17.
Amend Subchapter VIII of Chapter 17, Title 6 of the Delaware Code by
adding thereto, immediately following § 17-805, a new § 17-806 to read as follows:
Ҥ 17-806. Revocation of Dissolution.
Notwithstanding the occurrence of an
event set forth in Section 17-801(1), (2), (3), (4) or (5) of this chapter, the
limited partnership shall not be dissolved and its affairs shall not be wound
up if, prior to the filing of a certificate of cancellation in the office of
the Secretary of State, the business of the limited partnership is continued,
effective as of the occurrence of such event, pursuant to the affirmative vote
or written consent of (i) all remaining general partners and all remaining
limited partners of the limited partnership, (ii) all remaining general
partners and the personal representative of the last remaining limited partner
of the limited partnership if there is no remaining limited partner, (iii) all
remaining limited partners if there is no remaining general partner or (iv) the
personal representative of the last remaining limited partner if there is no
remaining limited partner and no remaining general partner (and, in each
instance, any other person whose approval is required under the partnership
agreement to revoke a dissolution pursuant to this section), provided, however,
if the dissolution was caused by a vote or written consent, the dissolution
shall not be revoked unless each general partner and limited partner and other
person (or their respective personal representatives) who voted in favor of, or
consented to, the dissolution has voted or consented in writing to continue the
business of the limited partnership. If
there is no remaining general partner of the limited partnership and all
remaining limited partners or, if there is no remaining limited partner, the
personal representative of the last remaining limited partner, vote in favor of
or consent to the continuation of the business of the limited partnership, such
limited partners or personal representative, as applicable, shall be required
to agree in writing to appoint 1 or more general partners effective as of the
date of withdrawal of the last general partner, and if there is no remaining
limited partner of the limited partnership and the personal representative of
the last remaining limited partner votes in favor of or consents to the
continuation of the business of the limited partnership, such personal
representative shall be required to agree in writing to the admission of the
personal representative of such limited partner or its nominee or designee to
the limited partnership as a limited partner, effective as of the occurrence of
the event that caused the last remaining limited partner to cease to be a
limited partner.”
Section 18.
Amend § 17-902, Chapter 17, Title 6 of the Delaware Code by deleting
Subsection (b) thereof in its entirety and by deleting the designation “(a)” as
it appears immediately prior to the first sentence thereof.
Section 19.
Amend Subchapter IX of Chapter 17, Title 6 of the Delaware Code by
adding thereto, immediately following § 17-911, a new § 17-912 to read as
follows:
Ҥ 17-912. Activities not constituting
doing business.
(a) Activities
of a foreign limited partnership in the State of
(1) maintaining,
defending or settling an action or proceeding;
(2) holding
meetings of its partners or carrying on any other activity concerning its
internal affairs;
(3) maintaining
bank accounts;
(4) maintaining
offices or agencies for the transfer, exchange or registration of the limited
partnership’s own securities or maintaining trustees or depositories with
respect to those securities;
(5) selling
through independent contractors;
(6) soliciting
or obtaining orders, whether by mail or through employees or agents or
otherwise, if the orders require acceptance outside the State of
(7) selling,
by contract consummated outside the State of Delaware, and agreeing, by the
contract, to deliver into the State of Delaware, machinery, plants or
equipment, the construction, erection or installation of which within the State
of Delaware requires the supervision of technical engineers or skilled
employees performing services not generally available, and as part of the
contract of sale agreeing to furnish such services, and such services only, to
the vendee at the time of construction, erection or installation;
(8) creating,
as borrower or lender, or acquiring indebtedness with or without a mortgage or
other security interest in property;
(9) collecting
debts or foreclosing mortgages or other security interests in property securing
the debts, and holding, protecting and maintaining property so acquired;
(10) conducting
an isolated transaction that is not one in the course of similar transactions;
(11) doing
business in interstate commerce; and
(12) doing
business in the State of
(b) A
person shall not be deemed to be doing business in the State of
(c) This
section does not apply in determining whether a foreign limited partnership is
subject to service of process, taxation or regulation under any other law of
the State of
Section 20.
This Act shall become effective
SYNOPSIS
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This Act continues the practice of amending
periodically the Delaware Revised Uniform Limited Partnership Act (the “Act”)
to keep it current and to maintain its national preeminence. The following is a section-by-section review
of the proposed amendments of the Act. Section 1 amends § 17-101(12) of the Act to confirm
that a partner of a limited partnership and an assignee of an interest in a
limited partnership are bound by the partnership agreement. Section 2 amends § 17-106(a) of the Act to expand
the permitted purposes of a limited partnership. Section 3 amends § 17-211(g) of the Act to increase
the flexibility permitted in the Act regarding amendments to partnership
agreements and the adoption of new partnership agreements in connection with
mergers and consolidations. Sections 4 and 6 amend § 17-215(i) and § 17-217(g)
of the Act to confirm that these sections of the Act address the effect of
domestication and conversion, respectively, as a matter of Section 5 amends § 17-216(b) to conform the approval
requirements for the transfer of a domestic limited partnership to the
requirements for the conversion of a domestic limited partnership. Section 7 amends § 17-301(b)(3) of the Act to
clarify the way in which a person is admitted as a partner of a limited
partnership pursuant to a merger or consolidation. Section 8 amends § 17-301(c) of the Act to confirm
that a person is admitted as a partner of a limited partnership in connection
with a domestication or a conversion as provided in the partnership
agreement. Section 9 amends the Act to add a new § 17-407 to
clarify the circumstances under which limited partners, general partners and
liquidating trustees of a limited partnership may rely on the records of, or
information relating to, the limited partnership. Sections 10, 11, 12, 13, 14, 15 and 16 amend § 17-703
to clarify the nature of a charging order and provide that a charging order
is the sole method by which a judgment creditor may satisfy a judgment out of
the partnership interest of a partner or partner’s assignee. Attachment, garnishment, foreclosure or
like remedies are not available to the judgment creditor and a judgment
creditor does not have any right to become or to exercise any rights or
powers of a partner (other than the right to receive the distribution or
distributions to which the partner would otherwise have been entitled, to the
extent charged). Section 17 amends the Act to add a new § 17-806 to
provide, under certain circumstances, for the revocation of the dissolution
of a limited partnership. Sections 18 and 19 amend the Act to add a new § 17-912
to identify the activities of a foreign limited partnership in the State of Section 20 provides that the proposed amendments of
the Act shall become effective on This Act was submitted for sponsorship and
consideration by the General Assembly by the Delaware Bar Association. |