Delaware llc division statute

What is Delaware incorporation services? What are the business entities in Delaware? Division of a limited liability company.

The original dividing LLC can continue to exist or terminate as part of the division. If the dividing company’s LLC Agreement does not specify the manner for adopting a plan of division and does not prohibit the dividing company from dividing, the plan of division shall be adopted in the same manner as is specified in its LLC Agreement for adopting a plan of merger or consolidation.

See full list on shearman. To effect a division, the surviving company or any other division company must file a certificate of division with the office of the Delaware Secretary of State, together with a certificate of formation for each resulting company. The certificate of division and each certificate of formation filed in connection therewith must have the same effective date or time.

If the dividing company does not survive the division, the certificate of division will serve also as a certificate of cancellation for the dividing company. When the certificate of division becomes effective, the debts, liabilities and obligations of the dividing company will vest in the applicable division company to which they are allocated under the plan of division, and no other division company will be liable for such debts, liabilities or obligations. However, if a court of competent jurisdiction determines that the allocation of a dividing company’s assets, debts and liabilities under a plan of division constitutes a fraudulent transfer, each division company shall be jointly and severally liable for those debts and liabilities.

Further, any debts or liabilities of a dividing company that are not allocated to a division company pursuant to the plan of division are deemed to be the joint and several obligations of each division company. A division may be utilized to facilitate, among other things, a spin-off, the sale of one or more lines of business, or the sale of assets, rights and properties, along with related liabilities, thereby eliminating the need to transfer assets and liabilities, or assign contracts or licenses, to newly formed LLCs.

Rather, upon effectiveness of a division, the dividing company’s assets and liabilities are “allocated” to, and vested in, the resulting LLCs, as specified in a plan of division, without the need for any further action by any party. The division of an LLC could also be utilize for example, to facilitate the sale of several lines of business to separate buyers simultaneously, and the equity interests in the resulting LLCs would be issued solely to the buyers of such lines of business. Registered series address certain issues and limitations that have arisen in connection with existing series, including (i) the inability of an existing series to obtain a good standing certificate, (ii) the inability of an existing series to merge with other series of the same LLC, and (iii) the fact that existing series are not considered “registered organizations” for purposes of the Uniform Commercial Code (UCC), thereby creating issues in perfecting a security interest against a series’ assets. The amendments authorize the formation of “registered series,” a new type of series of an LLC.

Addressing the Limitations of Existing Series Under the amendments, a registered series is an “association” and has the attributes of a “registered organization,” for purposes of the UCC, which may facilitate the use of registered series in secured financing transactions. In order to form a registered series, a certificate of registered series must be filed with the secretary of state. A statutory public benefit LLC permits a for-profit LLC to balance the members’ pecuniary interests with the public benefit to be promoted by the statutory public benefit LLC (as set forth in its certificate of formation) and the best interests of those materially affected by the statutory public benefit LLC’s conduct.

The managers, members or other persons managing the business and affairs of the statutory public benefit LLC are required to balance the members’ pecuniary interests with the stated public benefit, though there is no personal liability for monetary damages for failure. Under the amendments, the Delaware attorney general may file a motion in the Court of Chancery to cancel the certificate of formation of any LLC for abuse or misuse of its powers, privileges or existence. Upon any such cancellation, the court has the power to appoint trustees, receivers or otherwise wind up the LLC’s affairs. These amendments correspond to last year’s amendments to the DGCL relating to blockchain technology and will allow for the use of this new technology in connection with the governance of LLCs.

Previously, Section 262(e) required that the statement to dissenting stockholders provide the aggregate number of shares not voted in favor of the merger and for which appraisal rights were demande and the aggregate number of holders of such shares. In recognition of the fact that no shares are “voted” for the adoption of the merger agreement in a Section 251(h) transaction, the amendments clarify that the surviving corporation must provide stockholders, upon their request, with the number of shares not purchased in the tender or exchange offer, rather than the number of shares not voted for the merger. First, the amendments confirm that Section 2remains available for ratifying defective corporate acts in circumstances where no shares of valid stock are outstanding.

This amendment eliminates the need for any stockholder vote on the ratification of a defective corporate act in such circumstances, even if a vote of stockholders would otherwise be required under Section 204. Secon the amendments clarify that, in cases where a vote of stockholders is required for the ratification of a defective corporate act, the notice of the stockholder meeting required to be given to holders of valid or putative stock may be given to such holders as of the record date for the defective corporate act if it involved the establishment of a record date.

This change will facilitate a corporation’s ability to use the ratification mechanisms in Secti. Furthermore, as amende Section 2provides that the Court of Chancery has the power to appoint a trustee to administer and wind up the affairs of a corporation whose charter has been revoked or forfeited pursuant to Section 284. Copies of the amendments, which have been enacte are available here andhere. This memorandum is considered advertising under applicable state laws. Delaware LLC division statute , but three states, Texas, Arizona and Pennsylvania, already allow for LLC divisions.

In each of these states, divisions actually are permitted for all forms of business entities, not just limited liability companies. A limited liability company agreement of a limited liability company having only member shall not be unenforceable by reason of there being only person who is a party to the limited liability company agreement. Instant Downloa Mail Paper Copy or Hard Copy Delivery, Start and Order Now! A division permits a Delaware LLC to divide into two or more Delaware LLCs, which may or may not include the dividing LLC , and to allocate its assets and liabilities among those LLCs, with the only limitation, if not restricted by contract, being that there not be a fraudulent transfer.

Unlike a traditional merger, whereby two or more entities merge to become one entity, a divisive merger involves one entity dividing into multiple entities. Further, the dividing entity is not required to terminate in connection with the division and may continue as a surviving entity. Instantly Find and Download Legal Forms Drafted by Attorneys for Your State.