Delaware Legislative Changes
Effective August 1, 2018:
Statutory Trusts – HB 175
- All Statutory Trust filing fees were increased from $200 to $500 per filing (change approved in 2017 was not immediately implemented)
Corporations – SB 180
- Validations – Ratification of Defective Corporate Acts (§204 & §205 of the Delaware General Corporation Law) were implemented in 2014, but limited to stock corporations only. Under SB 180, non-stock corporations are also able to utilize these filings and several technical updates were made to the sections.
- Appraisal Rights. Enacts certain amendments to Section 262 regarding shareholder appraisal rights.
LLCs – SB 183
- Last year, many changes were made to the Corporation law, under SB 69, to permit Delaware’s Blockchain initiative, but these changes only impacted Corporations. This year, SB 183 goes further and modifies the LLC law to permit the Delaware Blockchain initiative for use with LLCs.
- A new filing has been created (§18-217) called a Certificate of Division. This new filing allows a Domestic LLC to divide into two or more (no maximum) Domestic LLCs. Think of this as the opposite of a merger. Similar to a Conversion/Formation, a Division MUST be accompanied by one (or more) Formations. The Domestic LLC can ONLY divide into multiple Domestic LLCs, but once divided, each resulting LLC can convert, merge, or otherwise transact business like any other LLC.
- CAUTION – because this is a multi-part filing, each filing has separate filing fees. So, if you are dividing into two entities and use 1 Hour $1,000 service, you just spent $2,000.
- CAUTION – if using an effective date and/or effective time in a Division, it must also be included (and be identical) in the simultaneously filed Formations.
- A certificate showing the Division can be obtained from the Division of Corporations.
- Public Benefit Corporations (for profit entities that have a socially beneficial purpose) have existed in Delaware since 2013. SB 183 creates a new entity type, the Statutory Public Benefit LLC (§18-1201). This entity combines the benefits of a Public Benefit Corporation with the advantages of the LLC law.
LPs – SB 182
- Under SB 182, the LP law was also updated to permit the Delaware Blockchain initiative for use with LPs.
Effective October 1st, 2018:
All Entity Types – HB 310
- Enacts the Certification of Adoption of Transparency and Sustainability Act under §5000E.
- This Act is entirely voluntary and allows any Delaware Domestic entity type to support global sustainability efforts. It is an enabling Act and does not suggest which sustainability standards should be adopted, therefore setting a “floor level standard” in the hopes that entities will voluntarily exceed them.
- Prior to the October 1st go-live, Delaware will release a website which outlines all of the details and requirements related to this optional certification.
Effective August 1st, 2019:
- We’ll see big changes to the existing Series LLC statutes in 2019.
- The names of the series within a Series LLC must be distinguishable from all other names (Corporations – SB 180, LLCs – SB 183, LPs – SB 182, UCC – SB 196).
- Allows for the creation of Protected Series (similar to the Series we know in Delaware today) and Registered Series (Series that voluntarily opt to register themselves on the Delaware database for additional fees).
- Each Registered Series will have to file a Qualification to register and then will pay $75 in annual tax on June 1st (in addition to the $300 Annual Tax for the parent LLC). If a Series becomes delinquent, they will be assessed a $50 penalty (in addition to the $200 penalty for the parent LLC).
- There can be an unlimited number of Protected and/or Registered Series under each parent Series LLC.
- Registered Series will be able to obtain their own good standing certificates and certified copies. They’ll also be able to file almost any document that a normal LLC could file (mergers, amendments, restateds, etc).
- A Registered Series can convert into a Protected Series and a Protected Series can convert into a Registered Series.
- Each series will have a registered agent – but all series MUST have the same agent as their parent.
- Each Registered Series will reflect their own status (good standing, ceased good standing, etc), however, a Registered Series CANNOT be in Good Standing if their parent Series LLC is not in Good Standing.
- A Statutory Public Benefit LLC will be able to also become a Series LLC which will allow each series to have a unique socially beneficial purpose.
- Additional details will be released as we approach the 2019 date
Courtesy of Alan Stachura, Senior Manager – Government Relations, CT Corporation