In its last session, the Delaware legislature passed 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’’). 2 Gov. Jack Markell signed the bill into law June 24, 2015. Except as otherwise noted below, all of the amendments are effective as of Aug. 1, 2015.

The amendments to the alternative entity statutes include several important changes. They eliminate, generally on a prospective basis, the class or group default voting in the DLLCA and DRULPA, which had applied to mergers, conversions, domestications, dissolutions and a number of other significant actions. They also confirm that the same rules governing irrevocability apply to a proxy as apply to a power of attorney and confirm that a delegation by a general partner or a manager is irrevocable if it states that it is irrevocable.

This article will discuss the amendments to the alternative entity statutes, each in turn.

Elimination of Default Class or Group Votes

[DLLCA § § 18-209(b), 18-213(b), 18-215(k), 18-215(l), 18-216(b), 18-801(a), 18-803(a); DRULPA § § 17-204(a)(3), 17-211(b), 17-214(a), 17-216(b), 17-218(k), 17-218(l), 17-219(b), 17-801, 17-803(a), 17-806]

The enumerated sections currently require a class or group vote for the actions taken thereunder, which include mergers and consolidations, transfers or continuances, termination and winding up of series, conversions and dissolution, if there is more than one class or group of members or limited partners, as applicable (unless otherwise provided in the limited liability company agreement or limited partnership agreement). Both the DLLCA and DRULPA permit the establishment of classes or groups [see § 18-302 of the DLLCA and § 17-302 of DRULPA]. However, neither the DLLCA nor DRULPA defines what a class or a group is. This has led to much uncertainty as to what constituted a ‘‘class or group’’ for purposes of the default voting provisions when a limited liability company agreement or limited partnership agreement gives certain members or partners different rights without designating those members or partners as a separate class or group. This uncertainty, in turn, has made numerous transactions difficult because it has been unclear what vote was required to approve them. The amendments eliminate these default rules throughout the DLLCA and DRULPA, although drafters may still put class or group votes in a limited liability company agreement or a limited partnership agreement if desired. For the most part, the changes are prospective only because the class or group voting requirements have been part of the statutes for so long that parties to limited liability company agreements and limited partnership agreements may have relied on them rather than putting class or group voting in their agreements. The exceptions are all in DRULPA and apply to Section 17-806 relating to revocation of dissolution because that section was just added last year so there would be no history of reliance on a default class or group vote and to Section 17-204(a)(3) relating to execution of a certificate of cancellation and Section 17-214(a) relating to election to be a limited liability limited partnership where, presumably, there would be little or no reliance on these provisions.


[DLLCA § 18-204(c); DRULPA § 17-204(c); DRUPA § 15-123]

Section 18-204(c) of the DLLCA, Section 17-204(c) of DRULPA and Section 15-123 of DRUPA currently address powers of attorney given with respect to limited liability companies, limited partnerships and general partnerships, respectively, and the circumstances under which they can be irrevocable. The amendments to these sections make clear that these provisions apply to proxies as well as powers of attorney. They also make clear that drafters can otherwise provide with respect to the provisions of an irrevocable power of attorney or irrevocable proxy in a limited liability company agreement or limited partnership agreement and that these subsections will not be construed to limit the enforceability of those powers of attorney or proxies. Thus, drafters should be able to expand or limit the circumstances under which a power of attorney or proxy will be deemed irrevocable in a limited partnership agreement or limited liability company agreement as well as in a general partnership agreement (although a similar change was not made to DRUPA because of its different structure relating to default rules).

Irrevocable Delegation

[DLLCA § 18-407; DRULPA § 17-403(c)]

Section 18-407 of the DLLCA currently provides that a member or manager of a limited liability company can delegate to one or more persons the member’s or manager’s rights and powers to manage and control the business and affairs of the limited liability company. Section 17-403(c) of DRULPA is to the same effect with regard to delegation by a general partner of a limited partnership of its rights and powers to manage and control the business of the limited partnership. The amendments confirm that any delegation by a member or manager or general partner will be irrevocable if it states that it is irrevocable, unless otherwise provided in the limited liability company agreement or the limited partnership agreement, as applicable, thus eliminating any question as to whether a delegation must be coupled with an interest or satisfy any additional requirements in order to be irrevocable.

Technical Change Regarding the Provision of Public Records

[DLLCA § 18-1105(a)(5); DRULPA § 17-1107(a)(5); DRUPA § 15-1207(a)(5)]

The final 2015 amendment to each of the DLLCA, DRULPA and DRUPA confirms that the Secretary of State may issue public records in the form of photocopies or electronic image copies and need not provide public records in any other form, in exchange for the statutorily prescribed fees. Unlike the other 2015 alternative entity amendments, these amendments took effect immediately upon enactment into law.