CHAPTER 348

FORMERLY

SENATE BILL NO. 469

AS AMENDED BY SENATE AMENDMENT NO. 1

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 DELAWARE (three-fifths of all members elected to each House thereof concurring therein):

Section 1. Amend §17-101(6), Chapter 17, Title 6 of the Delaware Code by deleting the language and 517-306" as it appears therein.

Section 2. Amend 517-101 (1D), Chapter 17, Title 6 of the Delaware Code by adding the words "or another written agreement or writing" in the second sentence of said subsection after the words "A written partnership agreement".

Section 3. Amend §17-104(b), Chapter 17, Title 6 of the Delaware Code by adding immediately before the next to the last sentence of said subsection the following language:

"In the event of a change of name of any person acting as a registered agent of a limited partnership, such registered agent shall file with the Secretary of State a certificate, executed by such registered agent, setting forth the new name of such registered agent, the name of such registered agent before it was changed, the names of all the limited partnerships represented by such registered agent, and the address at which such registered agent has maintained the registered office for each of such limited partnerships, and shall pay a fee as set forth in 517-1107(a)(2) of this title. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under his hand and seal of office."

Section 4. Amend §17-104 (b), Chapter 17, Title 6 of the Delaware Code by deleting the words of such certificate" as they appear after the word "Filing" in the next to the last sentence of said subsection, and by substituting in lieu thereof the words "a certificate under this section".

Section 5. Amend §17-104(d), Chapter 17, Title 6 of the Delaware Code by deleting therefrom the first two sentences of said subsection in their entirety and by substituting in lieu thereof the following language:

"The registered agent of a limited partnership may resign without appointing a success, registered agent by paying a fee as set forth in §17-1107 (a)(2) of this title and filing a certificate with the Secretary of State stating that it resigns as registered agent for the limited partnership identified in the certificate, but such resignation shall not become effective until 120 days after the certificate is filed. There shall be attached to such certificate an affidavit of such registered agent, if an individual, or the president, a vice-president or the secretary thereof if a corporation, that at least 30 days prior to and on or about the date of the filing of said certificate, notices were sent by certified or registered mail to the limited partnership for which such registered agent is resigning as registered agent, at the principal office thereof within or outside the State of Delaware, if known to such registered agent or, if not, to the last known address of the attorney or other individual at whose request such registered agent was appointed for such limited partnership, of the resignation of such registered agent."

Section 6. Amend §17-109, Chapter 17, Title 6 of the Delaware Code by deleting from the heading of said section the word general, by designating subsections "(d)" and "(e)" of said section as subsections "(e)" and "(f)", respectively, and by adding a new subsection "(d)" to said section to read as follows:

"(d) In a written partnership agreement or other writing, a partner may consent to be subject to the nonexclusive jurisdiction of the courts of, or arbitration in, a specified jurisdiction, or the exclusive jurisdiction of the courts of, or the exclusivity of arbitration in, the State of Delaware, and to be served with legal process in the manner prescribed in such partnership agreement or other writing."

Section 7. Amend §17-201(b), Chapter 17, Title 6 of the Delaware Code by adding the following sentence to the end of said subsection:

"A limited partnership formed under this chapter shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited partnership's certificate of limited partnership."

Section 8. Amend §17-202 (f)(2), Chapter 17, Title 6 of the Delaware Code by adding the following sentence to the end of said subsection:

"A person shown on a certificate of limited partnership as a general partner who is not winding up a limited partnership's affairs need not execute a certificate of amendment which is being executed and filed as required under this subsection."

Section 9, Amend §17-204(a)(3), Chapter 17, Title 6 of the Delaware Code by deleting the words "need be signed only by a majority of the limited partners" as they appear after the words "provided, however, that if the limited partners are winding up the limited partnership's affairs, a certificate of cancellation" in said paragraph and by substituting in lieu thereof the words "shall be signed by the limited partners or, if there is more than one 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 to the profits of the limited partnership owned by all of the limited partners or by the limited partners in each class or group, as appropriate".

Section 10. Amend §17-211(b), Chapter 17, Title 6 of the Delaware Code by adding immediately before the last sentence of said subsection the following sentence:

In connection with a merger or consolidation hereunder, rights or securities of, or interests in, a limited partnership or other business entity which is a constituent party to the merger or consolidation may be exchanged for or converted into cash, property, rights or securities of, or interests in, the surviving or resulting limited partnership or other business entity or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, a limited partnership or other business entity which is not the surviving or resulting limited partnership or other business entity in the merger or consolidation."

Section 11. Amend §17-211, Chapter 17, Title 6 of the Delaware Code by redesignating subsection "(g)" of said section as subsection "(h)', and by adding a new subsection to be designated as "(g)" to read as follows:

"(g) Notwithstanding anything to the contrary contained in a partnership agreement, a partnership agreement containing a specific reference to this subsection may provide that an agreement of merger or consolidation approved in accordance with subsection (b) of this section may (1) effect any amendment to the partnership agreement or (2) effect the adoption of a new partnership agreement for a limited partnership if it is the surviving or resulting limited partnership in the merger or consolidation. Any amendment to a partnership agreement or adoption of a new partnership agreement made pursuant to the foregoing sentence- shall be effective at the effective time or date of the merger or consolidation. The provisions of this subsection shall not be construed to limit the accomplishment of a merger or of any of the matters referred to herein by any other means provided for in a partnership agreement or other agreement or as otherwise permitted by law, including that the partnership agreement of any constituent limited partnership to the merger or consolidation (including a limited partnership formed for the purpose of consummating a merger or consolidation) shall be the partnership agreement of the surviving or resulting limited partnership."

Section 12. Amend §17-301, Chapter 17, Title 6 of the Delaware Code by adding a new subsection to said section to be designated as "(c)" to read as follows:

"(c) A person may be admitted to a limited partnership as a limited partner of the limited partnership and may receive a partnership interest in the limited partnership without making a contribution or being obligated to make a contribution to the limited partnership."

Section 13. Amend §17-303(a), Chapter 17, Title 6 of the Delaware Code by deleting the phrase "Except as provided in subsection (d) of this section," as they appear at the beginning of said subsection and by capitalizing the word "a" which follows the deleted words to read as A.

Section 14. Amend §17-303(b), Chapter 17, Title 6 of the Delaware Code by deleting the introductory paragraph in said subsection in its entirety and by substituting in lieu thereof the following:

"(b) A limited partner does not participate in the control of the business within the meaning of subsection (a) of this section by virtue of his possessing or, regardless of whether or not the limited partner has the rights or powers, exercising or attempting to exercise 1 or more of the following rights or powers or having or, regardless of whether or not the limited partner has the rights or powers, acting or attempting to act in 1 or more of the following capacities:".

Section 15. Amend §17-303(b)(1), Chapter 17, Title 6 of the Delaware Code by deleting said paragraph in its entirety and by substituting in lieu thereof the following:

"(1) To be an independent contractor for or to transact business with, including being a contractor for, or to be an agent or employee of, the limited partnership or a general partner, or to be an officer, director or stockholder of a corporate general partner, or to be a limited partner of a partnership that is a general partner of the limited partnership, or to be a trustee, administrator, executor, custodian or other fiduciary or beneficiary of an estate or trust which is a general partner, or to be a trustee, officer, advisor, stockholder or beneficiary of a business trust which is a general partner;".

Section 16. Amend §17-303(b), Chapter 17, Title 6 of the Delaware Code by redesignating paragraph "(9)" of said subsection as paragraph "(10)"; by amending paragraph (8) of said subsection by deleting the word or as it appears at the end of said paragraph; and by adding a new paragraph to said subsection to be designated as paragraph "(9)" to read as follows:

"(9) To serve on the board of directors or a committee of, to consult with or advise, to be an officer, director, stockholder, partner, agent or employee of, or to be a fiduciary for, any person in which the limited partnership has an interest; or".

Section 17. Amend §17-303, Chapter 17, Title 6 of the Delaware Code by adding a new subsection to said section to be designated as subsection "(f)" to read as follows:

"(f) A limited partner does not participate in the control of the business within the meaning of subsection (a) of this section regardless of the nature, extent, scope, number or frequency of the limited partner's possessing or, regardless of whether or not the limited partner has the rights or powers, exercising or attempting to exercise 1 or more of the rights or powers or having or, regardless of whether or not the limited partner has the rights or powers, acting or attempting to act in 1 or more of the capacities which are permitted under this section."

Section 18. Amend Subchapter III, Chapter 17, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§17-306" to read as follows:

"§17-306. Remedies for breach of partnership agreement by limited partner.

A partnership agreement may provide that (1) a limited partner who fails to perform in accordance with, or to comply with the terms and conditions of, the partnership agreement shall be subject to specified penalties or specified consequences, and (2) at the time or upon the happening of events specified in the partnership agreement, a limited partner shall be subject to specified penalties or specified consequences."

Section 19. Amend §17-401, Chapter 17, Title 6 of the Delaware Code by deleting the word "additional" from the heading of said section; by adding a subsection designation "(b)" immediately before the current text of said section; and by adding a new subsection to said section to be designated as "(a)" immediately before the current text of §17-401 to read as follows:

"(a) A person may be admitted to a limited partnership as a general partner of the limited partnership and ma:, receive a partnership interest in the limited partnership without making a contribution or being obligated to make a contribution to the limited partnership. Nothing contained in this subsection shall affect the first sentence of §17-403(b) of this chapter."

Section 20. Amend Subchapter IV, Chapter 17, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§17-406" to read as follows:

"§17-406. Remedies for breach of partnership agreement by general partner.

A partnership agreement may provide that (1) a general partner who fails to perform in accordance with, or to comply with the terms and conditions of, the partnership agreement shall be subject to specified penalties or specified consequences, and (2) at the time or upon the happening of events specified In the partnership agreement, a general partner shall be subject to specified penalties or specified consequences."

Section 21. Amend §17-602, Chapter 17, Title 6 of the Delaware Code by deleting the heading of said section in its entirety and by substituting In lieu thereof a new heading to read as "Withdrawal of general partner and assignment of general partner's partnership interest."; by adding a subsection designation "(a)" and language to read as "(a) A general partner may withdraw from a limited partnership at the time or upon the happening of events specified in the partnership agreement and in accordance with the partnership agreement." immediately before the current text of said section; and by adding a new subsection to said section to be designated as "(b)" to read as follows:

"(b) Notwithstanding anything to the contrary set forth In this chapter, a partnership agreement may provide that a general partner may not assign a partnership interest in a limited partnership prior to the dissolution and winding up of the limited partnership."

Section 22. Amend §17-702(a)(4), Chapter 17, Title 6 of the Delaware Code by adding a new sentence to the end of said paragraph to read as follows:

"Unless otherwise provided in a partnership agreement, the pledge of, or granting of a security interest, lien or other encumbrance in or against, any or all of the partnership interest of a partner shall not cause the partner to cease to be a partner or to have the power to exercise any rights or powers of a partner."

Section 23. Amend §17-904(b)(2), Chapter 17, Title 6 of the Delaware Code by deleting the words "or the limited partnership itself" as they appear at the end of said paragraph.

Section 24. Amend §17-904(c), Chapter 17, Title 6 of the Delaware Code by adding 2 sentences immediately before the next to the last sentence of the subsection to read as follows:

In the event of a change of name of any person acting as a registered agent of a foreign limited partnership, such registered agent shall file with the Secretary of State a certificate, executed by such registered agent, setting forth the new name of such registered agent, the name of such registered agent before it was changed, the names of all the foreign limited partnerships represented by such registered agent, and the address at which such registered agent has maintained the registered office for each of such foreign limited partnerships, and shall pay a fee as set forth in §17-1107(a)(7) of this title. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under his hand and seal of office."

Section 25. Amend §17-904(c), Chapter 17, Title 6 of the Delaware Code by deleting the words of such certificate" as they appear after the word "Filing" in the next to the last sentence said subsection and by substituting in lieu thereof the words "a certificate under this section".

Section 26. Amend §17-904(e), Chapter 17, Title 6 of the Delaware Code by deleting therefrom the first two sentences of said subsection In their entirety and by substituting In lieu thereof the following:

The registered agent of a foreign limited partnership may resign without appointing a successor registered agent by paying a fee as set forth in §17-1107(a)(7) of this title and filing a certificate with the Secretary of State stating that it resigns as registered agent for the foreign limited partnership identified in the certificate, but such resignation shall not become effective until 120 days after the certificate is filed. There shall be attached to such certificate an affidavit of such registered agent, if an individual, or of the president, a vice-president or the secretary thereof if a corporation, that at least 30 days prior to and on or about the date of the filing of said certificate, notices were sent by certified or registered mail to the foreign limited partnership for which such registered agent is resigning as registered agent, at the principal office thereof within or outside the State of Delaware, if known to such registered agent or, if not, to the last known address of the attorney or other individual at whose request such registered agent was appointed for such foreign limited partnership, of the resignation of such registered agent."

Section 27. Amend §17-1101, Chapter 17, Title 6 of the Delaware Code by adding at the end of the heading of said section and before the "." the words "and partnership agreement", and by adding at the end of said section the following new subsections to be designated as "(c)" and "(d)":

"(c) It is the policy of this chapter to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements.

(d) To the extent that, at law or in equity, a partner has duties (including fiduciary duties) and liabilities relating thereto to a limited partnership or to another partner,

(1) any such partner acting under a partnership agreement shall not be liable to the limited partnership or to any such other partner for the partner's good faith reliance on the provisions of such partnership agreement, and (2) the partner's duties and liabilities may be expanded or restricted by provisions in a partnership agreement."

Section 28. Amend §17-1107(a)(2), Chapter 17, Title 6 of the Delaware Code by deleting said paragraph in its entirety and by substituting in lieu thereof the following:

"(2) Upon the receipt for filing of a certificate under §17-104(b) of this title, a fee in the amount of $50, upon the receipt for filing of a certificate under §17-104(c) of this title, a fee in the amount of $50 and a further fee of $2 for each limited partnership affected by such certificate, and upon the receipt for filing of a certificate under §17-104(d) of this title, a fee in the amount of $10."

Section 29. Amend §17-1107(a)(7), Chapter 17, Title 6 of the Delaware Code by deleting said paragraph in its entirety and substituting in lieu thereof the following:

"(7) Upon the receipt for filing of a certificate under §17-904(c) of this title, a fee in the amount of $50, upon the receipt for filing of a certificate under §17-904(d) of this title, a fee in the amount of $50 and a further fee of $2 for each foreign limited partnership affected by such certificate, and upon the receipt for filing of a certificate under §17-904(e) of this title, a fee in the amount of $10."

Section 30. Amend §17-1107(a)(8), Chapter 17, Title 6 of the Delaware Code by deleting the amount of money "$50" as it appears in said paragraph and by substituting in lieu thereof the amount of money "$250".

Section 31. Amend §17-1107(a)(10), Chapter 17, Title 6 of the Delaware Code by adding at the end of said paragraph before the ".", the words ", except that for issuing any certificate of the Secretary of State that recites all of a limited partnership's filings with the Secretary of State, a fee of $100 shall be paid for each such certificate".

Section 32. Amend §17-1109(h), Chapter 17, Title 6 of the Delaware Code by adding at the end of said subsection after the word "tax", the words ", accompanied by a certificate of the limited partnership executed by a general partner or a liquidating trustee stating that it is paying all sums due hereunder".

Section 33. Amend §17-1109(j), Chapter 17, Title 6 of the Delaware Code by adding in the second sentence of the subsection after the words The Secretary of State shall not accept for filing any certificate" the words "(except a certificate of resignation of a registered agent when a successor registered agent is not being appointed)".

Section 34. This bill shall become effective on August 1, 1990.

Approved July 13, 1990.