CHAPTER 42

FORMERLY

SENATE BILL NO. 161

AS AMENDED BY SENATE AMENDMENT NO. 1

AN ACT TO AMEND CHAPTER 15, TITLE 6 OF THE DELAWARE CODE BY PROVIDING FOR THE FORMATION, REGISTRATION, AND REGULATION OF REGISTERED LIMITED LIABILITY 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 §1502, Chapter 15, Title 6 of the Delaware Code by adding a new subsection (6) to read as follows:

"(6) 'Registered limited liability partnership' means a partnership formed pursuant to an agreement governed by the laws of this state, registered under §1544 of this title and complying with §§1545 and 1546 of this title."

Section 2. Amend §1506(a), Chapter 15, Title 6 of the Delaware Code by adding the phrase "and includes, for all purposes of the laws of this state, a registered limited liability partnership" after the word "profit".

Section 3. Amend §1515, Chapter 15, Title 6 of the Delaware Code by deleting the phrase "All partners are liable:" as said phrase appears therein and substituting in lieu thereof the phrase "(a) Except as provided in subsection (b) of this section, all partners are liable:", and by adding new subsections (b), (c), and (d) to read as follows:

"(b) Subject to subsection (c) of this section, a partner in a registered limited liability partnership is not liable for debts and obligations of the partnership arising from negligence, wrongful acts, or misconduct committed while the partnership is a registered limited liability partnership and in the course of the partnership business by another partner or an employee, agent, or representative of the partnership.

(c) Subsection (b) of this section shall not affect the liability of a partner in a registered limited liability partnership for his own negligence, wrongful acts, or misconduct, or that of any person under his direct supervision and control.

(d) The ability of an attorney-at-law, admitted to the practice of law in Delaware, to practice law in a registered limited liability partnership, shall be determined by the Rules of the Supreme Court of this state."

Section 4. Amend §1518(1), Chapter 15, Title 6 of the Delaware Code by adding the phrase "except as provided in §1515(b) of this title, each partner" after the phrase "are satisfied; and".

Section 5. Amend §1534, Chapter 15, Title 6 of the Delaware Code by deleting the word "or" appearing at the end of §1534(1), by deleting the period appearing at the end of §1534(2) and substituting in lieu thereof the phrase "; or", and by adding a new subsection (3) to read as follows:

"(3) The liability is for a debt or obligation for which the partner is not liable as provided in §1515(b) of this title."

Section 6. Amend §1536(d), Chapter 15, Title 6 of the Delaware Code by deleting the word "all" appearing in the subsection and substituting in lieu thereof the word "those", and by adding the phrase "and for which he was liable under §1515 of this title,' after the words "while he was a partner".

Section 7. §1540(1)(b), Chapter 15, Title 6 of the Delaware Code by deleting the phrase "necessary for the payment of all the liabilities", and by substituting "(4)" for "(2)" appearing in the subsection.

Section 8. Amend §1540(4), Chapter 15, Title 6 of the Delaware Code by adding at the beginning of the subsection, following "(4)", the phrase "Except as provided in §1515(b) of this title: (a)", and by deleting the phrase "but if" which appears after the phrase "liabilities;" and substituting in lieu thereof the phrase "and (b) If".

Section 9. Amend Chapter 15, Title 6 of the Delaware Code by adding thereto new §§1544 through 1547, to read as follows:

"§1544. Registered Limited Liability Partnerships.

(a) To become and to continue as a registered limited liability partnership, a partnership shall file with the Secretary of State an application or a renewal application, as the case may be, stating the name of the partnership; the address of its principal office; if the partnership's principal office is not located in this state, the address of a registered office and the name and address of a registered agent for service of process in this state which the partnership shall be required to maintain; the number of partners; a brief statement of the business in which the partnership engages; and that the partnership thereby applies for status or renewal of its status, as the case may be, as a registered limited liability partnership.

(a) The application or renewal application shall be executed by a majority in interest of the partners or by one or more partners authorized to execute an application or renewal application.

(a) The application or renewal application shall be accompanied by a fee of $100 for each partner, but in no event shall the fee payable for any year with respect to a registered limited liability partnership under this section be more than the maximum annual corporation franchise tax as specified in 8 Del. C. §503(c).

(a) The Secretary of State shall register as a registered limited liability partnership, and shall renew the registration of any registered limited liability partnership, any partnership that submits a completed application or renewal application with the required fee.

(a) Registration is effective for one year after the date an application is filed, unless voluntarily withdrawn by filing with the Secretary of State a written withdrawal notice executed by a majority in interest of the partners or by one or more partners authorized to execute a withdrawal notice. Registration, whether pursuant to an original application or a renewal application, as a registered limited liability partnership is renewed if, during the sixty—day period preceding the date the application or renewal application otherwise would have expired, the partnership files with the Secretary of State a renewal application. A renewal application expires one year after the date an original application would have expired if the last renewal of the application had not occurred.

(a) The status of a partnership as a registered limited liability partnership shall not be affected by changes after the filing of an application or a renewal application in the information stated in the application or renewal application.

(a) The Secretary of State may provide forms for application for or for renewal of registration.

§1545. Name of Registered Limited Liability Partnerships.

The name of a registered limited liability partnership shall contain the words 'Registered Limited Liability Partnership' or the abbreviation 'L.L.P.' as the last words or letters of its name.

§1546. Insurance or Financial Responsibility of Registered Limited Liability Partnerships.

(a) A registered limited liability partnership shall carry at least $1,000,000 of liability insurance of a kind that is designed to cover the kinds of negligence, wrongful acts, and misconduct for which liability is limited by §1515(b) of this title and which insures the partnership and its partners.

(b) If in any proceeding, compliance by a partnership with the requirements of subsection (a) of this section is disputed, (1) that issue shall be determined by the court, and (2) the burden of proof of compliance shall be on the person who claims the limitation of liability in §1515(b) of this title.

(c) If a registered limited liability partnership is in compliance with the requirements of subsection (a) of this section, the requirements of this section shall not be admissible or in any way be made known to a jury in determining an issue of liability for or extent of the debt or obligation or damages in question.

(d) A registered limited liability partnership is considered to be in compliance with subsection (a) of this section if the partnership provides $1,000,000 of funds specifically designated and segregated for the satisfaction of judgments against the partnership or its partners based on the kinds of negligence, wrongful acts, and misconduct for which liability is limited by §1515(b) of this title by:

(1)deposit in trust or in bank escrow of cash, bank certificates of deposit, or United States Treasury obligations; or

(2) a bank letter of credit or insurance company bond.

§1547. Applicability of Chapter to Foreign and Interstate Commerce.

(a) A partnership, including a registered limited liability partnership, formed and existing under this chapter, may conduct its business, carry on its operations, and have and exercise the powers granted by this chapter in any state, territory, district, or possession of the United States or in any foreign country.

(b) It is the policy of this state that the internal affairs of partnerships, including registered limited liability partnerships, formed and existing under this chapter, including the liability of partners for debts and obligations of partnerships, shall be subject to and governed by the laws of this state."

Section 10. This Act shall become effective on August 1, 1993.

Approved June 24, 1993