CHAPTER 360

FORMERLY

HOUSE BILL NO. 528

AN ACT TO AMEND CHAPTER 18, TITLE 6 OF THE DELAWARE CODE RELATING TO THE CREATION, REGULATION, OPERATION AND DISSOLUTION OF DOMESTIC LIMITED LIABILITY COMPANIES AND THE REGISTRATION AND REGULATION OF FOREIGN LIMITED LIABILITY COMPANIES.

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 § 18-206(a), Chapter 18, Title 6 of the Delaware Code by adding immediately following the words any restated certificate," the words any certificate of conversion to limited liability company, any certificate of transfer, any certificate of limited liability company domestication,".

Section 2. Amend § 18-206(a)(1), Chapter 18, Title 6 of the Delaware Code by adding immediately following the words the restated certificate the words ", the certificate of conversion to- limited liability company, the certificate of transfer, the certificate of limited liability company domestication".

Section 3. Amend § 18-206(6), Chapter 18, Title 6 of the Delaware Code by

adding immediately following the first usage of the words "acts as a certificate of cancellation," in the second sentence of said subsection, the words "or a certificate of transfer," by adding immediately following the second usage of the words "acts as a certificate of cancellation," in the second sentence of said subsection, the words or a certificate of transfer," and by adding the following sentences immediately following the second sentence of said subsection:

"Upon the filing of a certificate of limited liability company domestication, or upon the future effective date or time of a certificate of limited liability company domestication, the entity filing the certificate of limited liability company domestication is domesticated as a limited liability company with the effect provided in § 18-212 of this chapter. Upon the filing of a certificate of conversion to limited liability company, or upon the future effective date or time of a certificate of conversion to limited liability company, the entity tiling the certificate of conversion to limited liability company is converted to a limited liability company with the effect provided in § 18-214 of this chapter."

Section 4. Amend § 18-206(c), Chapter 18, Title 6 of the Delaware Code by

adding immediately following the words "a restated certificate the words ", a certificate of conversion to limited liability company, a certificate of transfer, a certificate of limited liability company domestication".

Section 5. Amend § 18-207, Chapter 18, Title 6 of the Delaware Code by

adding immediately prior to the punctuation mark "." at the end of the only sentence of said section the words and which are permitted to be set forth in a certificate of formation by § 18-215(6) of this chapter"

Section 6. Amend Subchapter II, Chapter 18, Title 6 of the Delaware Code by

adding thereto a new section to be designated as "§ 18-212" to read as follows:

"§ 18-212. Domestication of non-United States entities.

(a) As used in this section, "non-United States entity" means a foreign limited

liability company (other than one formed under the laws of a state), or a corporation, a business trust or association, a real estate investment trust, a common-law trust, or any other unincorporated business, including a partnership (whether general (including a registered

limited liability partnership) or limited (including a registered limited liability limited partnership)), formed, incorporated, created or that otherwise came into being under the laws of any foreign country or other foreign jurisdiction (other than any state).

(b) Any non-United States entity may become domesticated as a limited

liability company in the State of Delaware by complying with subsection (g) of this section and filing in the Office of the Secretary of State in accordance with § 18-206 of this chapter:

(1) A certificate of limited liability company domestication that has been executed by 1 or more authorized persons in accordance with § 18-204 of this chapter; and

(2) A certificate of formation that complies with § 18-201 of this chapter and has been executed by 1 or more authorized persons in accordance with § 18-204 of this chapter.

(c) The certificate of limited liability company domestication shall state:

(1) The date on which and jurisdiction where the non-United States entity was first formed, incorporated, created or otherwise came into being;

(2) The name of the non-United States entity immediately prior to the filing of the certificate of limited liability company domestication;

(3) The name of the limited liability company as set forth in the certificate of formation filed in accordance with subsection (b) of this section;

(4) The future effective date or time (which shall be a date or time certain) of the domestication as a limited liability company if it is not to be effective upon the filing of the certificate of limited liability company domestication and the certificate of formation; and

(5) The jurisdiction that constituted the seat, siege social, or principal place of business or eentral administration of the non-United States entity, or any other equivalent thereto under applicable law, immediately prior to the filing of the certificate of limited liability company domestication.

(d) Upon the filing in the Office of the Secretary of State of the certificate of limited liability company domestication and the certificate of formation or upon the future effective date or time of the certificate of limited liability company domestication and the certificate of formation, the non-United States entity shall be domesticated us a limited liability company in the State of Delaware and the limited liability company shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding § 18-201 of this chapter, the existence of the limited liability company shall be deemed to have commenced on the date the non-United States entity commenced its existence in the jurisdiction in which the non-United States entity was first formed, incorporated, created or otherwise came into being.

(e) The domestication of any non-United States entity as a limited liability

company in the State of Delaware graft not be deemed to affect any obligations or liabilities of the non-United States entity incurred prior to its domestication as a limited liability company in the State of Delaware, or the personal liability of any person therefor.

(f) The filing of a certificate of limited liability' company domestication shall

not affect the choice of law applicable to the non-United States entity, except that from the effective date or time of the domestication, the law of the State of Delaware, including the provisions of this chapter, shall apply to the non-United States entity to the same extent as if the non-United States entity had been formed as a limited liability company on that date.

(g) Prior to filing a certificate of limited liability company domestication with

the Office of the Secretary of State, a limited liability company agreement shall be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the non-United States entity and the conduct of its business or by applicable non-Delaware law, as appropriate.

(h) When any domestication shall have become effective under this section, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the non-United States entity that has been domesticated, and all property; real, personal and mixed, and all debts due to such non-United States entity, as welt as all other things and causes of action belonging to such non-United States entity, shall be vested in the domestic limited liability company and shall thereafter be the property of the domestic limited liability company as they were of the non-United States entity immediately prior to its domestication, and the title to any real property vested by deed or otherwise in such non-United States entity shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such non-United States entity shall be preserved unimpaired, and all debts, liabilities and duties of the non-United States entity that has been domesticated shall thenceforth attach to the domestic limited liability company, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by the domestic limited liability company."

Section 7. Amend Subchapter II, Chapter 18, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§ 18-213" to read as follows:

"§ 18-213. Transfer and continuance of domestic limited liability companies.

(a) Upon compliance with the provisions of this section, any limited liability company may transfer to any jurisdiction, other than any state, that permits the transfer to or domestication or continuance in such jurisdiction of a limited liability company.

(b) Notwithstanding anything to the contrary in this chapter or a limited liability company agreement, a transfer described in subsection (a) of this section shall be approved in writing by all of the managers and all of the members. If all of the managers and all of the members of the limited liability company shall approve the transfer described in subsection (a) of this section, a certificate of transfer, executed in accordance with § 18-204 of this chapter, shall be filed in the Office of the Secretary of State in accordance with § 18-206 of this chapter. The certificate of transfer shall state:

(1) The name of the limited liability company and, if it has been changed, the name under which it was originally filed;

(2) The date of the filing of its original certificate of formation with the Secretary of State;

(3) The jurisdiction to which the limited liability company will transfer;

(4) The future effective date or time (which shall be a date or time certain) of the transfer to the jurisdiction specified in subsection (b)(3) of this section if it is not to be effective upon the filing of the certificate of transfer;

(5) That the transfer of the limited liability company has been approved in accordance with the provisions of this section;

(6) The agreement of the limited liability company that it may be served with process in the State of Delaware in any action, suit or proceeding for enforcement of any obligation of the limited liability company arising while it was a limited liability company of the State of Delaware, and that it irrevocably appoints the Secretary of State as its agent to accept service of process in any such action, suit or proceeding; and

(7) The address to which a copy of the process referred to in subsection (b)(6) of this section shall be mailed to it by the Secretary of State. In the event of service hereunder upon the Secretary of State, the procedures set forth in § 18911(e) of this chapter shall be applicable, except that the plaintiff in any such action, suit or proceeding shall furnish the Secretary of State with the address specified in this subsection and any other address that the plaintiff may elect to furnish, together with copies of such process as required by the Secretary of State, and the Secretary of State shall notify the limited liability company that has transferred out of the State of Delaware at all such addresses furnished by the plaintiff in accordance with the procedures set forth in § 18-911(c) of this chapter.

(c) Upon the filing in the Office of the Secretary of State of the certificate of transfer or upon the future effective date or time of the certificate of transfer and payment to the Secretary of State of all fees prescribed in this chapter, the Secretary of State shall certify that the limited liability company has filed all documents and paid all fees required by this chapter, and thereupon the limited liability company shall cease to exist as a limited liability company of the State of Delaware. Such certificate of the Secretary of State shall be prima facie evidence of the transfer by such limited liability company out of the State of Delaware.

(d) The transfer of a limited liability company out of the State of Delaware in accordance with this section shall not be deemed to affect any obligations or liabilities of the limited liability company incurred prior to such transfer or the personal liability of any person incurred prior to such transfer, nor shall it be deemed to affect the choice of law applicable to the limited liability company with respect to matters arising prior to such transfer."

Section 8. Amend Subchapter 11, Chapter 18, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§ 18-214" to read as follows:

"§ 18-214 Conversion of certain entities to a limited liability company.

(a) As used in this section, the term "other entity" means a business trust or association, a real estate investment trust, a common-law trust, or any other unincorporated business, including a partnership (whether general (including a registered limited liability partnership) or limited (including a registered limited liability limited partnership)) or a foreign limited liability company.

(b) Any other entity may convert to a domestic limited liability company by complying with subsection (h) of this section and filing in the Office of the Secretary of State in accordance with § 18-206 of this chapter:

(1) A certificate of conversion to limited liability company that has been executed by I or more authorized persons in accordance with § 18-204 of this chapter; and

(2) A certificate of formation that complies with § 18-201 of this chapter and has been executed by 1 or more authorized persons in accordance with § 18-204 of this chapter.

(c) The certificate of conversion to limited liability company shall state:

(1) The date on which and jurisdiction where the other entity was first

created, formed, incorporated or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic limited liability company;

(2) The name of the other entity immediately prior to the filing of the certificate of conversion to limited liability company;

(3) The name of the limited liability company as set forth in its certificate of formation filed in accordance with subsection (b) of this section; and

(4) The future effective date or time (which shall be a date or time certain) of the conversion to a limited liability company if it is not to be effective upon the filing of the certificate of conversion to limited liability company and the certificate of formation.

(d) Upon the filing in the Office of the Secretary of State of the certificate of conversion to limited liability company and the certificate of formation or upon the future effective date or time of the certificate of conversion to limited liability company and the certificate of formation, the other entity shall be converted into a domestic limited liability company and the limited liability company shall thereafter be subject to all of the provisions of this chapter, except that notwithstanding § 18-201 of this chapter, the existence of the limited liability company shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.

(e) The conversion of any other entity into a domestic limited liability company shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a domestic limited liability company, or the personal liability of any person incurred prior to such conversion.

(f) When any conversion shall have become effective under this section, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the other entity that has converted, and all property, real, personal and mixed, and all debts due to such other entity, as well as all other things and causes of action belonging to such other entity, shall be vested in the domestic limited liability company and shall thereafter be the property of the domestic limited liability company as they were of the other entity that has converted, and the title to any real property vested by deed or otherwise in such other entity shall not revert or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such other entity shall be preserved unimpaired, and all debts, liabilities and duties of the other entity that has converted shall thenceforth attach to the domestic limited liability company, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.

(g) Unless otherwise agreed, or as required under applicable non-Delaware law, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of such other entity.

(h) Prior to filing a certificate of conversion to limited liability company with the Office of the Secretary of State, a limited liability company agreement shall be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the other entity and the conduct of its business or by applicable law, as appropriate.

(i) The provisions of this section shall not be construed to limit the accomplishment of a change in the law governing, or the domicile of, an other entity to the State of Delaware by any other means provided for in a limited liability company agreement or other agreement or as otherwise permitted by law, including by the amendment of a limited liability company agreement or other agreement."

Section 9. Amend Subchapter II, Chapter 18, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§ 18-215" to read as follows:

"§18-21S Series of members, managers or limited liability company interests.

(a) A limited liability company agreement may establish or provide for the establishment of designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and, to the extent provided in the limited liability company agreement, any such series may have a separate business purpose or investment objective.

(b) Notwithstanding anything to the contrary set forth in this chapter or under other applicable law, in the event that a limited liability company agreement creates one or more series, and if separate and distinct records are maintained for any such series and the assets associated with any such series are held and accounted for separately from the other assets of the limited liability company, or any other series thereof, and if the limited liability company :agreement so provides, and notice of the limitation on liabilities of a series as referenced in this subsection is set forth in the certificate of formation of the limited liability company, then the debts, liabilities and obligations incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series only, and not against the assets of the limited liability company generally. The fact that a certificate of formation that contains the foregoing notice of the limitation on liabilities of a series is on file in the Office of the Secretary of State shall constitute notice of the limitation on liabilities of such series.

(c) Notwithstanding § 18-303(a) of this chapter, under a limited liability company agreement or under another agreement, a member or manager may agree to be obligated personally for any or all of the debts, obligations and liabilities of one or more series.

(d) A limited liability company agreement may provide for classes or groups of members or managers associated with a series having such relative rights, powers and duties as the limited liability company agreement may provide, and may make provision for the future creation in the manner provided in the limited liability company agreement of additional classes or groups of members or managers associated with the series having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of members or managers associated with the series. A limited liability company agreement may provide for the taking of an action, including the amendment of the limited liability company agreement, without the vote or approval of any member or manager or class or group of members or managers, including an action to create under the provisions of the limited liability company agreement a class or group of the series of limited liability company interests that was not previously outstanding. A limited liability company agreement may provide that any member or class or group of members associated with a series shall have no voting rights.

(e) A limited liability company agreement may grant to all or certain identified members or managers or a specified class or group of the members or managers associated with a series the right to vote separately or with all or any class or group of the members or managers associated with the series, on any matter. Voting by members or managers associated with a series may be on a per capita, number, financial interest, class, group or any other basis.

(f) Unless otherwise provided in a limited liability company agreement, the management of a series shall be vested in the members associated with such series in proportion to the then current percentage or other interest of members in the profits of the series owned by all of the members associated with such series, the decision of members owning more than 50 percent of the said percentage or other interest in the profits controlling; provided, however, that if a limited liability company agreement provides for the management of the series, in whole or in part, by a manager, the management of the series, to the extent so provided, shall be vested in the manager who shall be chosen in the manner provided in the limited liability company agreement. The manager of the series shall also hold the offices and have the responsibilities accorded to him as set forth in a limited liability company agreement. A series may have more than I manager. Subject to §18-602 of this chapter, a manager shall cease to be a manager with respect to a series as provided in a limited liability company agreement. Except as otherwise provided in a limited liability company agreement, any event under this chapter or in a limited liability company agreement that causes a manager to cease to be a manager with respect to a series shall not, in itself, cause such manager to cease to be a manager of the limited liability company or with respect to any other series thereof.

(g) Notwithstanding § 18-606 of this chapter, but subject to subsections (h) and (k) of this section, and unless otherwise provided in a limited liability company agreement, at the time a member associated with a series that has been established in accordance with subsection (b) of this section becomes entitled to receive a distribution with respect to such series, he has the status of, and is entitled to all remedies available to, a creditor of the series, with respect to the distribution. A limited liability company agreement may provide for the establishment of a record date with respect to allocations and distributions with respect to a series.

(h) Notwithstanding § 18-607(a) of this chapter, a limited liability company may make a distribution with respect to a series that has been established in accordance with subsection (b) of this section; provided that a limited liability company shall not make a distribution with respect to a series that has been established in accordance with subsection (b) of this section to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of such series, other than liabilities to members on account of their limited liability company interests with respect to such series and liabilities for which the recourse of creditors is limited to specified property of such series, exceed the fair value of the assets associated with such series, except that the fair value of property of the series that is subject to a liability for which the recourse of creditors is limited shall be included in the assets associated with such series only to the extent that the fair value of that property exceeds that liability. A member who receives a distribution in violation of this subsection, and who knew at the time of the distribution that the distribution violated this subsection, shall be liable to a series for the amount of the distribution. A member who receives a distribution in violation of this subsection, and who did not know at the time of the distribution that the distribution violated this subsection, shall not be liable for the amount of the distribution. Subject to § 18-607(c) of this chapter, which shall apply to any distribution made with respect to a series under this subsection, this subsection shall not affect any obligation or liability of a member under an agreement or other applicable law for the amount of a distribution.

(i) Unless otherwise provided in the limited liability company agreement, a member shall cease to be associated with a series and to have the power to exercise any rights or powers of a member with respect to such series upon the assignment of all of his limited liability company interest with respect to such series. Except as otherwise provided in a limited liability company agreement, any event under this chapter or a limited liability company agreement that causes a member to cease to be associated with a series shall not, in itself, cause such member to cease to be associated with any other series or terminate the continued membership of a member in the limited liability company.

(j) Subject to § 18-801 of this chapter, except to the extent otherwise provided in the limited liability company agreement, a series may be terminated and its affairs wound up without causing the dissolution of the limited liability company. The termination of a series established in accordance with subsection (b) of this section shall not affect the limitation on liabilities of such series provided by subsection (b) of this section. A series is terminated and its affairs shall be wound up upon the dissolution of the limited liability company under § 18-801 of this chapter or otherwise upon the first to occur of the following:

(1) At the time specified in the limited liability company agreement;

(2) Upon the happening of events specified in the limited liability company agreement;

(3) Unless otherwise provided in the limited liability company agreement, upon the written consent of all members associated with such series; or

(4) The termination of such series under subsection (1) of this section.

(k) Notwithstanding § 18-803(a) of this chapter, unless otherwise provided in the limited liability company agreement, a manager associated with a series who has not wrongfully terminated the series or, if none, the members associated with the series or a person approved by the members associated with the series or, if there is more than one class or group of members associated with the series, then by each class or group of members associated with the series, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the series owned by all of the members associated with the series or by the members in each class or group associated with the series, as appropriate, may wind up the affairs of the series; but, if the series has been established in accordance with subsection (b) of this section, the Court of Chancery, upon cause shown, may wind up the affairs of the series upon application of any member associated with the series, his legal representative or assignee, and in connection therewith, may appoint a liquidating trustee. The persons winding up the affairs of a series may, in the name of the limited liability company and for and on behalf of the limited liability company and such series, take all actions with respect to the series as are permitted under §18-803(b) of this chapter. The persons winding up the affairs of a series shall provide for the claims and obligations of the series as provided in § 18-804(b) of this chapter and distribute the assets of the series as provided in § 18-804(a) of this chapter. Actions taken in accordance with this subsection shall not affect the liability of members and shall not impose liability on a liquidating trustee.

(l) On application by or for a member or manager associated with a series established in accordance with subsection (b) of this section, the Court of Chancery may decree dissolution of such series whenever it is not reasonably practicable to carry on the business of the series in conformity with a limited liability company agreement.

(m) If a foreign limited liability company that is registering to do business in the State of Delaware in accordance with § 18-902 of this chapter is governed by a limited liability company agreement that establishes or provides for the establishment of designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the foreign limited liability company or profits and losses associated with specified property or obligations, that fact shall be so stated on the application for registration as a foreign limited liability company. In addition, the foreign limited liability company shall state on such application whether the debts, liabilities and obligations incurred, contracted for or otherwise existing with respect to a particular series, if any, shall be enforceable against the assets of such series only, and not against the assets of the foreign limited liability company generally."

Section 10. Amend Subchapter II, Chapter 18, Title 6 of the Delaware Code by adding thereto a new section to be designated as "§ 18-216" to read as follows:

"§ 18-216. Approval of conversion of a limited liability company.

A domestic limited liability company may convert to a business trust or association, a real estate investment trust, a common-law trust, a general partnership (including a registered limited liability partnership) or a limited partnership (including a registered limited liability limited partnership), organized, formed or created under the laws of the State of Delaware, upon the authorization of such conversion in accordance with this section. If the limited liability company agreement specifies the manner of authorizing a conversion of the limited liability company, the conversion shall be authorized as specified in the limited liability company agreement. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company and does not prohibit a conversion of the limited liability company, the conversion shall be authorized in the same manner as is specified in the limited liability company agreement for authorizing a merger or consolidation that involves the limited liability company as a constituent party to the merger or consolidation. If the limited liability company agreement does not specify the manner of authorizing a conversion of the limited liability company or a merger or consolidation that involves the limited liability company as a constituent party and does not prohibit a conversion of the limited liability company, the conversion shall be authorized by the approval by the members or, if there is more than one class or group of members, then by each class or group of members, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the domestic limited liability company owned by all of the members or by the members in each class or group, as appropriate."

Section 11. Amend § 18-302(a), Chapter 18, Title 6 of the Delaware Code by adding the following sentence at the end of said subsection:

"A limited liability company agreement may provide that any member or class or group of members shall have no voting rights."

Section 12. Amend § 18-305(f), Chapter 18, Title 6 of the Delaware Code by adding the following sentences immediately following the only sentence of said subsection:

If the limited liability company refuses to permit a member to obtain or a manager to examine the information described in subsection (a)(3) of this section or does not reply to the demand that has been made within 5 business days after the demand has been made, the demanding member or manager may apply to the Court of Chancery for an order to compel such disclosure. The Court of Chancery is hereby vested with exclusive jurisdiction to determine whether or not the person seeking such information is entitled to the information sought. The Court of Chancery may summarily order the limited liability company to permit the demanding member to obtain or manager to examine the information described in subsection (a)(3) of this section and to make copies or abstracts therefrom; or the Court of Chancery may summarily order the limited liability company to furnish to the demanding member or manager the information described in subsection (a)(3) of this section on the condition that the demanding member or manager first pay to the limited liability company the reasonable cost of obtaining and furnishing such information and on such other conditions as the Court of Chancery deems appropriate. When a demanding member seeks to obtain or a manager seeks to examine the information described in subsection (a)(3) of this section, the demanding member or manager shall first establish (1) that the demanding member or manager has complied with the provisions of this section respecting the form and manner of making demand for obtaining or examining of such information, and (2) that the information the demanding member or manager seeks is reasonably related to the member's interest as a member or the manager's position as a manager, as the case may be The Court of Chancery may, in its discretion, prescribe any limitations or conditions with reference to the obtaining or examining of information, or award such other or further relief as the Court of Chancery may deem just and proper. The Court of Chancery may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within the State of Delaware and kept in the State of Delaware upon such terms and conditions as the order may prescribe."

Section 13. Amend § 18-603, Chapter 18, Title 6 of the Delaware Code by inserting the word "only" immediately following the first usage of the words from a limited liability company" in the first sentence thereof, by deleting the second and third sentences thereof in their entirety, and adding the following sentences at the end of § 18-603 to read as follows:

"Notwithstanding anything to the contrary under applicable law, unless a limited liability company agreement provides otherwise, a member may not resign from a limited liability company prior to the dissolution and winding up of the limited liability company. Notwithstanding anything to the contrary under applicable law, a limited liability company agreement may provide that a limited liability company interest may not be assigned prior to the dissolution and winding up of the limited liability company.

Unless otherwise provided in a limited liability company agreement, a limited liability company whose original certificate of formation was filed with the Secretary of State and effective on or prior to July 31, 1996, shall continue to be governed by 6 Del. C, § 18-603 as in effect on July 31, 1996, and shall not be governed by this section."

Section 14. Amend § 18-702(b), Chapter 18, Title 6 of the Delaware Code by redesignating paragraph "(1)" as paragraph "(2)", by redesignating paragraph "(2)" as paragraph "(3)", and by adding a new paragraph designated as paragraph "or in its appropriate numerical order to read as follows:

"(I ) An assignment of a limited liability company interest does not entitle the assignee to become or to exercise any rights or powers of a member;"

Section 15. Amend §18-801, Chapter 18, Title 6 of the Delaware Code by deleting subsection (4) thereof in its entirety and by substituting in lieu thereof the following:

"(4) The death, retirement, resignation, expulsion, bankruptcy or dissolution of any member or only the member, members or class or classes or group or groups of members specified in the limited liability company agreement, or the occurrence of any other event that terminates the continued membership of any member, or only such member, members or class or classes or group or groups of members specified in the limited liability company agreement, unless the business of the limited liability company is continued (i) within 90 days following the occurrence of any such event either (A) by the vote or written consent of the percentage in interest of the members or class or classes or group or groups of members stated in the limited liability company agreement, or (B) if no such percentage is specified in the limited liability company agreement, by the vote or written consent of not less than a majority in interest of the remaining members, or (ii) pursuant to a right to continue stated in the limited liability company agreement; or"

Section 16. Amend § 18-1105(a)(3), Chapter 18, Title 6 of the Delaware Code by adding immediately after the words "Upon the receipt for filing of the words "a certificate of limited liability company domestication under § 18-212 of this chapter, a certificate of transfer under § 18-213 of this chapter, a certificate of conversion to limited liability company under § 18214 of this chapter,",

Section 17. This Act shall become effective August 1, 1996.

Approved June 10, 1996