CHAPTER 390

FORMERLY

SENATE BILL NO. 371

AN ACT TO AMEND THE DELAWARE REVISED UNIFORM PARTNERSHIP ACT, CHAPTER 15, TITLE 6 OF THE DELAWARE CODE, RELATING TO THE CREATION, REGULATION, OPERATION AND DISSOLUTION OF DOMESTIC PARTNERSHIPS AND THE REGISTRATION AND REGULATION OF FOREIGN LIMITED LIABILITY PARTNERSHIPS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each house thereof concurring therein):

Section 1. Amend § 15-103(b), Chapter 15, Title 6 of the Delaware Code by deleting subsection (8) thereof, by adding the word "or" after the ";" at the end of subsection (6) thereof, and by deleting from the end of subsection (7) thereof "; or", and by substituting in lieu thereof ".".

Section 2. Amend § 15-103, Chapter 15, Title 6 of the Delaware Code by relettering existing subsections (c) and (d) thereof as new subsections (d) and (e), respectively, and by adding a new subsection (c) as follows:

"(c) Notwithstanding anything to the contrary contained in this section, Sections 15-201, 15-203 and 15-501 may be modified only to the extent provided in a statement of partnership existence and in a partnership agreement."

Section 3. Amend § 15-103(d), Chapter 15, Title 6 of the Delaware Code by adding the words "that is a party to or is otherwise bound by a partnership agreement" immediately prior to the words "for the partner's".

Section 4. Amend § 15-104(b), Chapter 15, Title 6 of the Delaware Code by adding the word "a" after the words "No obligation of" in the first sentence thereof.

Section 5. Amend § 15-105(d), Chapter 15, Title 6 of the Delaware Code by deleting the words ", or upon the conversion of a domestic partnership approved in accordance with Section 15-903 of this chapter" from the fifth sentence thereof.

Section 6. Amend § 15-105(d), Chapter 15, Title 6 of the Delaware Code by deleting the words "or upon the conversion of a domestic partnership approved in accordance with Section 15-903 of this chapter" from the sixth sentence thereof.

Section 7. Amend § 15-105(d), Chapter 15, Title 6 of the Delaware Code by deleting subsection (4) of the sixth sentence thereof, by adding the word "and" after the ";" at the end of subsection (3) of the sixth sentence thereof and by renumbering existing subsection (5) as subsection (4) of the sixth sentence thereof.

Section 8. Amend § 15-106, Chapter 15, Title 6 of the Delaware Code by adding a new subsection (c) as follows:

"(c) If (i) a partnership agreement provides for the application of the laws of the State of Delaware, and (ii) the partnership files with the Secretary of State a statement of partnership existence, then the partnership agreement shall be governed by and construed under the laws of the State of Delaware."

Section 9. Amend § 15-109(b), Chapter 15, Title 6 of the Delaware Code by adding the word "the" after the words "taken by" in the last sentence thereof.

Section 10. Amend § 15-114(d), Chapter 15, Title 6 of the Delaware Code by deleting the word "proscribed" and by substituting in lieu thereof the word "prescribed".

Section 11. Amend § 15-201(a), Chapter 15, Title 6 of the Delaware Code by deleting the words "or to the extent".

Section 12. Amend § 15-202, Chapter 15, Title 6 of the Delaware Code by deleting subsection (b) thereof in its entirety and by inserting in lieu thereof the following new subsection (b):

"(b) Subject to Section 15-1206, an association formed under a statute other than (i) this chapter, (ii) a predecessor statute or (iii) a comparable statute of another jurisdiction, is not a partnership under this chapter."

Section 13. Amend § 15-203, Chapter 15, Title 6 of the Delaware Code by deleting the word "Property" at the beginning of the sentence and by substituting in lieu thereof the words "Unless otherwise provided in a statement of partnership existence and in a partnership agreement, property".

Section 14. Amend § 15-205, Chapter 15, Title 6 of the Delaware Code by deleting said section in its entirety and substituting in lieu thereof the following new section:

"Each person to be admitted as a partner to a partnership formed under either Section 15-202(a)(i) or Section 15-202(a)(ii) of this Chapter may be admitted as a partner and may receive a partnership interest in the partnership without making a contribution or being obligated to make a contribution to the partnership. Each person to be admitted as a partner to a partnership formed under either Section 15-202(a)(i) or Section 15-202(a)(ii) of this Chapter may be admitted as a partner without acquiring an economic interest in the partnership. Nothing contained in this section shall affect a partner's liability under Section 15-306."

Section 15. Amend § 15-309(a), Chapter 15, Title 6 of the Delaware Code by deleting the words "partnership interests" and by substituting in lieu thereof the words "economic interests", by inserting the words "limited liability" immediately prior to the word "partnership" in all five remaining places where the word "partnership" appears in said subsection, and by adding at the end of subsection (a) the following new sentence: "For purposes of this subsection (a), the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program."

Section 16. Amend §15-407(d), Chapter 15, Title 6 of the Delaware Code by adding the words "at which all partners entitled to vote thereon were present and voted" at the end of the first sentence.

Section 17. Amend § 15-408, Chapter 15, Title 6 of the Delaware Code by deleting the "," after the word "partner" in subsection (i) thereof.

Section 18. Amend § 15-501, Chapter 15, Title 6 of the Delaware Code by deleting the word "A" at the beginning of the sentence and by substituting in lieu thereof the words "Unless otherwise provided in a statement of partnership existence and in a partnership agreement, a".

Section 19. Amend § 15-504, Chapter 15, Title 6 of the Delaware Code by adding at the end thereof a new subsection (f) reading as follows:

"(f) No creditor of a partner shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the partnership."

Section 20. Amend § 15-601, Chapter 15, Title 6 of the Delaware Code by deleting subsection (6) thereof in its entirety and by inserting in lieu thereof the following new subsection (6):

"(6) the partner's:

(i) making an assignment for the benefit of creditors;

(ii) filing a voluntary petition in bankruptcy;

(iii) being adjudged a bankrupt or insolvent, or having entered against that partner an order for relief in any bankruptcy or insolvency proceeding;

(iv) filing a petition or answer seeking for that partner any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation;

(v) filing an answer or other pleading admitting or failing to contest the material allegations of a petition filed against that partner in any proceeding of this nature;

(vi) seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator of that partner or of all or any substantial part of that partner's properties; or

(vii) failing, within 120 days after its commencement, to have dismissed any proceeding against that partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, or failing, within 90 days after the appointment without that partner's consent or acquiescence, to have vacated or stayed the appointment of a trustee, receiver or liquidator of that partner or of all or any substantial part of that partner's properties, or failing, within 90 days after the expiration of any such stay, to have the appointment vacated;"

Section 21. Amend § 15-701(b), Chapter 15, Title 6 of the Delaware Code by deleting the first sentence thereof in its entirety and by substituting in lieu thereof the following:

"The buyout price of a dissociated partner's partnership interest is an amount equal to the fair value of such partner's economic interest as of the date of dissociation based upon such partner's right to share in distributions from the partnership."

Section 22. Amend § 15-801, Chapter 15, Title 6 of the Delaware Code by deleting subsection (5) thereof in its entirety and by inserting in lieu thereof the following new subsection (5):

"(5) on application by or for a partner to the Court of Chancery, the entry of a decree of dissolution of a partnership by the Court of Chancery upon a determination by the Court of Chancery that it is not reasonably practicable to carry on the partnership business, purpose or activity in conformity with the partnership agreement; or".

Section 23. Amend § 15-807(i), Chapter 15, Title 6 of the Delaware Code by inserting the following sentence immediately after the first sentence of subsection (i): "For purposes of the immediately preceding sentence, the term "distribution" shall not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of business pursuant to a bona fide retirement plan or other benefits program."

Section 24. Amend § 15-807, Chapter 15, Title 6 of the Delaware Code by deleting subsection (k) thereof in its entirety and by inserting in lieu thereof the following new subsection (k): "(k) Section 15-309 of this chapter shall not apply to a distribution to which this section applies."

Section 25. Amend § 15-901, Chapter 15, Title 6 of the Delaware Code by deleting subsection (f) in its entirety and by substituting in lieu thereof the following new subsection (f):

“(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 remain vested in the domestic partnership to which such other entity has converted and shall be the property of such domestic partnership, 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 remain attached to the domestic partnership to which such other entity has converted, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a domestic partnership. The rights, privileges, powers and interests in property of the other entity, as well as the debts, liabilities and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have been transferred to the domestic partnership to which such other entity has converted for any purpose of the laws of the State of Delaware.”

Section 26. Amend §15-901, Chapter 15, Title 6 of the Delaware Code by adding at the end of subsection (g) thereof a new sentence reading as follows:

“When an other entity has been converted to a domestic partnership pursuant to this section, the domestic partnership shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the converting other entity.”

Section 27. Amend § 15-901, Chapter 15, Title 6 of the Delaware Code by redesignating existing subsection (i) thereof as a new subsection (j) and adding the following as a substitute subsection (i):

“(i) In connection with a conversion hereunder, rights or securities of, or interests in, the other entity which is to be converted to a domestic partnership may be exchanged for or converted into, cash, property, rights or securities of, or interests in, such domestic partnership or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, another domestic partnership or other entity.”

Section 28. Amend § 15-902, Chapter 15, Title 6 of the Delaware Code by deleting subsection (e) thereof and by relettering existing subsection (f) as subsection (e), existing subsection (g) as subsection (f), existing subsection (h) as subsection (g), existing subsection (i) as subsection (h), existing subsection (j) as subsection (i) and existing subsection (k) as subsection (j).

Section 29. Amend § 15-903, Chapter 15, Title 6 of the Delaware Code by adding at the end thereof a new sentence reading as follows:

“Unless otherwise agreed, the conversion of a domestic partnership to another business form pursuant to this section shall not require such partnership to wind up its affairs under Subchapter VIII or pay its liabilities and distribute its assets under Subchapter VIII. In connection with a conversion of a domestic partnership to another business form pursuant to this section, rights or securities of, or interests in, the domestic partnership which is to be converted may be exchanged for or converted into cash, property, rights or securities of, or interests in, the business form into which the domestic partnership is being converted or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights or securities of, or interests in, another business form.”

Section 30. Amend § 15-904, Chapter 15, Title 6 of the Delaware Code by deleting subsection (h) in its entirety and by substituting in lieu thereof the following new subsection (h):

“(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 well as all other things and causes of action belonging to such non-United States entity, shall remain vested in the domestic partnership to which such non-United States entity has been domesticated and shall be the property of such domestic partnership, 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 remain attached to the domestic partnership to which such non-United States entity has been domesticated, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a domestic partnership. The rights, privileges, powers and interests in property of the non-United States entity, as well as the debts, liabilities and duties of the non-United States entity, shall not be deemed, as a consequence of the domestication, to have been transferred to the domestic partnership to which such non-United States entity has domesticated for any purpose of the laws of the State of Delaware.”

Section 31. Amend § 15-904, Chapter 15, Title 6 of the Delaware Code by adding at the end thereof a new subsection (i) reading as follows:

“(i) When a non-United States entity has become domesticated as a domestic partnership pursuant to this section, the domestic partnership shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the domesticating non-United States entity. Unless otherwise agreed, or as required under applicable non-Delaware law, the domesticating non-United States entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the domestication shall not be deemed to constitute a dissolution of such non-United States entity and shall constitute a continuation of the existence of the domesticating non-United States entity in the form of a domestic partnership. If, following domestication, a non-United States entity that has become domesticated as a domestic partnership continues its existence in the foreign country or other foreign jurisdiction in which it was existing immediately prior to domestication, the domestic partnership and such non-United States entity shall, for all purposes of the laws of the State of Delaware, constitute a single entity formed, incorporated, created or otherwise having come into being, as applicable, and existing under the laws of the State of Delaware and the laws of such foreign country or other foreign jurisdiction."

Section 32. Amend § 15-905, Chapter 15, Title 6 of the Delaware Code by adding at the end of subsection (d) thereof a new sentence reading as follows:

“Unless otherwise agreed, the transfer or domestication of a partnership out of the State of Delaware in accordance with this section shall not require such partnership to wind up its affairs under Subchapter VIII or pay its liabilities and distribute its assets under Subchapter VIII.”

Section 33. Amend § 15-905, Chapter 15, Title 6 of the Delaware Code by adding at the end of subsection (e) thereof a new sentence reading as follows:

“So long as a partnership continues to exist as a partnership of the State of Delaware following the filing of a certificate of transfer and continuance, the continuing domestic partnership and the entity formed, incorporated, created or that otherwise came into being as a consequence of the transfer of the partnership to, or its domestication in, a foreign country or other foreign jurisdiction shall, for all purposes of the laws of the State of Delaware, constitute a single entity formed, incorporated, created or otherwise having come into being, as applicable, and existing under the laws of the State of Delaware and the laws of such foreign country or other foreign jurisdiction.”

Section 34. This Act shall become effective August 1, 2000.

Approved June 30, 2000