CHAPTER 328

FORMERLY

SENATE BILL NO. 411

AN ACT TO AMEND CHAPTER 38, TITLE 12 OF THE DELAWARE CODE RELATING TO BUSINESS TRUSTS.

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 Section 3801, Title 12 of the Delaware Code by deleting subsection (a) thereof in its entirety and by substituting in lieu thereof the following subsection (a):

"(a) "Business trust" means an unincorporated association which (i) is created by a governing instrument under which property is or will be held, managed, administered, controlled, invested, reinvested and/or operated, or business or professional activities for profit are carried on or will be carried on, by a trustee or trustees or as otherwise provided in the governing instrument for the benefit of such person or persons as are or may become beneficial owners or as otherwise provided in the governing instrument, including but not limited to a trust of the type known at common law as a "business trust," or "Massachusetts trust," or a trust qualifying as a real estate investment trust under § 856 et seq., of the United States Internal Revenue Code of 1986 [26 U.S.C. § 856 et seq.], as amended, or under any successor provision, or a trust qualifying as a real estate mortgage investment conduit under § 860D of the United States Internal Revenue Code of 1986 [26 U.S.C. § 860D], as amended, or under any successor provision, and (ii) files a certificate of trust pursuant to § 3810 of this title. Any such association heretofore or hereafter organized shall be a business trust and a separate legal entity."

Section 2. Amend Subsection 3801(d), Title 12 of the Delaware Code by inserting the words "limited liability company" immediately following the words "limited partnership" therein, by inserting the words ", in each case, whether domestic or foreign, and a business trust or foreign business trust" immediately following the words "or any representative capacity" therein.

Section 3. Amend Subsection 3801(f), Title 12 of the Delaware Code by inserting the words "(whether referred to as a trust agreement, declaration of trust or otherwise)" immediately following the words "means any instrument" in the first sentence thereof.

Section 4. Amend Subsection 3801(f)(1), Title 12 of the Delaware Code by inserting the words "or a trustee" immediately following the words "shall become a beneficial owner" therein, by inserting the following words ", in the case of a beneficial owner," after the word "(or" therein, by inserting the words "or a trustee" after the words "becoming a beneficial owner" therein, and by inserting the following words ",in the case of a beneficial owner," after the words "any other writing and" therein.

Section 5. Amend Subsection 3801(f), Title 12 of the Delaware Code by inserting the following at the end of said subsection: "A business trust is not required to execute its governing instrument. A business trust is bound by its governing instrument whether or not it executes the governing instrument."

Section 6. Amend Subsection 3804(e), Title 12 of the Delaware Code by inserting the words "or other person" immediately after the words "or beneficial owner" therein and by inserting the following immediately after the first sentence thereof: "Except by agreeing to arbitrate any arbitrable matter in a specified jurisdiction or in the State, a beneficial owner who is not a trustee may not waive its right to maintain a legal action or proceeding in the courts of the State with respect to matters relating to the organization or internal affairs of a business trust."

Section 7. Amend Section 3805, Title 12 of the Delaware Code by inserting "and trustees" immediately following "Rights of beneficial owners" in the title of said section.

Section 8. Amend Section 3805, Title 12 of the Delaware Code by adding new subsections (h) and (i) thereto as follows:

"(h) Except to the extent otherwise provided in the governing instrument of the business trust, where the business trust is a registered investment company under the Investment Company Act of 1940, as amended (15 U.S.C. §§ 809-1 et seq.), any class, group or series of beneficial interests established by the governing instrument with respect to such business trust shall be a class, group or series preferred as to distribution of assets or payment of dividends over all other classes, groups or series in respect to assets specifically allocated to the class, group or series as contemplated by Section 18 (or any amendment or successor provision) of the Investment Company Act of 1940, as amended, and any regulations issued thereunder, provided that this section is not intended to affect in any respect the provisions of § 3804(a) of this title.

(i) Unless otherwise provided in the governing instrument of a business trust or another agreement, a beneficial owner shall have no preemptive right to subscribe to any additional issue of beneficial interests or another interest in a business trust."

Section 9. Amend Section 3806, Title 12 of the Delaware Code by deleting the word "or" immediately after the ";" in subsection (b)(6) thereof, by deleting the "." at the end of the second sentence in subsection (b)(7) thereof and substituting in lieu thereof "; or" and by adding a new subsection (b)(8) thereto as follows:

"(8) May provide rights to any person other than a party to the governing instrument to the extent set forth therein."

Section 10. Amend Subsection 3806(e), Title 12 of the Delaware Code by inserting the following words immediately prior to the "." at the end of the last sentence thereof:

", and such proxy may be granted in writing, by means of electronic transmission or as otherwise permitted by applicable law. Unless otherwise provided in a governing instrument, a consent transmitted by electronic transmission by a beneficial owner or by a person or persons authorized to act for a beneficial owner shall be deemed to be written and signed for purposes of this subsection (e). For purposes of this subsection (e), the term "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process".

Section 11. Amend Subsection 3806, Title 12 of the Delaware Code by inserting the following words immediately prior to the "." at the end of the last sentence thereof:

", and such proxy may be granted in writing, by means of electronic transmission or as otherwise permitted by applicable law. Unless otherwise provided in a governing instrument, a consent transmitted by electronic transmission by a trustee or by a person or persons authorized to act for a trustee shall be deemed to be written and signed for purposes of this subsection (f). For purposes of this subsection (f), the term "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process".

Section 12. Amend Subsection 3806, Title 12 of the Delaware Code by adding new subsections (g) and (h) thereto as follows:

"(g) Except to the extent otherwise provided in the governing instrument of a business trust, a beneficial owner, trustee, officer, employee or manager may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more obligations of, provide collateral for, and transact other business with, a business trust and, subject to other applicable law, has the same rights and obligations with respect to any such matter as a person who is not a beneficial owner, trustee, officer, employee or manager.

(h) Except to the extent otherwise provided in the governing instrument of a business trust, a trustee of a business trust has the power and authority to delegate to one or more other persons the trustee's rights and powers to manage and control the business and affairs of the business trust, including to delegate to agents, officers and employees of the trustee or the business trust, and to delegate by management agreement or other agreement with, or otherwise to, other persons. Except to the extent otherwise provided in the governing instrument of a business trust, such delegation by a trustee of a business trust shall not cause the trustee to cease to be a trustee of the business trust or cause the person to whom any such rights and powers have been delegated to be a trustee of the business trust."

Section 13. Amend Subsection 3807(e), Title 12 of the Delaware Code by deleting subsection (e) thereof in its entirety and by substituting in lieu thereof the following subsection (e):

"(e) A trustee or registered agent of a business trust whose address, as set forth in a certificate of trust pursuant to § 3810(a)(1)b. of this title, has changed may change such address in the certificates of trust of all business trusts for which such trustee or registered agent is appointed to another address in the State of Delaware by paying a fee as set forth in § 3813(a)(5) of this chapter and filing with the Secretary of State a certificate, executed by such trustee or registered agent, setting forth the address of such trustee or registered agent before it was changed, and further certifying as to the new address of such trustee or registered agent for each of the business trusts for which it is trustee or registered agent. Upon the filing of such certificate, the Secretary of State shall furnish to the trustee or registered agent a certified copy of the same under the Secretary's hand and seal of office, and thereafter, or until further change of address, as authorized by law, the address of such trustee or registered agent in the State of Delaware for each of the business trusts for which it is trustee or registered agent shall be located at the new address of the trustee or registered agent thereof as given in the certificate. A trustee or registered agent of a business trust whose name, as set forth in a certificate of trust pursuant to § 3810(a)(1)b. of this title, has changed may change such name in the certificates of trust of all business trusts for which such trustee or registered agent is appointed, to its new name by paying a fee as set forth in § 3813(a)(5) of this chapter and filing with the Secretary of State a certificate, executed by such trustee or registered agent, setting forth the name of such trustee or registered agent before it was changed, and further certifying as to the new name of such trustee or registered agent for each of the business trusts for which it is a trustee or registered agent. Upon the filing of such certificate and payment of such fee, the Secretary of State shall furnish to the trustee or registered agent a certified copy of the certificate under the Secretary's hand and seal of office. A change of name of any person acting as a trustee or registered agent of a business trust as a result of a merger or consolidation of the trustee or registered agent with another person who succeeds to its assets and liabilities by operation of law shall be deemed a change of name for purposes of this section. Filing a certificate under this section shall be deemed to be an amendment of the certificate of trust of each business trust affected thereby and no further action with respect thereto to amend its certificate of trust under § 3810 of this chapter shall be required. Any trustee or registered agent filing a certificate under this section shall promptly, upon such filing, deliver a copy of any such certificate to each business trust affected thereby."

Section 14. Amend Subsection 3812(a), Title 12 of the Delaware Code by deleting the word "he" immediately after "filing fees required by law" in the second sentence thereof and by substituting in lieu thereof "the Secretary", by deleting the word "and" immediately after the ";" in subsection (a)(2) thereof, by deleting the "." at the end of subsection (a)(3), by substituting in lieu thereof"; and" and by adding a new subsection (a)(4) thereto as follows:

"(4) Enter such information from the certificate as the Secretary of State deems appropriate into the Delaware Corporation Information System or any system which is a successor thereto in the office of the Secretary of State, and such information shall be permanently maintained as a public record. A copy of each certificate shall be permanently maintained on optical disk or by other suitable medium."

Section 15. Amend Subsection 3814(a), Title 12 of the Delaware Code by inserting ", partnership" immediately prior to each instance of ", limited partnership" therein and by inserting ", foreign partnership" immediately after the words "or registered as a foreign corporation" therein.

Section 16. Amend Section 3821, Title 12 of the Delaware Code by deleting the fifth sentence thereof in its entirety.

Section 17. Amend Section 3822, Title 12 of the Delaware Code by inserting the following immediately after the first sentence thereof: "Unless expressly stated to the contrary in this chapter, all amendments of this chapter shall apply to business trusts, trustees, beneficial owners and other persons whether or not existing as at the time of the enactment of any such amendment."

Section 18. Amend Subsection 3854(a), Title 12 of the Delaware Code by inserting the words "on such records" immediately following the words "Secretary of State from the name" therein, by inserting ", partnership" immediately following the words "foreign corporation" therein, by inserting ", formed" immediately following the words "limited partnership reserved, registered" therein, and by inserting ", partnership" immediately following the words "the written consent of the other corporation" therein.

Section 19. Amend Section 3854, Title 12 of the Delaware Code by deleting subsections (c), (d) and (e) in their entirety and by substituting in lieu thereof the following subsections (c), (d) and (e):

"(c) A registered agent may change the address of the registered office of the foreign business trust(s) for which he is registered agent to another address in the State of Delaware by paying a fee as set forth in § 3862 of this chapter and filing with the Secretary of State a certificate, executed by such registered agent, setting forth the address at which such registered agent has maintained the registered office for each of the foreign business trusts for which it is a registered agent, and further certifying to the new address to which each such registered office will be changed on a given day, and at which new address such registered agent will thereafter maintain the registered office for each of the foreign business trusts for which it is registered agent. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under the Secretary's hand and seal of office, and thereafter, or until further change of address, as authorized by law the registered offices in the State of Delaware of each of the foreign business trusts for which the agent is registered agent shall be located at the new address of the registered agent thereof as given in the certificate. In the event of a change of name of any person acting as a registered agent of a foreign business trust, 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 and the address at which such registered agent has maintained the registered office for each of the foreign business trusts for which it is registered agent, and shall pay a fee as set forth in § 3862 of this chapter. Upon the filing of such certificate, the Secretary of State shall furnish to the registered agent a certified copy of the same under the Secretary's hand and seal of office. A change of name of any person acting as a registered agent of a foreign business trust as a result of the merger or consolidation of the registered agent, with or into another person which succeeds to its assets and liabilities by operation of law, shall be deemed a change of name for purposes of this section. Filing a certificate under this section shall be deemed to be an amendment of the application of each foreign business trust affected thereby and each foreign business trust shall not be required to take any further action with respect thereto, to amend its application under § 3855 of this chapter. Any registered agent filing a certificate under this section shall promptly, upon such filing, deliver a copy of any such certificate to each foreign business trust affected thereby.

(d) The registered agent of 1 or more foreign business trusts may resign and appoint a successor registered agent by paying a fee as set forth in § 3862 of this chapter and filing a certificate with the Secretary of State, stating that it resigns and the name and address of the successor registered agent. There shall be attached to such certificate a statement of each affected foreign business trust ratifying and approving such change of registered agent. Upon such filing, the successor registered agent shall become the registered agent of such foreign business trust as has ratified and approved such substitution and the successor registered agent's address, as stated in such certificate, shall become the address of each such foreign business trust's registered office in the State of Delaware. The Secretary of State shall then issue a certificate that the successor registered agent has become the registered agent of the foreign business trusts so ratifying and approving such change and setting out the names of such foreign business trusts. Filing of such certificate of resignation shall be deemed to be an amendment of the application of each foreign business trust affected thereby and each such foreign business trust shall not be required to take any further action with respect thereto, to amend its application under § 3855 of this chapter.

(e) The registered agent of one or more foreign business trusts may resign without appointing a successor registered agent by paying a fee as set forth in § 3862 of this chapter and filing a certificate of resignation with the Secretary of State, but such resignation shall not become effective until 30 days after the certificate is filed. The certificate shall contain a statement that written notice of resignation was given to each affected foreign business trust at least 30 days prior to the filing of the certificate by mailing or delivering such notice to the foreign business trust at its address last known to the registered agent and shall set forth the date of such notice. After receipt of the notice of the resignation of its registered agent, the foreign business trust for which such registered agent was acting shall obtain and designate a new registered agent, to take the place of the registered agent so resigning. If such foreign business trust fails to obtain and designate a new registered agent as aforesaid prior to the expiration of the period of 30 days after the filing by the registered agent of the certificate of resignation, such foreign business trust shall not be permitted to do business in the State of Delaware and its registration shall be deemed to be canceled. After the resignation of the registered agent shall have become effective as provided in this section and if no new registered agent shall have been obtained and designated in the time and manner aforesaid, service of legal process against the foreign business trust for which the resigned registered agent had been acting shall thereafter be upon the Secretary of State in accordance with § 3861 of this chapter."

Section 20. This Act shall become effective August 1, 2002.

Approved June 27, 2002