CHAPTER 266

FORMERLY

SENATE BILL NO. 274

AN ACT TO AMEND 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 (Three-fifths of all members elected to each house thereof concurring therein):

Section 1. Amend § 15-101(12), Chapter 15, Title 6 of the Delaware Code by adding at the end thereof the following new sentence: "A partnership agreement may provide rights to any person, including a person who is not a party to the partnership agreement, to the extent set forth therein.".

Section 2. Amend § 15-103(b)(3), Chapter 15, Title 6 of the Delaware Code by deleting said subsection in its entirety and substituting in lieu thereof the following:

"(3) Eliminate the implied contractual covenant of good faith and fair dealing;".

Section 3. Amend § 15-103(e), Chapter 15, Title 6 of the Delaware Code by deleting said subsection in its entirety and substituting in lieu thereof the following:

"(e) A partner or other person shall not be liable to a partnership or to another partner or to an other person that is a party to or is otherwise bound by a partnership agreement for breach of fiduciary duty for the partner’s or other person’s good faith reliance on the provisions of the partnership agreement.".

Section 4. Amend § 15-103, Chapter 15, Title 6 of the Delaware Code by adding at the end thereof a new subsection (f) thereto reading as follows:

"(f) A partnership agreement may provide for the limitation or elimination of any and all liabilities for breach of contract and breach of duties (including fiduciary duties) of a partner or other person to a partnership or to another partner or to an other person that is a party to or is otherwise bound by a partnership agreement; provided that a partnership agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.".

Section 5. Amend § 15-404(d), Chapter 15, Title 6 of the Delaware Code by deleting such subsection in its entirety and re-designating subsections (e), (f) and (g) thereof as (d), (e) and (f) respectively.

Section 6. Amend § 15-407(e), Chapter 15, Title 6 of the Delaware Code by deleting the first sentence in said subsection in its entirety and substituting in lieu thereof the following:

"(e) If a partnership agreement provides for the manner in which it may be amended, including by requiring the approval of a person who is not a party to the partnership agreement or the satisfaction of conditions, it may be amended only in that manner or as otherwise permitted by law (provided that the approval of any person may be waived by such person and that any such conditions may be waived by all persons for whose benefit such conditions were intended).".

Section 7. Amend § 15-901(i), Chapter 15, Title 6 of the Delaware Code by inserting "or may be cancelled" immediately before the "." at the end thereof.

Section 8. Amend § 15-902(b), Chapter 15, Title 6 of the Delaware Code by inserting "or may be cancelled" immediately before the "." at the end of the third sentence thereof.

Section 9. Amend § 15-902(c), Chapter 15, Title 6 of the Delaware Code by re-designating paragraphs (4), (5), (6), and (7) thereof as paragraphs (5), (6), (7), and (8) respectively, and by inserting new paragraph (4) thereof immediately prior to the newly designated paragraph (5) thereof reading as follows:

"(4) In the case of a merger in which a domestic partnership is the surviving entity, such amendments, if any, to the statement of partnership existence of the surviving domestic partnership (and in the case of a surviving domestic partnership that is a limited liability partnership, to the statement of qualification of such surviving domestic partnership) to change its name as are desired to be effected by the merger;".

Section 10. Amend § 15-902(f), Chapter 15, Title 6 of the Delaware Code by inserting the following sentence immediately after the first sentence thereof: "A certificate of merger that sets forth any amendment in accordance with subsection (c)(4) of this section shall be deemed to be an amendment to the statement of partnership existence (and if applicable to the statement of qualification) of the domestic partnership, and the domestic partnership shall not be required to take any further action to amend its statement of partnership existence (or if applicable its statement of qualification) under § 15-105 of this title with respect to such amendments set forth in the certificate of merger.".

Section 11. Amend § 15-903(d), Chapter 15, Title 6 of the Delaware Code by inserting "or may be cancelled" immediately before the "." at the end thereof.

Section 12. Amend § 15-903, Chapter 15, Title 6 of the Delaware Code by adding at the end thereof a new subsection (h) thereto reading as follows:

"(h) When a domestic partnership has been converted to another business form pursuant to this section, the other business form shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the domestic partnership. 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 domestic partnership that has converted, and all property, real, personal and mixed, and all debts due to such partnership, as well as all other things and causes of action belonging to such partnership, shall remain vested in the other business form to which such partnership has converted and shall be the property of such other business form, and the title to any real property vested by deed or otherwise in such partnership 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 partnership shall be preserved unimpaired, and all debts, liabilities and duties of the domestic partnership that has converted shall remain attached to the other business form to which such partnership 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 such other business form. The rights, privileges, powers and interests in property of the domestic partnership that has converted, as well as the debts, liabilities and duties of such partnership, shall not be deemed, as a consequence of the conversion, to have been transferred to the other business form to which such partnership has converted for any purpose of the laws of the State of Delaware.".

Section 13. Amend § 15-904(j), Chapter 15, Title 6 of the Delaware Code by inserting "or may be cancelled" immediately before the "." at the end thereof.

Section 14. Amend § 15-905(f), Chapter 15, Title 6 of the Delaware Code by inserting "or may be cancelled" immediately before the "." at the end thereof.

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

"(g) When a domestic partnership has transferred or domesticated out of the State of Delaware pursuant to this section, the transferred or domesticated business form shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the domestic partnership. When any transfer or domestication of a domestic partnership out of the State of Delaware 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 domestic partnership that has transferred or domesticated, and all property, real, personal and mixed, and all debts due to such partnership, as well as all other things and causes of action belonging to such partnership, shall remain vested in the transferred or domesticated business form and shall be the property of such transferred or domesticated business form, and the title to any real property vested by deed or otherwise in such partnership 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 partnership shall be preserved unimpaired, and all debts, liabilities and duties of the domestic partnership that has transferred or domesticated shall remain attached to the transferred or domesticated business form, 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 the transferred or domesticated business form. The rights, privileges, powers and interests in property of the domestic partnership that has transferred or domesticated, as well as the debts, liabilities and duties of such partnership, shall not be deemed, as a consequence of the transfer or domestication out of the State of Delaware, to have been transferred to the transferred or domesticated business form for any purpose of the laws of the State of Delaware.".

Section 16. This Act shall become effective August 1, 2004.

Approved June 24, 2004