CHAPTER 275

FORMERLY

HOUSE BILL NO. 411

AS AMENDED BY

HOUSE AMENDMENT NO. 1

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 (Two-thirds of all members elected to each house thereof concurring therein):

Section 1. Amend § 18-101(7), Chapter 18, Title 6 of the Delaware Code by adding after the end of the fourth sentence thereof the following new sentence:

“A limited liability company agreement may provide rights to any person, including a person who is not a party to the limited liability company agreement, to the extent set forth therein.”.

Section 2. Amend § 18-209(b), Chapter 18, Title 6 of the Delaware Code by inserting “or may be cancelled” immediately before the “.” at the end of the third sentence thereof.

Section 3. Amend § 18-209(c), Chapter 18, 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 a new paragraph (4) thereof immediately prior to the newly designated paragraph (5) thereof to read as follows:

“(4) In the case of a merger in which a domestic limited liability company is the surviving entity, such amendments, if any, to the certificate of formation of the surviving domestic limited liability company to change its name as are desired to be effected by the merger;”.

Section 4. Amend § 18-209(e), Chapter 18, 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 certificate of formation of the limited liability company, and the limited liability company shall not be required to take any further action to amend its certificate of formation under § 18-202 of this Title with respect to such amendments set forth in the certificate of merger.”.

Section 5. Amend § 18-212(j), Chapter 18, Title 6 of the Delaware Code by inserting “or may be cancelled” immediately before the “.” at the end thereof.

Section 6. Amend § 18-213(f), Chapter 18, Title 6 of the Delaware Code by inserting “or may be cancelled” immediately before the “.” at the end thereof.

Section 7. Amend § 18-213, Chapter 18, Title 6 of the Delaware Code by adding at the end thereof a new Subsection (g) thereto to read as follows:

“(g) When a limited liability company 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 limited liability company. When any transfer or domestication of a limited liability company 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 limited liability company that has transferred or domesticated, and all property, real, personal and mixed, and all debts due to such limited liability company, as well as all other things and causes of action belonging to such limited liability company, 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 limited liability company 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 limited liability company shall be preserved unimpaired, and all debts, liabilities and duties of the limited liability company 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 limited liability company that has transferred or domesticated, as well as the debts, liabilities and duties of such limited liability company, 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 8. Amend § 18-214(i), Chapter 18, Title 6 of the Delaware Code by inserting “or may be cancelled” immediately before the “.” at the end thereof.

Section 9. Amend § 18-215(b), Chapter 18, Title 6 of the Delaware Code by inserting “in such separate and distinct records” immediately after “any such series are held” and by inserting “in such separate and distinct records” immediately after “and accounted for” in the first sentence thereof.

Section 10. Amend § 18-216(d), Chapter 18, Title 6 of the Delaware Code by inserting “or may be cancelled” immediately before the “.” at the end thereof.

Section 11. Amend § 18-216, Chapter 18, Title 6 of the Delaware Code by adding at the end thereof a new Subsection (h) thereto to read as follows:

“(h) When a limited liability company 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 limited liability company. 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 limited liability company that has converted, and all property, real, personal and mixed, and all debts due to such limited liability company, as well as all other things and causes of action belonging to such limited liability company, shall remain vested in the other business form to which such limited liability company 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 limited liability company 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 limited liability company shall be preserved unimpaired, and all debts, liabilities and duties of the limited liability company that has converted shall remain attached to the other business form to which such limited liability company 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 interest in property of the limited liability company that has converted, as well as the debts, liabilities and duties of such limited liability company, shall not be deemed, as a consequence of the conversion, to have been transferred to the other business form to which such limited liability company has converted for any purpose of the laws of the State of Delaware.”.

Section 12. Amend § 18-302, Chapter 18, Title 6 of the Delaware Code by adding at the end thereof a new Subsection (e) thereto to read as follows:

“(e) If a limited liability company 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 limited liability company 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 13. Amend § 18-1101(c), Chapter 18, Title 6 of the Delaware Code by deleting said subsection in its entirety and substituting in lieu thereof the following:

“(c) To the extent that, at law or in equity, a member or manager or other person has duties (including fiduciary duties) to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement, the member’s or manager’s or other person’s duties may be expanded or restricted or eliminated by provisions in the limited liability company agreement; provided that the limited liability company agreement may not eliminate the implied contractual covenant of good faith and fair dealing.”.

Section 14. Amend § 18-1101, Chapter 18, Title 6 of the Delaware Code by re-designating subsections (d) and (e) thereof as subsections (f) and (g) respectively, and by inserting new subsections (d) and (e) thereto immediately prior to the newly designated subsection (f) thereof to read as follows:

“(d) Unless otherwise provided in a limited liability company agreement, a member or manager or other person shall not be liable to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement for breach of fiduciary duty for the member’s or manager’s or other person’s good faith reliance on the provisions of the limited liability company agreement.

(e) A limited liability company 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 member, manager or other person to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement; provided that a limited liability company 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 15. This Act shall become effective August 1, 2004.

Approved June 24, 2004