Category: Delaware LLC Act

DELAWARE LLCS

By , August 15, 2017 12:05 pm

Under the link below is an excellent discussion by Dan Kleinberger, a leading LLC scholar, about the pros and cons of forming Delaware LLCs.  Here’s the link:

https://www.americanbar.org/publications/blt/2017/07/ulc.html

2017 PROPOSED AMENDMENTS TO DELAWARE’S LLC AND PARTNERSHIP ACTS

By , June 15, 2017 9:41 am

The Delaware Limited Liability Company Act is the most prestigious U.S. LLC act, many sophisticated investors and lenders will deal only with Delaware LLCs, and when two or more LLC founders from non-Delaware states disagree about whose LLC act will govern, they often choose the Delaware Act.  Sophisticated LLC lawyers should have a detailed understanding of the Delaware Act.

The Delaware bar updates the Delaware Act every year to keep it current.  However, as shown in the link below, the updates this year will be quite minor.

http://richardslaytonnews.com/rv/ff00313a50ec119fa779ccd23e4591a53369b557

THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

By , February 22, 2017 12:42 pm

The implied contractual covenant of good faith and fair dealing applies powerfully to the interpretation and implementation of the operating agreement of every multi-member LLC.  So LLC lawyers have to have a deep understanding of implied covenant doctrine.  The new article cited below is an excellent introduction to this doctrine under Delaware law, and the doctrine as addressed in the article undoubtedly applies also in most or all other states.

Also set forth below is an abstract of the article.

57 B.C. L. Rev. E-Supplement 212
Boston College Law Review E-Supplement
2016
LEAP OF FAITH: DETERMINING THE STANDARD OF FAITH NEEDED TO VIOLATE THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING FOR DELAWARE LIMITED LIABILITY COMPANIES
Pat Andriola
Copyright © 2016 Pat Andriola. All rights reserved.

Abstract: Delaware courts have long respected the right to contract in Delaware, and possibly no entity is afforded more privileges to set the boundaries of its corporate form than the Delaware Limited Liability Company. Unlike nearly every other state, Delaware permits LLCs to abolish the duties of care and loyalty in their operating agreements, but forbids companies to eliminate liability for “any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.” The problem with the phrase “bad faith violation” is that, when referencing a breach of the implied covenant of good faith and fair dealing, it implies that there exists a non-bad faith violation of the covenant. In determining whether or not “neutral faith” or “non-bad faith” violations of the implied covenant are permissible under Delaware LLC law, this essay argues that Delaware courts should look to the relatively short history of the covenant, the contractarian spirit of Delaware laws and courts, and section 18-1101 of the Delaware Limited Liability Company Act to hold that the implied covenant can only be violated in bad faith.

ADVANCEMENT AND INDEMNIFICATION PROVISIONS IN LLC OPERATING AGREEMENTS

By , February 16, 2017 11:32 am

In the operating agreements of larger and more sophisticated LLCs—and sometimes the operating agreements of smaller LLCs—advancement and indemnification provisions can be critically important.  The new post under the link below provides a brief but excellent discussion of the Delaware LLC law relevant in drafting these provisions.

Here’s the link:  http://www.lexology.com/library/detail.aspx?g=a234e902-0fd0-4369-94ca-242ecc7c028c&l=7T7DJ8A

DELAWARE ENTITIES-LIFE CYCLES

By , February 10, 2017 10:57 am

The Delaware Limited Liability Company Act is often the best LLC act under which to form an LLC even for non-Delaware clients; and, as is often said, “Delaware is everyone’s second choice” when clients from two or more jurisdictions are forming an LLC.  The new article whose title is below is a significant contribution to Delaware entity secondary literature:

2016-DEC Bus. L. Today 1
Business Law Today
December, 2016
Feature Article
ENTITY LIFECYCLES: AN OVERVIEW OF THE STATUTORY REQUIREMENTS RELATING TO THE FORMATION, MAINTENANCE, AND TERMINATION OF DELAWARE CORPORATIONS, LIMITED LIABILITY COMPANIES, AND STATUTORY TRUSTS
Shannon S. Frazier
Copyright © 2016 by the American Bar Association; Shannon S. Frazier

DEVELOPMENTS IN DELAWARE LAW

By , September 21, 2016 8:10 am

Under the link below is a rather detailed article from the Morris Nichols law firm (Delaware) about the recent amendments to the Delaware General Corporation Law and in the Delaware “alternative entity” statutes, including the Delaware Limited Liability Company Act.

Here’s the link:   http://www.mnat.com/files/BylinedArticles/2016AmendmentstoDelawaresGeneralCorporationLawandAlternativeEntityStatutes.pdf

NEW AMENDMENT TO DELAWARE GLL AND LLC ACT

By , August 23, 2016 10:55 am

The post under the following link provides a good summary of the above amendments:

http://www.lexology.com/library/detail.aspx?g=00ebf0dc-952e-4884-a39f-4e7de098802a&l=7S4DNFC

NEW AMENDMENTS TO THE DELAWARE LLC AND PARTNERSHIP ACTS

By , July 27, 2016 11:49 am

The Delaware Limited Liability Company Act is by far the most prominent and influential U.S. LLC Act  Every LLC lawyer should be familiar with it and should know when it to use instead of the lawyer’s home state act.  The Delaware law firm of Richards Layton & Finger provides an excellent summary of the several amendments to the Delaware Limited Liability Company Act and the Delaware general and limited partnership acts that the Delaware Legislature has just enacted.

You can read their summary at http://richardslaytonnews.com/rv/ff00287695adfaaa5408fcfecb47af456b182550.

AMENDMENTS TO DELAWARE ENTITY STATUTES

By , August 7, 2015 10:41 am

For those of you who form Delaware LLCs and other Delaware entities, here is a good post re the new Delaware amendments to Delaware entity statutes:

http://www.lexology.com/library/detail.aspx?g=9e388310-c142-4763-a754-489fa73237ff&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2015-08-05&utm_term=

CHANGES IN DELAWARE LLC AND PARTNERSHP STATUTORY LAW

By , July 6, 2015 9:54 am

The governor of Delaware has just signed bills making changes in Delaware LLC and partnership statutory law.  If you form Delaware LLCs or partnerships or if you might eventually form them or if you’re looking for statutory concepts potentially useful in the LLC act of your home state (as I do for the Massachusetts and New Hampshire LLC acts), you may find these changes interesting.

Here is a link to a blog post of the Richards Layton law firm summarizing these changes:

http://richardslaytonnews.com/rv/ff00204125a325b18b571c2cf74cbbfb658aa993