CURRENT MONTH (April 2019)

Corporate Law

Proposed Amendments to Delaware Alternative Entity Statutes

By Tarik J. Haskins

In April, the Corporation Law Section of the Delaware State Bar Association approved amendments to Delaware’s alternative entity statutes that, if approved by the Delaware legislature, will become effective August 1, 2019.  The amendments to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq. (the “DRULPA”) include a number of substantive changes that will be of interest to practitioners. The amendments to the DRULPA include, but are not limited to, the addition of provisions that: (i) create a new type of limited partnership series  called “registered series” that will be helpful in facilitating secured transactions, (ii) permit a limited partnership to divide into one or more newly formed limited partnerships, with the dividing limited partnership either continuing its existence or terminating as part of the division and (iii) authorize the creation of statutory public benefit limited partnerships that are similar to public benefit corporations organized under the Delaware General Corporation Law.  The relevant provisions related to registered series and division are similar to the amendments made to the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq. (the “DLLCA”) in 2018.  In addition, amendments were made to the DRULPA and the DLLCA that confirm certain transactions and documents contemplated by the DRULPA and the DLLCA, as applicable, may be signed and delivered electronically.  The relevant provisions are based on Delaware’s Uniform Electronic Transactions Act and permit certain contracts and documents to be signed via DocuSign and similar electronic processes.

Limited Liability Companies

Personal Jurisdiction of Delaware Courts over Management of LLCs

By Huston Firment and Michael Maxwell

In CelestialRX Investments, LLC, v. Krivulka, C.A. No. 11733-VCG (Del. Ch. Mar. 27, 2019), the Delaware Court of Chancery, among other things, reviewed whether it had personal jurisdiction over two individuals related to their involvement with a Delaware limited liability company (the “LLC”).   The Court held that it had personal jurisdiction over defendant Leonard Mazur (“Mazur”) with respect to claims related to when Mazur served as a designated manager on the board of directors of the LLC, but that it did not have jurisdiction over claims arising after his removal from the LLC’s board.  Allegations that after his removal Mazur retained the title of vice chairman and engaged a banker on behalf of the LLC were insufficient to support a finding that he materially participated in management of the LLC for purposes of Section 18-109(a) of the Delaware Limited Liability Company Act.  The Court also held that defendant Donald Olsen (“Olsen”), as president and CEO of the LLC, was not subject to the court’s personal jurisdiction because he was not listed as a manager of the LLC and did not have control of, or a decision making role in, the LLC. Despite Olsen’s responsibilities that included day to day operations, Olsen performed his duties subject to the control of the LLC’s manager. 


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