Morris, Nichols, Arsht & Tunnell LLP
MONTH-IN-BRIEF (Sep 2026)
It’s Difficult to Dispute the Power of Dividing Limited Liability Companies
By William E. H. Quick, Outside Inside Counsel, LLC
Division of an existing limited liability company (“LLC”) into two or more new LLCs is permitted under Delaware law. See Del. Code Ann. tit. 6, § 18-217. This division process may be thought of as a merger in reverse. Each of the constituent entities, post-division, are independent, juridical persons (i.e., having a distinct legal identity recognized by law), and each is a continuation, as a matter of law, of the original LLC. As a result, LLC division can be a powerful tool in spin-offs, split-ups, and business separation transactions.
Each resulting company in a division must be formed in compliance with the requirements of the applicable act. To effect a division, the dividing company is required to adopt a plan of division (similar to a plan of merger) and file a certificate of division with the Department of State. A plan of division will effect the adoption of a new operating agreement for each resulting company, and it may effect either an amendment to the existing operating agreement or adoption of a new amended and restated operating agreement of a surviving company in the division.