Rep. James Johnson

This bill continues the practice of amending periodically the Delaware Revised Uniform Partnership Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act. Section 1. This section amends Section 15-108(c) of the Act to provide that the name of a partnership must be such as to distinguish it from the name of any registered series of a limited liability company formed under the laws of the State of Delaware. Section 2. This section provides that the proposed amendments of the Act shall become effective August 1, 2019.

This bill continues the practice of amending periodically the Delaware Revised Uniform Limited Partnership Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act. Section 1. This section amends Section 17-102(3) of the Act to provide that the name of a limited partnership must be such as to distinguish it from the name of any registered series of a limited liability company formed under the laws of the State of Delaware. Sections 2 and 4 through 6. These sections amend Sections 17-104(g), 17-302(e), 17-305(c) and 17-405(d) of the Act to provide specific statutory authority for Delaware limited partnerships to use networks of electronic databases (examples of which are described currently as "distributed ledgers" or a "blockchain") for the creation and maintenance of limited partnership records and for certain "electronic transmissions." Section 3. This section amends Section 17-213(b) of the Act relating to a corrected certificate to clarify that the fee payable to the Secretary of State for filing a certificate of correction pursuant to Section 17-1107 shall be paid with the filing of a corrected certificate pursuant to Section 17-213(b) of the Act. Section 7. This section provides that the proposed amendments of Section 1 of the Act shall become effective August 1, 2019, and the proposed amendments of Sections 2 through 6 shall become effective August 1, 2018.

This bill continues the practice of amending periodically the Delaware Limited Liability Company Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act. Section 1. This section amends Section 18-101 of the Act to include definitions for "series," "protected series" established in accordance with Section 18-215(b) of the Act, and "registered series" formed in accordance with Section 18-218 of the Act. Section 2. This section amends Section 18-102(3) of the Act to provide that the name of a limited liability company must be such as to distinguish it from the name of any registered series. Section 3. This section amends Section 18-102(4) of the Act to confirm that the name of a limited liability company may contain the words "public benefit." Section 4. This section amends Section 18-103 of the Act to provide that the exclusive right to the use of a name for a registered series may be reserved by a person intending to form a registered series of a limited liability company in accordance with Section 18-218 of the Act and to adopt that name pursuant to Section 18-218(e) of the Act. Section 5. This section amends Section 18-104 of the Act to include references to protected series of a limited liability company established in accordance with Section 18-215 of the Act and registered series of a limited liability company formed in accordance with Section 18-218 of the Act, as appropriate. Section 6. This section amends Section 18-104(g) of the Act to provide specific statutory authority for domestic limited liability companies to use networks of electronic databases (examples of which are described currently as "distributed ledgers" or a "blockchain") for the creation and maintenance of limited lability company records and for certain "electronic transmissions." Sections 7, 10, 12, 14, 15, and 30 through 33. These sections amend Sections 18-105, 18-203, 18-206, 18-207, 18-208, 18-1107, 18-1108 and 18-1109 of the Act and add a new Section 18-1110 of the Act to include references to protected series of a limited liability company established in accordance with Section 18-215 of the Act and registered series of a limited liability company formed in accordance with Section 18-218 of the Act, as appropriate. Section 8. This section adds new Section 18-112 of the Act to provide that, upon motion by the Attorney General, the Court of Chancery may cancel the certificate of formation of any domestic limited liability company for abuse or misuse of its limited liability company powers, privileges or existence. Section 9. This section amends Section 18-203(a) of the Act to include a reference to new Section 18-112 of the Act. Section 11. This section amends Section 18-206 of the Act to include references to new Section 18-112 of the Act and a certificate of division. Section 13. This section amends Section 18-207 of the Act to include a reference to new Section 18-1202 of the Act. Section 16. This section amends Section 18-209(a) of the Act relating to merger and consolidation to include a cross-reference to new Section 18-217 of the Act which refers to "other business entity," as defined in Section 18-209(a) of the Act. Section 17. This section amends Section 18-209(a) of the Act relating to merger and consolidation to include a cross-reference to new Sections 18-219, 18-220 and 18-221 of the Act which refer to "other business entity," as defined in Section 18-209(a) of the Act. Section 18. This section amends Section 18-211(b) of the Act relating to a corrected certificate to clarify that the fee payable to the Secretary of State for filing a certificate of correction pursuant to Section 18-1105 of the Act shall be paid with the filing of a corrected certificate pursuant to Section 18-211(b) of the Act. Section 19. This section amends Section 18-215 of the Act relating to series of limited liability companies to clarify certain provisions, including those relating to a protected series. Section 20. This section adds new Section 18-217 of the Act to enable a limited liability company to divide into one or more newly formed limited liability companies with the dividing company continuing its existence or terminating its existence, as the case may be. Section 21. This section adds new Section 18-218 of the Act to authorize the formation of a registered series by complying with Section 18-218 of the Act. Registered series are associations and formed by the filing of a certificate of registered series and, therefore, have the attributes required to be "registered organizations" under the Uniform Commercial Code. Registered series formed under Section 18-218 of the Act also have the same rights and powers and the same inter-series limitation on liability as protected series established under Section 18-215(b) of the Act. Section 22. This section adds new Section 18-219 of the Act to enable a protected series of a limited liability company to convert to a registered series of such limited liability company. Section 23. This section adds new Section 18-220 of the Act to enable a registered series of a limited liability company to convert to a protected series of such limited liability company. Section 24. This section adds new Section 18-221 of the Act to provide that one or more registered series of a limited liability company may merge or consolidate with or into one or more other registered series of such limited liability company. Sections 25 through 27. These sections amend Sections 18-302(d), 18-305(d) and 18-404(d) of the Act to provide specific statutory authority for domestic limited liability companies to use networks of electronic databases (examples of which are described currently as "distributed ledgers" or a "blockchain") for the creation and maintenance of limited lability company records and for certain "electronic transmissions." Section 28. This section amends Section 18-1105(a) of the Act to provide the fee payable to the Secretary of State for the filing of a certificate of division under Section 18-217 of the Act. Section 29. This section amends Section 18-1105(a) of the Act to provide for the fee payable to the Secretary of State for the filing of certain certificates pursuant to Sections 18-218, 18-219, 18-220 and 18-221 of the Act and to provide for the fee payable to the Secretary of State for the issuance of a good standing certificate for a registered series of a limited liability company and a certificate which lists all of the registered series formed by a limited liability company. Section 34. This section adds a new subchapter XII providing for the formation of statutory public benefit limited liability companies which, like public benefit corporations, are intended to produce a public benefit or public benefits and to operate in a responsible and sustainable manner. Section 35. This section provides that the proposed amendments in Sections 3, 6, 8, 9, 11, 13, 16, 18, 20, 25 through 28 and 34 of this Act shall become effective August 1, 2018. The proposed amendments in Sections 1, 2, 4, 5, 7, 10, 12, 14, 15, 17, 19, 21 through 24 and 29 through 33 of this Act shall become effective August 1, 2019.

Section 1. Section 1 of this Act amends Section 102(a)(1) to provide that the name of a corporation must be such as to distinguish it from the name of any registered series of a limited liability company. Section 2. Sections 2 and 3 of this Act amend Section 114. Section 114 translates the provisions of Title 8, to determine which provisions apply to nonstock corporations. As amended, Section 114 allows nonstock corporations to use the provisions of Sections 204 and 205 to ratify defective corporate acts. Section 3. Sections 4 through 8 of this Act amend Section 204. The addition of new Section 204(c)(2) confirms that Section 204 remains available for use in ratifying defective corporate acts in circumstances where no valid stock is outstanding, consistent with the existing provisions of Section 204 specifying that only valid stock is entitled to vote on the ratification of a defective corporate act that requires or required a vote of stockholders. The changes to Section 204(d) clarify that, in cases where a vote of stockholders is being sought for the ratification of a defective corporate act at a meeting of stockholders, the notice that is required to be given to holders of valid stock or putative stock as of the time of the defective corporate act may be given to the holders of valid stock or putative stock as of the record date for the defective corporate act if such defective corporate act involved the establishment of a record date. Section 204(g) is also being amended to provide that public companies may give such notice through disclosure in a document publicly filed with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934. Section 204(h)(1) is being amended to clarify and confirm that any act or transaction that a corporation takes that is within its power under subchapter II of the Delaware General Corporation Law (i.e., any act or transaction other than those that are expressly denied, such as the power of issuing bills, notes, or other evidences of debt for circulation as money, or carrying on the business of receiving deposits of money) may be subject to ratification under Section 204 if such act or transaction was void or voidable due to a "failure of authorization." The amendments to Section 204(h)(1) are intended to eliminate any implication from Nguyen v. View, Inc., C.A. No. 11138-VCS (Del. Ch. June 6, 2017), suggesting that an act or transaction may not be within the power of a corporation—and therefore may not constitute a "defective corporate act" susceptible to cure by ratification—solely on the basis that it was not approved in accordance with the provisions of the Delaware General Corporation Law or the corporation's certificate of incorporation or bylaws. The amendments would not, however, disturb the power of the Court of Chancery to decline to validate a defective corporate act that had been ratified under Section 204, or to declare invalid any defective corporate act, on the basis that the failure of authorization that rendered such act void or voidable involved a deliberate withholding of any consent or approval required under the Delaware General Corporation Law, the certificate of incorporation or bylaws, nor would it limit, eliminate, modify or qualify any other power expressly granted to the Court of Chancery under Section 205 of the Delaware General Corporation Law. Section 204(h)(2) is being amended to make clear that the failure of an act or transaction to be approved in compliance with the disclosure set forth in any proxy or consent solicitation statement may constitute a failure of authorization. Section 4. Sections 9 and 10 of this Act amend Section 262. The amendments to Section 262(b) will apply the "market out" exception to the availability of statutory appraisal rights to "intermediate form" mergers effected pursuant to Section 251(h). As currently drafted, Section 262(b)(3) provides that, if all of the stock of a subsidiary Delaware corporation party to a merger effected pursuant to Section 251(h) are not owned by the parent immediately prior to the merger, appraisal rights will be available for the shares of the subsidiary Delaware corporation, whether or not the market out exception would otherwise apply to an analogous "long form" merger, effectively ensuring that the market out exception will not be available to any exchange offer effected pursuant to Section 251(h). As amended, Section 262(b) will provide that, in the case of a merger pursuant to Section 251(h), appraisal rights will not be available for the shares of any class or series of stock of a target corporation that were listed on a national securities exchange or held of record by more than 2,000 holders as of immediately prior to the execution of the agreement of merger, so long as such holders are not required to accept for their shares anything except (i) stock of the surviving corporation (or depository receipts in respect thereof), (ii) stock of any other corporation (or depository receipts in respect thereof) that at the effective time of the merger will be listed on a national securities exchange or held of record by more than 2,000 holders, (iii) cash in lieu of fractional shares or fractional depository receipts in respect of the foregoing, or (iv) any combination of the foregoing shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts. The changes to Section 262(e) effect a technical clarifying change with respect to the statement required to be furnished by the surviving corporation thereunder. Currently, Section 262(e) requires the surviving corporation to provide, upon request and subject to specified conditions, a statement to dissenting stockholders setting forth the aggregate number of shares that were not voted in favor of the merger or consolidation and as to which demands for appraisal have been received, and the aggregate number of holders of such shares. The changes to Section 262(e) give recognition to the fact that, in the case of a merger effected pursuant to Section 251(h), no shares are "voted" for the adoption of the agreement of merger. Instead, if a requisite number of shares of a target corporation are tendered for purchase or exchange in a tender offer satisfying the requirements of Section 251(h), the merger of the target corporation may be effected without a vote of its stockholders. The amendment to Section 262(e) thus clarifies that the statement provided pursuant thereto in connection with a merger effected under Section 251(h) must set forth the relevant shares not tendered for exchange or purchase rather than the shares not voted for the merger. Section 5. Section 11 of this Act amends Section 284 to clarify that the Attorney General has the exclusive authority to move for the revocation or forfeiture of a charter of a corporation pursuant to Section 284. As amended, Section 284 also clarifies that, in light of electronic filing, the Attorney General may file a complaint seeking revocation or forfeiture in the Court of Chancery without regard to county. Section 284 is also amended to provide expressly that the Court of Chancery has the power to appoint a trustee to administer and wind up the affairs of a corporation whose charter has been revoked or forfeited pursuant to Section 284. Section 6. Section 12 of this Act amends Section 313(b) to reflect the current practice of the Office of the Secretary of State relating to the filing of certificates of revival for exempt corporations. Section 13 of this Act amends Section 502(a) to reflect the current practice of the Office of the Secretary of State relating to the filing of annual reports for exempt corporations. Section 7. Sections 14 through 17 of this Act relate to the effectiveness of the amendments to Title 8. Section 14 of this Act provides that Section 1 of this Act (relating to the amendments to Section 102(a)(1)) are effective on August 1, 2019. Section 15 of this Act provides that Sections 2 and 3 and Sections 11 through 13 of this Act (relating to the amendments to Sections 114, 284, 313(b) and 502(a)) are effective on August 1, 2018. Section 16 of this Act provides that Sections 4 through 8 of this Act (relating to the amendments to Section 204) are effective only with respect to defective corporate acts ratified or to be ratified pursuant to resolutions adopted by a board of directors on or after August 1, 2018. Section 17 of this Act provides that Sections 9 and 10 of this Act (relating to the amendments to Section 262) are effective only with respect to a merger or consolidation consummated pursuant to an agreement entered into on or after August 1, 2018.

In December 2016, the federal Office of Child Support Enforcement issued final regulations titled "Flexibility, Efficiency, and Modernization in Child Support Enforcement Programs," 81 Fed. Reg. 93,492 (Dec. 20, 2016) (codified at 42 C.F.R Pt. 433). This Act updates to whom Delaware's Division of Child Support Services can send child support payments, in compliance with the federal regulations.

This Act restores the Delaware Prescription Drug Payment Assistance Program (“Program”), which was eliminated in the Fiscal Year 2018 Annual Appropriations Act. This Act replaces Senate Bill 148 and makes the following additional changes: (1) Delays implementation of the Act until January 1, 2019, to coordinate with the Medicare Part D benefit year to enable the Department of Health and Social Services (“Department”) to make necessary system changes. (2) Makes changes to the defined term “prescription drugs.” (3) Removes provisions required to be included in rules and regulations promulgated by the Department. (4) Adds provisions that may be included in rules and regulations promulgated by the Department. (5) Makes technical corrections to conform the provisions of the restored Program to the standards of the Delaware Legislative Drafting Manual.

This bill allows children under the age of 18 to be transferred to the Department of Corrections only after adjudication and an imposition of a sentence of incarceration. Currently, Delaware permits juveniles charged with adult offenses to be held in default of bail in the custody of the Department of Corrections. The trend nationwide is to hold juveniles charged with adult offenses in juvenile facilities pretrial as these facilities provide educational and rehabilitative programs.

This Act provides that all current employees, prospective employees, contractors and subcontractors of the Department of Labor with access to federal tax information shall be subject to appropriate background checks to ensure that the Department of Labor complies with obligations imposed by § 6103(p)(4) of the Internal Revenue Code and by the Internal Revenue Service in Publication 1075.

This Act permits the Superior Court to consider petitions out of sequence where the Attorney General consents and the Court determines consideration to be in the interest of justice. To ensure this exceptional sequencing provision is employed judiciously, the Court will only consider the consent of the Attorney General authorized by Delaware Department of Justice leadership (Attorney General, Chief Deputy Attorney General, State Prosecutor, or Chief County Prosecutors) in response to requests of Office of Defense Services leadership (Chief Defender, Chief Deputy Defender, Chief Conflicts Counsel) where a petitioner is represented by the Office of Defense Services, and in all other circumstances in response to privately retained counsel. This special authorization ensures individual petitioners do not unwittingly forego or disrupt their single opportunity for sentence review and further ensures consistency in modifications to sequencing.

This Act would permit the Superior Court to conduct an evidentiary hearing, upon motion from the Department of Services for Children, Youth & Their Families, before placing a child 16 years of age or older, in a secure detention facility pending trial. The purpose of the hearing is for the Court to determine whether the child should be placed in a facility not operated by the Department because either the Department’s facilities are at or beyond capacity or the child is deemed to be a risk to self or to other children held in secure detention facilities operated by the Department. If the Court orders the child transferred solely because the Department’s facilities are at or beyond capacity, the Court shall require the Department to transfer the child as soon as the capacity level is below capacity and to provide at least weekly updates on the capacity to the Court and no child may be held in a facility for adults for longer than 60 days. A child may also be transferred if the Court finds clear and convincing evidence that the child is a danger to self or other youth and the child’s needs would be better served at a facility not operated by the Department. This bill contains a sunset provision that is 2 years from the effective date.