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Delaware Legislative Amendments Affecting Business Entities by Ellisa Opstbaum Habbart, Esq. The Delaware legislature has updated Delaware's business statutes once again. Members of the Delaware bar, including the author of this article, were responsible for drafting and recommending these amendments that are effective August 1, 2005. Delaware Corporations H.B. 150 amends the Delaware General Corporation Law by amending sections 141(d), 158, 251(g), 265, 271 and 388. Significant amendments include changes to conversion laws allowing a foreign entity to convert directly into a Delaware corporation; and providing that all Delaware public companies the right to only issue electronic stock certificates. Another important amendment is a clarification concerning the sale, lease or exchange of a Delaware corporation's assets. Pursuant to the new amendments, the definition of a Delaware's corporation's "property and assets" includes the property and assets of any wholly-owned and controlled subsidiary. In addition, the new amendments add a provision that a shareholder vote is not required for a Delaware corporate parent to sell all of its assets to its wholly-owned and controlled Delaware subsidiary. This legislative amendment addresses and clarifies a situation which previously was arguably unsettled under Section 271 and referenced by the Delaware Court of Chancery in Hollinger, Inc. v. Hollinger Int'l, 858 A.2d 342, 348 (Del Ch. 2004). Alternative Business Entities In each of the entity statutes, the new amendments either provide for a new section or clarify that partners, members, managers, or liquidating trustees are protected from liability if they rely in good faith on the entity's records or expert reports, including those experts selected by another business partner. In addition, each of the entity statutes clarify that a judgment creditor's exclusive remedy is a lien on a member of partner's financial interest only. As stated in the legislative synopsis, a judgment creditors has no remedies such as foreclosure, garnishment, attachment or any right to become, or exercise any right as a member or partner. These clarifications further confirm Delaware's preeminence as the jurisdiction for business certainty, providing investors the comfort that they will not find themselves in business with partners or members they did not anticipate. The law and a summary of the amendments are below. Corporations: Summary of H.B. 150. Limited Liability Companies: Summary of S.B. 86. Limited Partnerships: Summary of H.B. 151. General Partnerships/Limited Liability Partnerships: Summary of S.B. 85. This information will be incorporated into and maintained in LeapLaw's knowledge base for all LeapLaw subscribers. About Ellisa Opstbaum Habbart, Esq. Ellisa is a partner at The Delaware Counsel Group, LLP ("DCG"), a law firm located in Wilmington, Delaware. DCG routinely serves as Delaware counsel providing Delaware opinions, advice and guidance on Delaware entities. Members of the firm are appointees to the committees that recommend legislative changes to the Delaware statutes. For more information about Ellisa or DCG, please visit the firm’s web site at www.delawarecounselgroup.com

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