Delaware Certificate of Cancellation Limited Partnership

Key Takeaways

• A Delaware certificate of cancellation for a limited partnership formally ends the entity’s legal existence.
• Dissolution requires completing winding up, settling debts, and distributing assets before filing.
• The Delaware Division of Corporations charges $200 for filing a certificate of cancellation for LPs.
• Mistakes, such as filing before winding up is complete, can lead to rejected or incorrect filings.
• Partnerships should follow a structured process: partner approval, tax clearance, and final filings.
• Filing must include the LP’s legal name, original formation date, and effective cancellation date.

A Delaware certificate of cancellation limited partnership is issued when a limited partnership has been dissolved. Delaware made amendments to the LLC Act and LP Act in order to modify the group voting requirements and eliminate the default class in the case of conversion, consolidations, mergers, transfer or continuance, dissolution, or winding up of a Delaware LLC or Delaware LP.

Delaware Partnership Law

In regards to limited partnerships, the amendment allows for the following:

• The removal of the group voting rights and default class that is required when a dissolution or conversion takes place.
• The removal of the default class or group voting requirements when a certificate of cancellation is executed.
• The ability of the limited partnership to state that the rights and management powers to control the business by a member of a limited partnership are irrevocable.
• The irrevocability of a power of attorney. This also applies to proxies.

It also states that a power of attorney for a limited partnership cannot be limited by provisions in the LLC and Partnership Acts.

Delaware Entity Dissolution Information

When an entity wants to end its legal existence, it must complete the dissolution process. This process will vary in effort, time, and cost, depending on the state of the business. A limited partnership can file a statement of cancellation with the Delaware Department of State, Division of Corporations. The filing will include a fee of $200.

The dissolution of a limited partnership occurs when:

• The winding up process has been completed.
• A consolidation or merger certificate has been filed.
• A certificate of conversion has been filed to move the entity out of Delaware.
• A certificate of cancellation has been filed.

A certificate of cancellation that includes the following information must be filed with the office of the secretary of state:

• The limited partnership's full legal name.
• The certificate of limited partnership filing date.
• The future date and time of cancellation if different from the filing date.
• All required information in regards to the person who is filing the certification of cancellation.

If the certificate is filed before the winding up process has been completed, it will result in the certificate being marked as an incorrectly filed certificate. A certificate of correction would then need to be filed when the winding up process is complete. The Delaware secretary of state will not issue a limited partnership a certificate of good standing if the certificate of limited partnership has been canceled.

An template for a limited partnership cancellation certificate in Delaware would include language related to cancellation date, information about whether a merger or consolidation is taking place, and details about whether the entity is moving to another state.

Steps to File a Delaware Certificate of Cancellation

To properly dissolve a Delaware limited partnership, partners must ensure that all dissolution requirements are met before filing the certificate of cancellation:

1. Partner Approval – The limited partnership agreement usually outlines voting requirements for dissolution. Partners should formally document approval to dissolve.
2. Winding Up Affairs – Settle outstanding debts, liquidate remaining assets, and distribute proceeds according to ownership interests.
3. Prepare the Certificate of Cancellation – The certificate must include the LP’s full legal name, date of original filing, and effective date of cancellation.
4. Submit to the Delaware Division of Corporations – File online or by mail with the $200 fee. Expedited processing is available for an additional cost.
5. Resolve Tax Obligations – While Delaware does not require tax clearance to dissolve, the entity should file final tax returns with the IRS and any applicable states.

Failing to follow these steps may result in ongoing franchise tax liability or rejection of the filing.

Dissolution Fees & Forms

In Delaware, the fees to dissolve a business entity will differ based on the type of entity and how it was formed. The fees are:

• Domestic corporations: $204.
• Domestic limited liability companies: $200.
• Domestic limited liability limited partnerships: $200.
• Domestic limited Liability partnerships: $200.
• Domestic limited partnerships: $200.
• Domestic nonprofit corporations: $204.

Each entity type must also file the correct form. The correct forms are:

• Domestic corporations: certificate of dissolution.
• Domestic limited liability companies: certificate of cancellation of a limited liability company.
• Domestic limited liability limited partnerships: statement of cancellation of limited liability limited partnership.
• Domestic limited liability partnerships: statement of cancellation of limited liability limited partnership.
• Domestic limited partnerships: statement of cancellation of limited liability limited partnership.
• Domestic nonprofit corporations: certificate of dissolution for non-stock corporation.

The forms must then be submitted with all required paperwork to the correct division in Delaware which is the Delaware Department of State, Division of Corporations.

Common Filing Mistakes to Avoid

Limited partnerships often make errors that can delay dissolution:

• Filing Too Early – Submitting the certificate of cancellation before finishing winding up will cause rejection.
• Incorrect Entity Name – The name must exactly match the original certificate of limited partnership.
• Missing Information – Omitting the formation date or effective date of cancellation may invalidate the filing.
• Unpaid Franchise Taxes – Even if the LP ceases operations, franchise taxes accrue until the cancellation is approved.

To avoid these issues, many partnerships work with business attorneys or filing services to review documents before submission.

Why Do Delaware LLCs Structure Their Business Contractually

When a Delaware limited liability company is formed, the business affairs are organized in a structure which sets up all business relationships contractually. This is done to allow the company to set up the management structure and economic rights to match the business they are creating.

With a contractual business structure, the entity can follow the Delaware Limited Liability Company Act which expressly provides a policy to offer the most freedom possible in regards to contracts and agreements of limited liability companies.

Final Considerations After Cancellation

Once a Delaware certificate of cancellation limited partnership is filed and accepted:

• The entity loses legal standing to conduct business in Delaware.
• Creditors can no longer bring claims against the partnership itself, but may still pursue partners personally if obligations remain.
• Former partners should retain copies of the cancellation certificate and dissolution documents for tax and recordkeeping purposes.
• If the partnership operated in other states, separate withdrawal filings may be required in those jurisdictions.

Frequently Asked Questions

1. What is a Delaware certificate of cancellation for a limited partnership?
   It is the legal document filed with the Delaware Division of Corporations that officially ends the existence of a limited partnership.
2. How much does it cost to file?
   The filing fee is $200 for domestic limited partnerships. Expedited services cost extra.
3. Can I file a certificate of cancellation online?
   Yes. Delaware allows online submissions as well as paper filings by mail or courier.
4. Do I need to clear taxes before filing?
   Delaware does not require tax clearance, but the LP should still file final federal and state returns to avoid penalties.
5. What happens if I file before winding up is complete?
   The state will reject the filing, and you will need to file a corrected certificate after completing winding up.

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