What Is Delaware Corporation Change of Ownership?
Delaware corporation change of ownership requirements are unlike those in any other state which is more complicated and expensive.3 min read
Updated July 6, 2020:
Delaware corporation change of ownership requirements are unlike those in any other state. Typically, changing ownership for an LLC is complicated and expensive, but this isn't the case in Delaware.
Changing LLC Ownership in Delaware
Most states require lots of information, but in Delaware, all that needs to be filed is a certificate of formation, which must contain three parts:
- Name of the Delaware LLC
- Name and address of the registered office
- Name and contact information for the registered agent in Delaware
Other information, including the names of members and their addresses, isn't required under Delaware law, so it doesn't become part of public record. Information is only filed internally with the LLC operating agreement. Instead of filing changes with the state of Delaware, the operating agreement can easily be changed by members.
Common changes are adding or removing a member or altering a person's percentage of ownership in the LLC. The operating agreement is required to be signed by all members to be valid, but the LLC isn't required to file the new operating agreement with the state of Delaware.
Changing a Certificate of Incorporation in Delaware
Most government forms can be found online for quick access and updating. The Delaware Secretary of State's Corporations Division offers a downloadable form for amending provisions in the certificate of incorporation. This form is for any changes to the incorporation documents aside from changing the name and address of the registered agent.
An amended certificate is attached to the original form as an addendum. If a business wants its certificate of incorporation to be a single document, it must use the state's corporation statute as a guide to draft the amendment and restate articles from scratch.
Step 1: File a corporate resolution to make an amendment. Under Delaware law, any changes to the certificate of incorporation must be agreed to by a majority of shareholders. Companies must call a meeting of the board of directors and open a discussion about the proposed change. The minutes of that meeting and the vote of the board of directors must then be sent to the shareholders for their vote.
Step 2: Call for a shareholder meeting to consider the amendment. The shareholders should vote on the proposal. The record of the vote is added to the meeting minutes. In order for the amendment to proceed, a majority of shareholders must vote in favor.
Step 3: File a certificate with the Delaware Division of Corporations. The certificate of amendment form is available online. A separate certificate is required for each new provision. If you choose to skip this step and file a new amended and restated certificate of incorporation, you will be required to pay an additional filing fee. Filing a certificate of amendment first also helps prove that the provision was approved by shareholders.
Step 4: File an amended and restated certificate of incorporation. If other amendments have been filed through a certificate of amendment, you can copy the formatting of the original certificate of incorporation and include the older amendments already in place. The most important changes for the form are a new document title and a new paragraph at the beginning stating that the provision was adopted legally. The paragraph should also state that the provision integrates with but doesn't further amend the original certificate of incorporation.
If the provision does further amend the certificate of incorporation, the new paragraph should detail how the new amendment was approved by the board of directors and a majority of shareholders.
Step 5: File the amended certificate with the Delaware Division of Corporations. You will also need to pay a filing fee and $9 for each additional page. Additional fees may be required if the amendment increases the number of authorized shares of stock. More information can be found on the Division of Corporations website.
Included with your certificate should be a cover letter with a company representative's name and contact information.
After the new certificate has been accepted, it overrules the original certificate of incorporation. Any future amendments will use the restated certificate. The corporation's date of incorporation will stay the same.
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