Delaware LLC Merger: Everything You Need to Know
A Delaware LLC merger happens when business agreements combine multiple entities into one sole entity.3 min read
A Delaware LLC merger happens when business agreements combine multiple entities into one sole entity. The LLC series isn't considered a separate entity according to Delaware state laws. Even though a Delaware series LLC can hold title to assets and grant security interests and liens, the series can't enter into a conversation or merger.
Delaware Merger Information
Delaware allows a domestic limited liability company to enter the conversion or merger. The process tends to be complex and requires applications to be filed with multiple government agencies. It costs $439 for a domestic entity, or $239 for a foreign entity, to file with the Delaware Department of State.
Delaware Limited Liability Company Act Updates
In 2015, Jack Markell, the governor of Delaware, signed the Senate Bills 76, 77, and 78 into law. They made changes to the Delaware Revised Uniform Limited Partnership Act, Delaware Limited Liability Company Act (De LLC Act), and the Delaware Revised Uniform Partnership Act. These changes were made effective after August 1, 2015, unless they were noted otherwise. To eliminate any uncertainty in case there was an absence of the LLC agreement provision that afforded a group vote or class, the De LLC Act needed to have a special vote by a group of members or class of members.
With the new revisions, the agreement of merger or conversion only needed to be approved on the Delaware LLC's behalf by members who had a majority of the voting interest in the company. Any dissolved LLC could be conducted by the designee or members. Parts of the De LLC Act also have been changed to get rid of the requirement that any termination and a series winding up needs to be approved by every group of members or class that's associated with that series.
So there was no prejudice to the current parties who relied on the voting rules before the amendment happened, any LLC formed before or on July 31, 2015, will still be controlled by the voting requirements that went into effect before the amendment. Delaware LLCs that were formed before August 1, 2015, needed to consider having the opt-in language for all of the relevant determinations.
Merging Domestic Corporations and Limited Liability Companies
One or more corporations of Delaware can consolidate or merge with one or more limited liability companies in the state of Delaware or elsewhere in the United States. These corporations and limited liability companies can merge into a corporation or can merge into a limited liability company. They may also consolidate into a new limited liability company or corporation that's formed by this consolidation. This can be any limited liability company or corporation of Delaware, the District of Columbia, or any other state in the United States.
Every limited liability company or corporation needs to enter into a written agreement of consolidation or merger. It needs to state the following:
- What the terms and conditions are of the consolidation or merger.
- What mode of carrying is being used.
- What manner is being used for the conversion of stock shares. If a limited liability company survives or results from a consolidation, merger, or if all interests and shares are canceled, any shares from the corporation of from LLC interests cannot remain outstanding. Any limited liability company interests or any other securities of the remaining entity or that results from a consolidation or merger are to get property, securities, cash, or rights in exchange for converting these limited liability company interests or shares.
- Any other provisions or details that are seen as desirable that don't limit the foregoing's generality, provision of cash payment in exchange for fractional shares being issued, the surviving interests, or the resulting limited liability company or corporation.
Any agreement terms of the consolidation or merger are dependent on facts that are outside of the agreement, assuming that the facts operate on the agreement terms in a way that's expressly set forth and clear in the agreement of consolidation or merger. The word facts is used in the above sentence and includes any event occurrence, including an action by a body or person, the corporation included.
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