The Delaware LLC act, Section 18 406 specifically, allows businesses formed outside the US to be formed and domesticated within Delaware without ceasing operations or needing the winding up and termination of their original entity. This flexibility enables DLLCs to grow without disrupting current operations or having to cease altogether.
Articles of Organization
Limited liability companies (LLCs) are a business structure that combines the safety of a corporation with the versatility and simplicity of forming either a partnership or sole proprietorship.
Forming a Delaware LLC typically involves filing formal paperwork and paying relevant fees. An attorney can help ensure everything is done correctly, resulting in your LLC being officially formed.
In Delaware, articles of organization can be filed online, in person, by mail or fax. A Certificate of Formation must also be submitted to the Secretary of State as part of this process.
An LLC must have a designated registered agent, someone or company who accepts legal papers and important tax information on behalf of the business. This agent should have an address in the state and be accessible to receive and respond to legal communications during regular business hours.
Certified copies of the articles of organization can be ordered from the Secretary of State, but normal processing can take up to 3 weeks and costs $50 plus $2 per page. Expedited service is also available for $50 or more and should be processed within 24 hours.
Meetings
Delaware LLCs may hold meetings of members, managers or other officers in addition to their annual stockholders meeting. These can be held in person or via telephone and do not necessitate the consent of all members.
Though state business laws typically govern many of an LLC’s activities, they may not provide complete liability protection. Maintaining accurate records is one way to safeguard an LLC against future conflicts and liabilities.
Section 18-406 of the Delaware LLC act outlines that a limited liability company agreement may include provisions regarding notice of meetings where matters will be voted on by managers, classes or groups of managers, waiver of such notice, action by consent without a meeting, quorum requirements and rules for voting in person or by proxy.
If a member or manager of an LLC is accused of wrongdoing, having minutes from past meetings and other records available can be invaluable to defend the entity. This is especially true if the LLC has been under investigation.
Dissolution
Dissolving a Delaware LLC can be done in two ways: using the rules in your operating agreement, or by obtaining consent of members who own over two-thirds of the company’s profits. Either way, documentation confirming the decision must be recorded in official minutes at either an official dissolution meeting or on written consent form.
If you are considering dissolving your limited liability company, it is important to create a plan for winding up the business and distributing any property, cash or assets to its members. Furthermore, make sure all creditors are paid off, accounts closed, tax returns filed and other required steps taken as per law.
Once all these steps have been completed, the last step is filing a Certificate of Cancellation with the State of Delaware. This formally confirms that your business has ceased operations and alerts government agencies that you have dissolved your company and closed any remaining accounts or credit lines. You may file this certificate online or via postal mail.
Distributions
As provided in Section 18-406 of the Delaware LLC act, a Delaware limited liability company may make distributions of its funds to Members and any other Persons as allowed by law. Each Member agrees to hold the Company, its Membership Interests, and any proceeds of distributions made by the Company in accordance with internal substantive laws of Delaware without regard to “choice of law,” “conflict of laws” or similar principles of other jurisdictions.
Under the Delaware LLC act, in order for any distribution from a Company (i.e., profits and losses allocated among Members), its net income and expenses must have substantial economic effect. When deciding whether this amount is sufficient for substantial economic benefit, the Managing Member may assess both current performance of the Company’s assets and liabilities in comparison with their historical performance, including whether or not it has enough funds available to pay any debts owed to Members by the Company.
