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  • Writer's pictureJoe Dye Culik

Change to the Delaware LLC Act Permits LLCs to Subdivide

Although many North Carolina limited liability companies do not need to incorporate under the Delaware LLC Act, that Act is nevertheless used by many companies in North Carolina. Anyone doing business in North Carolina, or elsewhere, should be aware of the basic requirements. Indeed, a change to Delaware corporate law sometimes foreshadows a change in the same law in other states.

Effective August 1, 2018, the Delaware LLC Act was amended to allow a single LLC to divide itself into multiple LLCs. The LLC’s assets and liabilities may be reallocated under such a division. To do so, the LLC would need to draft a document stating the terms under which it is dividing, and would need to file the appropriate certificates with the Secretary of State.

Furthermore, any creditors of the original LLC will have to be notified of the division, along with the name and address of the new LLC who is liable to the creditor.

However, if the LLC had previously signed an agreement under which it was prohibited from merging or transferring assets, that agreement will continue to prohibit such divisions or consolidation.

LLCs are subject to a variety of rules, depending on which state they are formed under, and which state they are operating in.

The Delaware LLC Act is available at 18 Del. Code § 101. The North Carolina LLC Act is available at N.C.G.S. § 57D.

DYE CULIK PC is a Charlotte, North Carolina business law firm that represents entrepreneurs in a variety of business matters, from formation and incorporation, through litigation of disputes. If you would like a consultation about your issue, contact us at 980-999-3557 to see how we can help your business succeed.



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