Delaware – Limited Liability Company Act – Resignations

Previous Page Next Page Home Page

§ 18-601. | § 18-602. | § 18-603. | § 18-604. | § 18-605. | § 18-606. | § 18-607.

SUBTITLE II

Other Laws Relating to Commerce and Trade

CHAPTER 18. LIMITED LIABILITY COMPANY ACT

Subchapter VI. Distributions and Resignation

§ 18-601. Interim distributions.

Except as provided in this subchapter, to
the extent and at the times or upon the happening of the events
specified in a limited liability company agreement, a member is
entitled to receive from a limited liability company distributions
before the member’s resignation from the limited liability company and
before the dissolution and winding up thereof. (68 Del. Laws, c. 434, §
1; 70 Del. Laws, c. 186, § 1.)

§ 18-602. Resignation of manager.

A manager may resign as a manager of a
limited liability company at the time or upon the happening of events
specified in a limited liability company agreement and in accordance
with the limited liability company agreement. A limited liability
company agreement may provide that a manager shall not have the right
to resign as a manager of a limited liability company. Notwithstanding
that a limited liability company agreement provides that a manager does
not have the right to resign as a manager of a limited liability
company, a manager may resign as a manager of a limited liability
company at any time by giving written notice to the members and other
managers. If the resignation of a manager violates a limited liability
company agreement, in addition to any remedies otherwise available
under applicable law, a limited liability company may recover from the
resigning manager damages for breach of the limited liability company
agreement and offset the damages against the amount otherwise
distributable to the resigning manager. (68 Del. Laws, c. 434, § 1.)

§ 18-603. Resignation of member.

A member may resign from a limited
liability company only at the time or upon the happening of events
specified in a limited liability company agreement and in accordance
with the limited liability company agreement. Notwithstanding anything
to the contrary under applicable law, unless a limited liability
company agreement provides otherwise, a member may not resign from a
limited liability company prior to the dissolution and winding up of
the limited liability company. Notwithstanding anything to the contrary
under applicable law, a limited liability company agreement may provide
that a limited liability company interest may not be assigned prior to
the dissolution and winding up of the limited liability company.

Unless otherwise provided in a limited
liability company agreement, a limited liability company whose original
certificate of formation was filed with the Secretary of State and
effective on or prior to July 31, 1996, shall continue to be governed
by this section as in effect on July 31, 1996, and shall not be
governed by this section. (68 Del. Laws, c. 434, § 1; 69 Del. Laws, c.
260, § 27; 70 Del. Laws, c. 360, § 13.)

§ 18-604. Distribution upon resignation.

Except as provided in this subchapter,
upon resignation any resigning member is entitled to receive any
distribution to which such member is entitled under a limited liability
company agreement and, if not otherwise provided in a limited liability
company agreement, such member is entitled to receive, within a
reasonable time after resignation, the fair value of such member’s
limited liability company interest as of the date of resignation based
upon such member’s right to share in distributions from the limited
liability company. (68 Del. Laws, c. 434, § 1; 71 Del. Laws, c. 341, §
14; 72 Del. Laws, c. 129, § 12.)

§ 18-605. Distribution in kind.

Except as provided in a limited liability
company agreement, a member, regardless of the nature of the member’s
contribution, has no right to demand and receive any distribution from
a limited liability company in any form other than cash. Except as
provided in a limited liability company agreement, a member may not be
compelled to accept a distribution of any asset in kind from a limited
liability company to the extent that the percentage of the asset
distributed exceeds a percentage of that asset which is equal to the
percentage in which the member shares in distributions from the limited
liability company. Except as provided in the limited liability company
agreement, a member may be compelled to accept a distribution of any
asset in kind from a limited liability company to the extent that the
percentage of the asset distributed is equal to a percentage of that
asset which is equal to the percentage in which the member shares in
distributions from the limited liability company. (68 Del. Laws, c.
434, § 1; 69 Del. Laws, c. 260, § 28; 70 Del. Laws, c. 186, § 1.)

§ 18-606. Right to distribution.

Subject to §§ 18-607 and 18-804 of this
title, and unless otherwise provided in a limited liability company
agreement, at the time a member becomes entitled to receive a
distribution, the member has the status of, and is entitled to all
remedies available to, a creditor of a limited liability company with
respect to the distribution. A limited liability company agreement may
provide for the establishment of a record date with respect to
allocations and distributions by a limited liability company. (68 Del.
Laws, c. 434, § 1; 70 Del. Laws, c. 186, § 1.)

§ 18-607. Limitations on distribution.

(a) A limited liability company shall not
make a distribution to a member to the extent that at the time of the
distribution, after giving effect to the distribution, all liabilities
of the limited liability company, other than liabilities to members on
account of their limited liability company interests and liabilities
for which the recourse of creditors is limited to specified property of
the limited liability company, exceed the fair value of the assets of
the limited liability company, except that the fair value of property
that is subject to a liability for which the recourse of creditors is
limited shall be included in the assets of the limited liability
company only to the extent that the fair value of that property exceeds
that liability. For purposes of this subsection (a), the term
“distribution” shall not include amounts constituting reasonable
compensation for present or past services or reasonable payments made
in the ordinary course of business pursuant to a bona fide retirement
plan or other benefits program.

(b) A member who receives a distribution
in violation of subsection (a) of this section, and who knew at the
time of the distribution that the distribution violated subsection (a)
of this section, shall be liable to a limited liability company for the
amount of the distribution. A member who receives a distribution in
violation of subsection (a) of this section, and who did not know at
the time of the distribution that the distribution violated subsection
(a) of this section, shall not be liable for the amount of the
distribution. Subject to subsection (c) of this section, this
subsection shall not affect any obligation or liability of a member
under an agreement or other applicable law for the amount of a
distribution.

(c) Unless otherwise agreed, a member who
receives a distribution from a limited liability company shall have no
liability under this chapter or other applicable law for the amount of
the distribution after the expiration of 3 years from the date of the
distribution unless an action to recover the distribution from such
member is commenced prior to the expiration of the said 3-year period
and an adjudication of liability against such member is made in the
said action. (68 Del. Laws, c. 434, § 1; 69 Del. Laws, c. 260, § 29; 72
Del. Laws, c. 389, § 23.)

Close Menu
×
×

Basket