Change to the Delaware LLC Act Permits LLCs to Subdivide - See if this Affects Your North Carolina LLC
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Change to the Delaware LLC Act Permits LLCs to Subdivide – See if this Affects Your North Carolina LLC

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 who own a North Carolina LLC. 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.

North Carolina LLC

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.

A North Carolina LLC  is subject to a variety of rules, depending on which state they are formed under, and which states 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.

Fairview Law 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 to see how we can help your business succeed.

Joe Culik

Joe Culik

Attorney Joe Culik advocates for both your business needs and your individual needs as a business owner. Utilizing his years of experience in consumer financial protection, employment law, and small business law, he brings key knowledge and skills to help your business thrive. Whether you are looking to start a small business or want to protect and grow your current business, Attorney Culik helps you at every stage.