- →
-
Contact Form
-
The Delaware Limited Liability Company Act is Chapter 18 of Title 6 of the Delaware Code, the statute under which every Delaware LLC is formed and run. Its short title comes from § 18-1102, its sections are cited as 6 Del. C. § 18-101 onwards, and the official text is on delcode.delaware.gov. Many of its rules apply “unless otherwise provided in a limited liability company agreement”, in line with the policy of “freedom of contract” in § 18-1101(b), so the agreement comes first and the Act fills its gaps. Read this guide with a Delaware lawyer for your own case.
| Topic | Sections | Subchapter |
|---|---|---|
| Definitions, including the LLC agreement | § 18-101 | I, General Provisions |
| Name, nature of business, registered agent | §§ 18-102, 18-104, 18-106 | I |
| Certificate of formation, amendment, signing | §§ 18-201, 18-202, 18-204 | II, Formation; Certificate of Formation |
| Protected and registered series | §§ 18-215, 18-218 | II |
| Admission, classes and voting, liability, information | §§ 18-301, 18-302, 18-303, 18-305 | III, Members |
| Management by members or managers | § 18-402 | IV, Managers |
| Contributions | § 18-502 | V, Finance |
| Resignation of a member, limits on distributions | §§ 18-603, 18-607 | VI, Distributions and Resignation |
| Assignment of an LLC interest, charging orders | §§ 18-701 to 18-704 | VII, Assignment of Limited Liability Company Interests |
| Dissolution, winding up, revocation | §§ 18-801 to 18-804, 18-806 | VIII, Dissolution |
| Freedom of contract, annual tax, cancellation, revival | §§ 18-1101, 18-1107 to 18-1109 | XI, Miscellaneous |
Subchapters IX, X and XII cover LLCs formed elsewhere that register in Delaware, derivative actions by members, and statutory public benefit LLCs.
The Act’s name for the operating agreement is the limited liability company agreement: any agreement, “whether referred to as a limited liability company agreement, operating agreement or otherwise”, that is “written, oral or implied” (§ 18-101(9)). One must exist before, at or after the filing of the certificate of formation (§ 18-201(d)), but it is never filed. Where the agreement says nothing, the defaults govern, among them amendment only by all members for an LLC formed on or after 1 January 2012 (§ 18-302(f)) and new members, other than assignees, only with the consent of all (§ 18-301(b)).
The agreement may expand, restrict or eliminate the duties of members and managers, fiduciary duties included, and limit liability for their breach, but it can never remove the implied contractual covenant of good faith and fair dealing (§ 18-1101(c), (e)). Where it is silent, the general rules of law and equity on fiduciary duties apply (§ 18-1104).
A Delaware LLC is one “having 1 or more members” (§ 18-101(8)), and the chapter applies whether it has one member or more (§ 18-1101(j)). A member may be an individual or an entity, “whether domestic or foreign” (§ 18-101(14)), and Delaware sets no residence or nationality condition for members or managers. By default the members manage in proportion to their interest in profits, those holding more than 50 percent deciding, unless the agreement appoints managers, and every member and manager can bind the LLC (§ 18-402).
The agreement may create classes of members with different rights, including later classes that rank ahead of existing ones, and members with no vote at all (§ 18-302(a)); votes may be counted per capita, by financial interest, by class or on any other basis (§ 18-302(b)). Unless the agreement says otherwise, members may act without a meeting by written or electronic consent of those holding the votes a meeting would need (§ 18-302(d)), and an agreement with its own amendment procedure can be amended only that way (§ 18-302(e)).
Members need not appear on any public filing, but the LLC must keep a current record of each member’s and manager’s name and address (§ 18-305(h)), which a member may demand for a purpose reasonably related to the membership (§ 18-305(a)).
An LLC exists from the filing of its certificate of formation, or a later time the certificate states, as a separate legal entity until the certificate is cancelled (§ 18-201(b)). The certificate needs only the name, which must contain “Limited Liability Company”, “L.L.C.” or “LLC” (§ 18-102), the registered office and the registered agent (§ 18-201(a)); the filing steps are on our page on Delaware company registration.
Each certificate is executed by “1 or more authorized persons” (§ 18-201(a), § 18-204(a)). Section 18-101 does not define the term, and neither section requires that person to be a member or manager. Anyone may sign through an agent whose authority “need not be in writing” (§ 18-204(b)), and signing affirms under the penalties of perjury that the facts stated are true to the knowledge of the signer (§ 18-204(d)). A statement that becomes false must be promptly amended (§ 18-202(b)).
Every LLC keeps a registered office and a registered agent in Delaware: the LLC itself, a Delaware resident, a Delaware entity or a foreign entity authorised to do business there (§ 18-104(a)). The agent accepts service of process, forwards it and the annual tax statement, verifies the identity of the LLC’s contacts, and may not work solely through a virtual office or mail forwarding (§ 18-104(e)). If the agent resigns without a successor and no new agent is appointed within 30 days of the resignation being filed, the certificate of formation is cancelled (§ 18-104(d)).
Under § 18-303(a) the LLC’s debts are its own, and no member or manager is personally obliged for them “solely by reason of being a member or acting as a manager”. The protection covers that status only. A member is still bound by an agreement to answer for the LLC’s debts, such as a guarantee (§ 18-303(b)), and by a promised contribution (§ 18-502(a)), and must repay a distribution received knowing that it left the liabilities above the fair value of the assets (§ 18-607). A member’s personal creditor can obtain only a charging order over the member’s distributions, the exclusive remedy “whether the limited liability company has 1 member or more than 1 member” (§ 18-703).
An LLC interest is personal property (§ 18-701), assignable in whole or in part unless the agreement provides otherwise (§ 18-702(a)), and the agreement may bar assignment until dissolution (§ 18-603). By default an assignment passes the share of profits, losses and distributions but not membership, and the assignor ceases to be a member on assigning all of their interest (§ 18-702(b)). Interests may not be issued in bearer form (§ 18-702(c)). The assignee becomes a member as the agreement provides, with the consent of all members, or, where the sole member voluntarily assigns all the interests to one assignee, on that assignment, unless the agreement excludes it by specific reference or the assignment provides otherwise (§ 18-704(a)).
That last rule covers a single-member ready-made LLC sold outright to one buyer. The buyer is bound by the existing agreement without signing it (§ 18-101(9)) and takes over unmet contribution obligations that could be found in it (§ 18-704(b)), while any unpaid annual tax stays with the LLC as its own debt (§ 18-1107(g)). Unless the certificate names members, which it need not do, nothing is filed with the Division of Corporations for the change. Our page on Delaware shelf companies lists the checks before buying.
Every Delaware LLC pays an annual tax, due on 1 June following the close of each calendar year (§ 18-1107(b), (c)), and files no annual report. For Delaware taxes an LLC follows its federal classification and is otherwise a partnership (§ 18-1107(a)); the federal side is on our Delaware LLC guide for non-US residents. If the tax is not paid:
Paying the arrears with penalties and interest restores good standing (§ 18-1107(i)), a cancelled LLC can be revived (§ 18-1109), and unpaid tax alone makes no member or manager liable for the LLC’s debts (§ 18-1107(n)).
Under § 18-215 the agreement may establish series of members, managers, interests or assets, each with its own rights and business purpose. A protected series answers for its debts only with its own assets if the agreement provides for it, its records keep its assets separate and the certificate of formation gives notice of the limitation (§ 18-215(b)). A registered series under § 18-218 has the same separation but is created by its own filing with the Secretary of State, carries a name beginning with the LLC’s name, pays its own annual tax and can obtain its own certificate of good standing.
An LLC exists perpetually unless its agreement sets an end (§ 18-801(a)(1)). It dissolves on an event the agreement names, on a vote of members holding more than two thirds of the profit interests unless the agreement says otherwise, when no member remains and it is not continued within 90 days, or by decree of the Court of Chancery (§ 18-801(a), § 18-802); a member’s death or bankruptcy does not dissolve it by default (§ 18-801(b)). Creditors are paid before members (§ 18-804), and the LLC ends when a certificate of cancellation is filed (§ 18-203(a)), once the full annual tax for that year is paid (§ 18-1107(c)).
We form new Delaware LLCs and supply ready-made ones, prepare the assignment of the interest and a new LLC agreement for a buyer, and arrange a registered agent that meets § 18-104. See also our Delaware company guide and, for the European equivalents, our page on the LLC in Europe. Contact us, or message us on Telegram or WhatsApp at +48 663 247 166.
Yes, but it need not be in writing. An LLC agreement must exist before, at or after the filing of the certificate of formation (§ 18-201(d)), and it may be written, oral or implied, whatever it is called (§ 18-101(9)). Without a written agreement, the Act’s defaults govern management, voting, new members and dissolution.
Yes. The Act defines a Delaware LLC as one having one or more members (§ 18-101(8)) and applies every provision whether it has one member or more (§ 18-1101(j)). An agreement with a single member is enforceable although only one person is a party to it (§ 18-101(9)), and that member’s personal creditors are still limited to a charging order (§ 18-703).
The LLC ceases to be in good standing and owes interest and a penalty on top of the tax. Until it pays, it cannot obtain a certificate of good standing, make most filings or sue in a Delaware court (§ 18-1107), although its contracts stay valid. After 3 years unpaid, its certificate of formation is cancelled (§ 18-1108).
Yes, unless the LLC agreement restricts it: the interest is personal property and assignable (§ 18-701, § 18-702). The assignee receives the economic rights and becomes a member as the agreement provides, with the consent of all members or, where a sole member assigns all the interests to one assignee, on the assignment itself (§ 18-704).
It is an LLC whose agreement divides members, managers, interests or assets into series under § 18-215. A protected series keeps its debts to its own assets when the agreement, separate records and a notice in the certificate of formation are in place; a registered series is also filed with the Secretary of State (§ 18-218).