LIMITED PARTNERSHIPS-EXPANDED OPPORTUNITIES UNDER DELAWARE'S 1988 REVISED UNIFORM LIMITED PARTNERSHIP ACT

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1 LIMITED PARTNERSHIPS-EXPANDED OPPORTUNITIES UNDER DELAWARE'S 1988 REVISED UNIFORM LIMITED PARTNERSHIP ACT By CRAIG B. SMITH* In 1988, Delaware adopted significant changes to its Revised Uniform Limited Partnership Act (the "1988 Delaware Act")' which reflect Delaware's continuing role in the conceptual and practical modernization of the law of limited partnerships. Amendments made in 1985 to the Delaware Revised Uniform Limited Partnership Act (the "1985 Delaware Act") 2 had substantially clarified the prior law, codified practices that had developed in the limited partnership area, and increased flexibility in the structuring of limited partnerships. 3 As a result, the 1985 Delaware Act in many respects provided a clearer and more workable statute for the drafters of limited partnership agreements to work with than the 1985 Revised Uniform Limited Partnership Act (the "1985 RULPA") 4 approved later that same year by the National Conference of Commissioners on Uniform State Laws. 5 The 1988 amendments, which became effective September 1, 1988,6 provide still greater clarity, flexibility, and protection from liability for limited partners. For example, the 1988 Delaware Act facilitates the issuance and transfer of limited partner interests in publicly-traded limited partnerships by permitting persons, including assignees, to be admitted as limited partners without signature. Partners in research and development and venture capital partnerships can structure smoother exits by taking advantage of the revised *. Mr. Smith is a member of the Delaware Bar and practices law with Lassen, Smith, Katzenstein & Furlow in Wilmington, Delaware. He is one of the draftsmen of the Delaware Revised Uniform Limited Partnership Act. Mr. Smith wishes to acknowledge the substantial assistance of Catherine Gargas, Esquire, in the preparation of this article Del. Laws ch. 316 (codified at DEL. CODE ANN. tit. 6, to (Supp. 1988)) Del. Laws ch. 188 (effective Aug. 1, 1985) (codified at Da.. CODE ANN. tit. 6, to (Supp. 1986)). 3. See generally Basile, The 1985 Delaware Revised Uniform Limited Partnership Act, 41 Bus. LAw. 571 (1986). 4. Id. at Uniform Limited Partnership Act, 6 U.L.P.A (1976) (amended 1985) Del. Laws ch. 316, 71.

2 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 merger and consolidation provisions allowing limited partnerships to merge into or consolidate with corporations, trusts, or other business entities, as well as other limited partnerships. Persons drafting agreements for Delaware limited partnerships will appreciate the clarification and expansion of the activities a limited partner may engage in without incurring liability as a general partner, the new limitations on limited partner liability for return of distributions, and various other administrative changes made by the 1988 amendments. In addition to amending its limited partnership laws, Delaware also adopted amendments to its General Corporation Law to coordinate partnership and corporate name reservation and registration 7 and to permit for the first time the merger or consolidation of Delaware corporations with domestic or foreign limited partnerships." This article discusses the significant changes in Delaware limited partnership law made by the 1988 amendments and compares them to relevant provisions in the 1985 RULPA and to the limited partnership laws of certain other states. SUMMARY OF CONTENTS Page I. ORGANIZATIONAL CHANGES A. Certificates and Agreements The Partnership Agreement Signature Requirements a. Certificates b. Signature by Agent c. Facsimile Signatures Amending the Certificate of Limited Partnership B. Mergers and Consolidations Delaware Limited Partnerships Delaware Corporations Fees Effective D ates II. LIMITED PARTNERS Del. Laws ch. 352, 1, 12 (codified at DEL. CODE ANN. tit. 6, 102(a)(1), 371(c) (Supp. 1988)) Del. Laws ch. 352, 10 (codified at DEL. CODE ANN. tit. 6, 263 (Supp. 1988)).

3 1990] LIMITED PARTNERSHIPS 45 A. Admission, Assignment, and ithdrawal B. Voting, Safe Harbor Activities, and Liability to Third Parties Voting Safe Harbor Activities and Liability to Third Parties C. Access to Information III. GENERAL PARTNERS A. Admission and Withdrawal B. Classes and Voting IV. FINANCE A. Contributions B. Distributions and Return Obligations C. Assignor and Assignee Liabilities V. DISSOLUTION AND WINDING Up A. Liquidating Trustees B. Distribution Procedures VI. MISCELLANEOUS PROVISIONS A. Partnership Name B. Service of Process on General Partners and Liquidating Trustees C. Business Transactions With the Partnership D. Annual Tax E. Other New Fees F. Foreign Limited Partnerships VII. COMPARATIVE TABLE I. ORGANIZATIONAL CHANGES A. Certificates and Agreements The certificate of limited partnership filed in the state of organization and the partnership agreement have together been the traditional organizational documents of limited partnerships. The 1985 Delaware Act introduced significant changes in the nature of these documents that reduced administrative burdens and permitted greater contractual flexibility in the organization of the partnership.' Additional changes made by the 1988 Delaware Act in certificate 9. See Basile, supra note 3, at

4 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 requirements and in the concept of the partnership agreement promote the same objectives. 1. The Partnership Agreement The 1988 amendments make it easier to enter into and to change the partnership agreement, and thereby facilitate the transfer of partnership interests and permit greater flexibility in the arrangements among the partners. The definition of "partnership agreement" in the 1988 Delaware Act has been revised to allow a written partnership agreement to contain provisions for the admission of a limited partner, or the recognition of the assignment of a partnership interest or of other rights or powers of a limited partner to the extent assigned, without signature if conditions prescribed by the partnership agreement are met. 10 Compliance with the conditions, or the signing of the partnership agreement by a representative, also binds the partner or assignee to the terms of the written partnership agreement. The alternatives to signing the partnership agreement are: (i) execution of "any other writing evidencing the intent of such person to become a limited partner or assignee"" by the partner, assignee or representative, or (ii) "compli[ance] with the conditions for becoming a limited partner or assignee as set forth in the partnership agreement or any other writing and request[ ] (orally, in writing or by other action such as payment for a partnership interest) that the records of the limited partnership reflect such admission or assignment. ''12 The alternatives to signature set forth in the partnership agreement can be invoked either by a person seeking admission as a limited partner or recognition as an assignee or by "a representative authorized by such person orally, in writing or by other action such as payment for a partnership interest."'" Oral authorization of representatives and requests for admission or recognition of assignment and the deeming of an action, such a: payment for a partnership interest, as a functional equivalent, permit publicly-traded limited partnerships to take advantage of trading procedures similar to the procedures regularly used for trading cor- 10. DEL. CODE ANN. tit. 6, (10) (Supp. 1988). 11. Id. 12. Id. 13. Id.

5 1990] LIMITED PARTNERSHIPS porate securities. The 1988 amendments facilitate and potentially eliminate the need for structuring of depositary and assignee relations frequently seen in publicly traded partnerships." 4 To eliminate any concern that the statute of frauds might invalidate a written partnership agreement to which a person had become a party by an alternative to executing the agreement, the 1988 Delaware Act expressly provides that a written partnership agreement is not unenforceable either because it was not signed by a person admitted as a limited partner or becoming an assignee, or because the agreement was signed by a representative whose authorization was oral or by other action.' 5 Provision in the written partnership agreement for admission of limited partners without signature may also permit simplification of the power of attorney included in most subscription agreements in connection with offerings of limited partnership interests. Such powers typically authorize one or more of the general partners to sign the partnership agreement and other documents on behalf of the limited 14. To facilitate trading in publicly-held limited partnership interests, depositary receipts or assignments are customary. Both arc techniques to avoid continual amendment to the partnership agreement or certificate of limited partnership to reflect admission and withdrawal of limited partners. Depositary receipts are receipts for limited partnership interests deposited with and held of record by a depositary institution. The depositary appears as the limited partner of record. Receipt holders have beneficial ownership of the interests. The depositary receipt is transferrable and typically is listed for trading. An alternative method is the use of assignee units. A limited partner, usually affiliated with the general partner, assigns to investors the limited partner's economic interests in the partnership and certain rights. The assignee units are transferrable and may be listed for trading. Sfe generally 14 L. WERTHEIMER, SECURITIES AND PARTNERSHIP LAW FOR MLP's AND OTHER INVESTMENT LIMITED PARTNERSHIPS (1988). Under the 1985 Delaware Act, as under the 1985 RULPA, it was possible to structure the partnership agreement to avoid the need for signature. Under 301(b)(1) of the 1985 RULPA, and (1) of the 1985 Delaware Act, a person acquiring an interest directly from the partnership could be admitted upon compliance with the partnership agreement. Similarly, an assignee could also be admitted upon terms specified in the partnership agreement. 6 U.L.P.A. 704 (1976) (amended 1985); (a)(1) (Supp. 1986). Not all were comfortable with such arrangements. Section (b) of the 1985 Delaware Act, like 204(b) of the 1985 RULPA, contemplates written powers of attorney. Id (b); 6 U.L.P.A. 704 (1976) (amended 1985). A statute of frauds problem potentially existed with respect to such oral arrangements. Section (10) of the 1988 Delaware Act clearly eliminates such concerns and provides express authority for signatureless transactions. DEL. CODE ANN. tit. 6, (10) (Supp. 1988). Problems may still exist under the rules and regulations of the National Association of Securities Dealers and under the Blue Sky laws of some states. Se WERTHEIMER, supra, 1102(5). 15. DEL. CODE ANN. tit. 6, (10)(b) (Supp. 1988).

6 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 partner. Under the 1988 Delaware Act, if a written partnership agreement so provides, a person's signing of the subscription agreement, or payment of an initial contribution, will bind the person and make the partnership agreement enforceable against that person. 6 In some circumstances it may still be advisable, however, to obtain the signature of each limited partner on a power of attorney authorizing the general partner to sign documents other than the partnership agreement on behalf of the limited partner. If the nature of the partnership's business may require the execution of additional documents by limited partners, and if counsel believes that such a power of attorney included in the partnership agreement made binding on the limited partners without signatures pursuant to the 1988 Delaware Act would not be sufficient under applicable law, a separate executed power of attorney may be desirable. 2. Signature Requirements In addition to the new provisions permitting signatureless transactions, the 1988 amendments clarify or eliminate other signature requirements for certificates of limited partnership, amendments and restatements of certificates of limited partnership, certificates of merger or consolidation, and other partnership documents. a. Certificates The 1988 Delaware Act amends the execution requirements for a certificate of amendment to the certificate of limited partnership to provide that where the amendment reflects the withdrawal of a general partner as a general partner, such withdrawing general partner need not sign the certificate. 7 The 1985 Delaware Act also did not require a certificate of amendment to be signed by a withdrawing general partner. Many practitioners nonetheless preferred to obtain the signature of a withdrawing general partner to avoid later disputes. Moreover, because a certificate of amendment had to be signed by at least one existing general partner, problems arose where a sole general partner withdrew under circumstances in which that general partner either refused to sign or was unavailable or incapacitated and could not sign the certificate of amendment. The 1988 amendment, by eliminating the 16. Id (10)(a). 17. Id (a)(2).

7 1990] LIMITED PARTNERSHIPS need for a withdrawing general partner to execute a certificate of amendment, avoids the need for a judicially directed execution by, or on behalf of, the withdrawing general partner under such circumstances. With the introduction of procedures for appointing liquidating trustees,' 8 a certificate of cancellation must be signed by all liquidating trustees if the general partners are not winding up the partnership, or by a majority of the limited partners if the limited partners are themselves winding up the partnership.' 9 In the event of a merger or consolidation, the 1988 Delaware Act replaces the certificate of cancellation formerly called for by the 1985 Delaware Act with a certificate of merger or consolidation. The certificate of merger or consolidation must be signed by one general partner if a domestic limited partnership is filing the certificate, or by an authorized person if any other business entity is filing the certificate. 20 Although the 1988 amendments provide for persons other than general partners to sign certificates, such persons are not statutorily liable for false statements contained in certificates they sign. The 1988 Delaware Act continues to provide only that execution of any certificate by a general partner constitutes the general partner's oath or affirmation of the truth of statements in the certificate and that a general partner is liable for false statements contained in the certificate. 2 ' Furthermore, the 1988 amendments expressly provide that a liquidating trustee (which includes a limited partner who participates in winding up the partnership) does not have liability as a general partner for actions taken in winding up the affairs of the partnership. 22 b. Signature by Agent The 1985 Delaware Act allowed a person to sign any certificate of limited partnership or partnership agreement or amendments thereto by an agent, including an attorney-in-fact.23 A power of attorney did not have to be sworn to, verified, or acknowledged, or filed in 18. Id to Id (a)(3). 20. Id (a)(4). 21. Id (b), -207(a). 22. Id (Ni(2), E -804(b). 23. DEL. CODE ANN. tit. 6, (b) (Supp. 1986).

8 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 the Office of the Secretary of State, but was required to be kept by a general partner. With express recognition of signatureless transactions, it became necessary to recognize also oral authorizations to sign certificates. The 1988 Delaware Act thus provides that an authorization, including a power of attorney, to sign any certificate need not be written. 4 Where such authorization is in writing, however, the 1988 Delaware Act continues the requirement that the written authorization be retained by a general partner. 2 1 Finally, express authority is granted to limit in the partnership agreement the power to execute certificates by an agent. 26 c. Facsimile Signatures The 1988 amendments provide that any signature on any certificate authorized to be filed with the Secretary of State may be a facsimile Amending the Certificate of Limited Partnership Although the 1988 amendments generally reduce administrative burdens, it was considered appropriate to add a requirement to amend the certificate of limited partnership to provide information about those who are winding up the partnership following dissolution if the general partners are not so doing. 28 This serves to put creditors on notice that the persons winding up the affairs are not general partners and will not be liable as general partners, and protects liquidating trustees from a creditor later arguing that the trustees' actions misled the creditor into reasonably believing the person to be a general partner. An amendment must be filed setting forth the name and the business, residence or mailing address of each person who is winding up the limited partnership's affairs after the withdrawal of all the general partners or when a person shown on the certificate as a general partner is not winding up the limited partnership's affairs. Each such liquidating trustee or, when the limited partners are 24. DEL. CODE ANN. tit. 6, (b) (Supp. 1988). By comparison, the 1985 RULPA requires a written power of attorney. 6 U.L.P.A. 204(b) (1976) (amended 1985). 25. DEL. CODE ANN. tit. 6, (b) (Supp. 1988). 26. Id. 27. Id (a). 28. Id (f).

9 1990] LIMITED PARTNERSHIPS winding up the partnership, a majority of the limited partners must sign the certificate of amendment setting forth such information. The amendment constitutes legal notice of the information required to be included, but the liquidating trustees are expressly excluded from liability as general partners.2 9 The new filing requirement and the exculpation from general partner liability should clarify the liabilities that may be incurred by persons other than general partners who wind up a limited partnership's affairs, thereby encouraging competent and qualified persons to undertake the duties of a liquidating trustee. B. Mergers and Consolidations The 1985 Delaware Act provided for the first time an express statutory basis for Delaware limited partnerships to merge or consolidate with or into other limited partnerships, whether domestic or foreign. 30 The 1988 Delaware Act introduces dearer procedures and guidelines for mergers and consolidations, while retaining flexibility by allowing either the merger agreement or the partnership agreement to modify the statutory procedures. In addition, the 1988 Delaware Act permits a Delaware limited partnership to merge or consolidate not only with other limited partnerships, domestic or foreign, but also with corporations and other business entities. 3 ' The expansion of the merger or consolidation possibilities under Delaware law lends an extra degree of flexibility in structuring reorganizations and other transactions. The merger or consolidation with a Delaware limited partnership could be an initial, interim or final step in a traditional roll-up of limited partnerships into a corporation or master limited partnership, or a reorganization or transaction of any kind which heretofore has not used a limited partnership form. Provisions of the 1988 Delaware Act and the Delaware General Corporation Law regarding mergers and consolidations should also make Delaware limited partnerships an attractive form of organization for limited purpose joint ventures between existing businesses (whether 29. Id (0(1), (2), -803(b), -804(b). A limited partner may serve as liquidating trustee. Id (8). 30. DEL. CODE ANN. tit. 6, (a)-(d) (Supp. 1986). 31. DEL. CODE ANN. tit. 6, (a)-(g) (Supp. 1988). The Delaware legislature adopted a corresponding amendment to the Delaware General Corporation Law to permit, for the first time, the merger or consolidation of Delaware corporations with limited partnerships. 66 Del. Laws ch. 352, 10 (codified at DELt.. CODE ANN. tit. 8, 263 (Supp. 1988)).

10 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 corporations or partnerships), such as technology development arrangements. Provision for a structured termination of the joint venture is often a crucial concern of the parties at the outset. Such a structured termination by merger into one of the corporate partners or by merger or consolidation with a third corporation (perhaps created for that purpose) can now be outlined in the original agreements between the parties. Correspondingly, these new provisions may facilitate hostile takeovers or other changes in control, including the takeover of a corporation by a limited partnership or the takeover of a limited partnership by partners or third parties. A substantial body of case law has developed in Delaware dealing with mergers and consolidations of corporations, and the Delaware courts are familiar with the issues that arise in mergers and consolidations. Although the Delaware courts recognize that limited partnerships are different in many respects from corporations, Delaware limited partnerships and corporations considering merger or consolidation and the Delaware courts that come to hear cases in this area will have a starting point for analysis of many of the issues that may be expected to arise Delaware Limited Partnerships Under the 1988 Delaware Act, a Delaware limited partnership may merge or consolidate with or into one or more Delaware limited partnerships or "other business entities" whether organized under Delaware law or the law of any other jurisdiction." The 1988 Delaware Act broadly defines the term "other business entity" to include corporations, business trusts or associations, real estate investment trusts, common law trusts, or any unincorporated business, including a partnership (whether general or limited).1 4 Whether an "other business entity" will be able to merge or consolidate with or into a Delaware limited partnership pursuant to this provision will depend upon the laws of the jurisdiction under which that entity is organized. Prior to the 1988 Delaware Act, a merger or consolidation of a limited partnership was effected pursuant to an agreement of merger 32. For example, when dealing with the powers of a liquidator winding up a limited partnership's affairs, the Delaware Court of Chancery looked to corporate law analogies in deciding the issues. Boesky v. CX Partners, L.P., No (Del. Ch. Apr. 28, 1988), reprinted in 14 DEL. J. CORP. L. 230 (1989). See infra text accompanying notes DEL. CODE ANN. tit. 6, (b) (Supp. 1988). 34. Id (a).

11 1990] LIMITED PARTNERSHIPS or consolidation and no statutory vote of partners was required. With the 1988 amendments, unless otherwise provided in the partnership agreement, a merger or consolidation must be approved by all general partners and by a majority of each class or group of limited partners, or a majority of the limited partners as a group if there are no individual classes or groups. 3 5 The requisite majority is defimed as "limited partners who own more than 50 percent of the then current percentage or other interests in the profits of the... partnership" held by each such class or group of limited partners. 6 The partnership agreement may alter the statutory vote in any respect or eliminate it altogether. 37 No statutory appraisal rights are granted to partners. Any right to appraisal must be granted in the partnership agreement or in the agreement of merger. 3 8 The 1988 amendments add a provision similar to that contained in the merger and consolidation provisions of the Delaware General Corporation Law, permitting the termination or amendment of an agreement of merger or consolidation prior to its effectiveness pursuant to a provision permitting such termination or amendment contained in the agreement of merger or consolidation.9 The 1985 Delaware Act required a Delaware limited partnership that did not survive a merger or consolidation simply to file a certificate of cancellation with the Office of the Secretary of State."' The information contained in a certificate of cancellation is not necessarily sufficient to provide a legal record of the surviving entity that assumes the debts, liabilities and duties of the nonsurviving entities. The filing of a certificate of cancellation also may imply that the merger or consolidation of a partnership is a dissolution and liquidation because that is the usual import of such a certificate. Because of these problems, the introduction of the power to merge with business entities other than other limited partnerships, and the desire to use one certificate to effect filings under both the partnership 35. Id (b). 36. Id. 37. Not only does the "[u]nless otherwise provided in the partnership agreement" language of (b) support alteration or elimination of the vote, (a) also allows action without limited partner approval. Id l(b), -302(a). 38. The absence of appraisal rights was intentional. The draftsmen believed that through enforcement of the general partners' fiduciary duties limited partners had adequate protection. Indeed, absence of appraisal rights may make injunctive relief easier to obtain where fair price is at issue. 39. DEL. CODE ANN. tit. 6, (b) (Supp. 1988). 40. DEL. CODE ANN. tit. 6, (b) (Supp. 1986).

12 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 and corporation laws, the 1988 Delaware Act adopts a more detailed filing procedure. The surviving limited partnership or other entity must file a certificate of merger or consolidation with the Secretary of State stating: (i) the name and jurisdiction of formation or organization of each of the entities; (ii) that an agreement of merger or consolidation has been approved and executed by each of the entities; (iii) the name of the surviving or resulting entity; (iv) the future effective date or time (which must be a date or time certain) of the merger or consolidation if it is not to be effective upon filing of the certificate; (v) that the agreement of merger or consolidation is on file at a place of business of the surviving or resulting entity and the address thereof; (vi) that a copy of the agreement of merger or consolidation will be furnished by the surviving or resulting entity on request and without cost to any person holding an interest in any of the entities, and a consent to service of process by a surviving or resulting entity which is not a Delaware limited partnership or corporation. 4 ' The filing of the certificate of merger or consolidation serves as a certificate of cancellation for any domestic limited partnership which does not survive the merger or transaction. 42 The certificate of merger or consolidation must be signed by one general partner if it is filed by a Delaware limited partnership, or by an authorized person of any other business entity filing the certificate. 43 As under the 1985 Delaware Act, the surviving or resulting entity in a merger or consolidation has all the rights and is subject to all of the liabilities of the merging or consolidating entities." In addition, the 1988 Delaware Act makes clear that, unless otherwise agreed, the merger or consolidation of the Delaware limited partnership does not constitute a dissolution or require the limited partnership to wind up its affairs. 45 In addition to Delaware, nine other states have adopted statutory merger provisions. 4 6 The District of Columbia and Maryland have 41. DEL. CODE ANN. tit. 6, (c) (Supp. 1988). 42. Id (). 43. Id (a)(4). 44. Id (g). 45. Id. 46. D.C. CODE ANN (Supp. 1989); GA. CODE ANN (Supp. 1988); IND. CODE ANN (Bums Supp. 1989); KAN. STAT. ANN a609 (Supp. 1988); MD. CORPS. & Ass'NS CODE ANN (Supp. 1988); MIss. CODE ANN (Supp. 1988); S.C. CODE ANN (Law. Co-op. 1976) (amended 1986); TENN. CODE ANN (Supp. 1988); TEx. REv. CIV. STAT. ANN. art. 6132a-1, 2.11 (Vernon Supp. 1989).

13 1990] LIMITED PARTNERSHIPS provisions comparable in scope to the 1988 Delaware Act. The principal substantive differences are that both Maryland and the District of Columbia grant a statutory right of appraisal to partners, and the statutory vote called for by the District of Columbia is a two-thirds vote of the general partners and of the limited partners. 47 Maryland, like Delaware, calls for the unanimous consent of the general partners and a majority in interest of the limited partners. 3 The remaining states, Georgia, Indiana, Kansas, Mississippi, South Carolina, Tennessee, and Texas, authorize mergers only of limited partnerships; mergers of limited partnerships and other types of business organizations are not authorized. The 1985 RULPA contains no merger provisions. 2. Delaware Corporations The 1988 amendments to the Delaware General Corporation Law add a new section 263 providing for the merger or consolidation of one or more Delaware corporations with or into one or more partnerships organized in the State of Delaware or any other state in the United States or the District of Columbia unless the laws of the jurisdiction of organization forbid such merger or consolidation. 49 The merger or consolidation must be made pursuant to a written agreement of merger or consolidation. The General Corporation Law, however, unlike the 1988 Delaware Act provision enabling mergers and consolidations of limited partnerships, requires that certain matters be covered by the agreement. The written agreement of merger or consolidation where a Delaware corporation is a participating entity must state: (i) the terms and conditions of the merger or consolidations; (ii) the mode of carrying the same into effect; (iii) the manner of converting the shares of stock of each participating constituent corporation and the partnership interest of each participating constituent limited partnership into shares; (iv) partnership interests or other securities of the surviving or resulting entity, the cash, property, rights or securities of any other entity which the holders of such shares or partnership interests are to receive in exchange for, or upon conversion of such shares or partnership interests and the surrender of any certificates evidencing them; (v) 47. D.C. CODE ANN (e), (h) (Supp. 1989); MD. CoRPs. & Ass'Ns CODE ANN (f) (Supp. 1988). 48. MD. CORPS. & ASS'NS CODE ANN (c)(2) (Supp. 1988). 49. DEL. CODE ANN. tit. 8, 263 (Supp. 1988).

14 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 such other details or provisions as are deemed desirable, such as a provision for the payment of cash in lieu of the issuance of fractional shares or interests in the surviving or resulting entity. 50 Cash, property, rights, or securities of other entities may be in addition to or in lieu of securities of the surviving or resulting entity. Any of the terms of the agreement of merger or consolidation may be made dependent upon facts ascertainable outside of the agreement provided that the manner in which such facts operate upon the terms of the agreement is clearly and expressly set forth in the agreement."' The written agreement of merger and consolidation must be adopted, approved, certified, executed, and acknowledged by each domestic corporation in the same manner as the General Corporation Law provides for the merger or consolidation of domestic corporations. The agreement of merger and consolidation is also to be filed and recorded in the same manner as is provided for mergers or consolidations of domestic corporations. 52 In lieu of filing and recording the entire agreement of merger or consolidation, however, the surviving entity may file a certificate of merger or consolidation containing essentially the same information as the certificate of merger or consolidation permitted to be filed by merging or consolidating domestic corporations and which parallels the certificate to be filed under the 1988 Delaware Act for limited partnerships. 5 3 A surviving or resulting entity which is not a Delaware corporation or limited partnership must consent to service of process either in a certificate or by other agreement if a certificate is not filed. 5 4 By cross-reference, new section 263 applies certain of the provisions of the General Corporation Law governing mergers and consolidations of domestic corporations to mergers and consolidations of domestic corporations and limited partnerships. 5 The agreement 50. Id. 263(b). 51. Id. 52. Id. 263(c). 53. Id. 54. Id. 263(d). 55. Id. 263(e). The provisions cross-referenced include 251 (manner of approval of merger); 251(d) (termination and amendment of merger agreement); 251(e) (amendments to certificate of incorporation of surviving corporation); 251(f) (mergers not requiring a vote of stockholders); (status of constituent and surviving corporations, powers of surviving corporation, and effect of merger on pending actions); and 328 (merger does not impair liabilities of corporation, stockholders, directors, and officers or remedies of creditors). Id. 251, , 328.

15 1990] LIMITED PARTNERSHIPS of merger or consolidation may contain a provision which permits the board of directors to terminate or amend the agreement prior to filing, provided, however, that no such amendment may alter the amount or type of consideration to be received in the merger, alter the certificate of incorporation of the surviving corporation, or alter the terms or conditions of the agreement if such alteration would adversely affect the holders of stock of the constituent corporation.", Such restrictions on amendment of the agreement are not contained in the 1988 Delaware Act provision enabling mergers of limited partnerships and corporations. However, it would be advisable to include such provisions in the merger agreement. In the case of a merger, the certificate of incorporation of a surviving entity which is a Delaware corporation is automatically amended to the extent set forth in the agreement of merger." As in the case of other mergers involving Delaware corporations, unless the certificate of incorporation requires, no vote of stockholders of the surviving corporation is necessary to authorize a merger if the agreement of merger does not amend in any respect the certificate of incorporation of the surviving corporation. Each share of stock of the surviving corporation outstanding immediately prior to the effective date of the merger is to be an identical outstanding or treasury share of the surviving corporation after the effective date of the merger, and either (1) no shares of common stock of the surviving corporation (or no securities convertible into such stock) are to be issued or delivered under the plan of merger or (2) the shares of stock to be issued or delivered plus those shares which will be issued upon conversion of securities to be issued or delivered under the plan of merger do not exceed twenty percent of the shares of common stock of the surviving corporation outstanding immediately prior to the effective date of the merger. In addition, no vote of stockholders of any constituent corporation is necessary to authorize a merger or consolidation if no shares of such corporation's stock were issued prior to the adoption by the board of directors of the resolution approving the agreement of merger or consolidation." Provision is also made for the survival of the rights and liabilities of the constituent entities in the surviving or resulting corporation, 56. Id. 263(e). 57. Id. 263(c). 58. Id. 263(e). 59. Id.

16 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 the right of a surviving or resulting corporation to issue stocks, bonds or other indebtedness in order to effect such merger or consolidation, and the continuation of any pending actions against a party to a merger or consolidation or the substitution of the surviving corporation in such action or proceeding. 60 Finally, appraisal rights are available to dissenting stockholders of a Delaware corporation which merges or consolidates with a limited partnership. 61 As earlier noted, no such appraisal rights are provided to partners by the 1988 Delaware Act. 3. Fees The 1988 Delaware Act imposes a $200 fee for the filing of a certificate of merger and consolidation of a Delaware limited partnership. 62 The fee is separate from and in addition to any fees payable by a Delaware corporation. 4. Effective Dates Like the other 1988 amendments to the Delaware Revised Uniform Limited Partnership Act, the amendments regarding mergers and consolidations of limited partnerships became effective on September 1, The amendments expressly state that any merger or consolidation that was effective prior to that date is valid and effective despite any failure to file a certificate of merger or consolidation as required pursuant to the amendments. 64 New section 263 of the Delaware General Corporation Law, permitting mergers or consolidations between Delaware corporations and domestic or foreign limited partnerships, was delayed in effectiveness, becoming effective December 1, II. LIMITED PARTNERS A. Admission, Assignment, and Withdrawal In addition to revising the definition of "partnership agreement" to allow admission of limited partners to the partnership without the 60. Id. 61. DEL. CODE ANN. tit. 8, (b), 263(d) (Supp. 1988). 62. DEL. CODE ANN. tit. 6, (a)(3) (Supp. 1988) Del. Laws ch. 316, DEL. CODE ANN. tit. 6, (d) (Supp. 1988) Del. Laws ch. 352, 519.

17 1990] LIMITED PARTNERSHIPS execution of any writing 6 and to clarify and limit the liabilities of assignors and assignees of partnership interests, 67 the 1988 amendments also clarified two provisions relating to the admission, assignment of interests, and withdrawal of limited partners. The 1988 amendments delete two separate sections relating to the admission of additional limited partners and the time of admission of limited partners, and replace them with a single section that dearly sets forth the prerequisites for admission as a limited partner and the time when such admission is effective.t3 In connection with the formation of a limited partnership, a person is admitted upon the later of the formation of the partnership or the time provided in and upon compliance with the partnership agreement.!" Following formation, a person who acquires an interest directly from the partnership is admitted at the time provided in and upon compliance with the partnership agreement. Absent such provisions, a person is admitted upon the consent of all partners and when the person's admission is reflected in the partnership's records. 70 Assignees are admitted at the time provided in and upon compliance with the partnership agreement or, in the absence of such provisions, when the person's admission is reflected in the partnership's records." The 1988 amendments also expressly authorize a partnership agreement to provide that a limited partner cannot withdraw from the partnership or assign such limited partner's interest in the partnership.72 B. Voting, Safe Harbor Activities, and Liability to Third Parties The Delaware Revised Uniform Limited Partnership Act, which became effective January 1, 1983, introduced voting powers and other safe harbor activities in which limited partners might participate without incurring liability to third parties for partnership obliga- 66. See supra text accompanying notes See infa text accompanying notes Sections and of the 1985 Delaware Act were deleted in their entireties and replaced by of the 1988 Delaware Act. DEL. CODE ANN. tit. 6, (Supp. 1988). 69. Id (a). 70. Id (b)(1). 71. Id (b)(2). In addition, admission of assignees is subject to (a) of the 1988 Delaware Act, which provides that an assignee may become a limited partner if and to the extent that the partnership agreement so provides or if all partners consent. Id (a). 72. Id

18 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 tions. 73 The 1985 Delaware Act significantly expanded the safe harbor activities. The 1988 amendments both clarify and further expand the activities that limited partners may engage in without incurring general partner liability. Consequently, the 1988 Delaware Act is significantly more permissive in this area than the 1985 RULPA and the limited partnership statutes in effect in most other states. 1. Voting The 1988 amendments expand on the 1985 Delaware Act provision, which referred only to a "per capita or any other" basis, to provide that voting by limited partners may be on a per capita, number, financial interest, class, group or any other basis. 74 The amendment thus gives express authority for voting mechanisms that have been used and that were undoubtedly authorized by the 1985 Delaware Act. Any voting of limited partners permitted under the safe harbor provision of section (b) is also permitted under the voting provision. 75 This confirms that voting rights, like other safe harbor limited partner powers, may be granted to limited partners, and avoids potential conflict or inconsistency between the voting provisions and the safe harbor provisions. Significantly, however, this allows for voting rights to be granted in writings other than the partnership agreement. 76 The 1988 amendments also allow a partnership agreement to provide for the taking of any action without the vote or approval of any general partner or class or group of general partners. 7 Such actions specifically may include either amending the partnership agreement or taking action to create under provisions of the partnership agreement a class or group of partnership interests that was not previously outstanding. 78 In the latter case, the creation of a new class or group of interests must be pursuant to existing provisions in the partnership agreement. 79 However, there is no apparent reason Del. Laws ch. 105, 1; DEL. CODE ANN. tit. 6, 1701 (1953). 74. DEL. CODE ANN. tit. 6, (b) (Supp. 1988). 75. Id (d). 76. This is because, under (b)(8)(1) of the 1988 Delaware Act, limited partners may vote on other matters stated in "the partnership agreement or in any other agreement or in writing." Id (b)(8)(1). 77. Id (a). 78. Id. 79. Id.

19 1990] LIMITED PARTNERSHIPS why the limited partners could not first amend the agreement to create the necessary provisions, and then create the new class or group. This provision parallels another of the 1988 amendments, which permits a partnership agreement to provide for the taking of an action by the general partners without the vote or approval of any limited partner or class or group of limited partners, including the amendment of the partnership agreement or the creation under the provisions of the partnership agreement of a class or group of partnership interests not previously outstanding.s" Under the 1985 Delaware Act, as under the 1985 RULPA, the general partners had the rights, including the right to manage the business of the partnership, of partners in a partnership without limited partners, except as limited by relevant provisions of the 1985 Delaware Act or the partnership agreement. 8 ' Many partnership agreements restrict the actions of general partners in managing the partnership, frequently confining them to the defined business purposes of the limited partnership. Even before the introduction of safe harbor activities, the approval of limited partners was required in certain circumstances, such as the election of an additional or new general partner or the withdrawal of the last remaining general partner. Many partnership agreements provide for the passive role of one or more general partners and designate one partner as the managing general partner. More rarely, limited partners have been given the power to act as a group without general partner approval, such as provisions permitting the limited partners to wind up the partnership in the absence of the general partner following dissolution. The 1988 Delaware Act, while not altering the rights and powers of general partners, now expressly permits partnership actions to be taken exclusively by a decision of the limited partners or a class or group of limited partners, requiring only that the power to make such decisions be provided for in the partnership agreement. This is not as significant and broad a departure from existing limited partnership law as it might seem. It is only a logical extension of the current trend in limited partnership law generally to permit limited partners to engage in voting and other safe harbor activities without jeopardizing their limited liability. This expanded limited partner power remains limited by the safe harbor provisions. It is 80. Id (a). 81. DEL. CODE ANN. tit. 6, (a) (Supp. 1986).

20 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 not a carte blanche to limited partners to conduct the business and affairs to the exclusion of the general partners. Unless the safe harbor provisions of the 1988 Delaware Act cover the taking of an action by limited partners in the conduct of the partnership business, the limited partners cannot carry out their decisions on behalf of the partnership without potentially incurring liability to third parties. Likewise, limited partners cannot take actions on behalf of the partnership that the 1988 Delaware Act requires the general partners to take, such as the signing of the certificate of limited partnership. In addition, the limited partners cannot create a class or group of partnership interests not previously outstanding unless the partnership agreement already permits such action or unless the limited partners first act to amend the agreement to so permit. Although this may be a subtle limitation, it preserves the traditional "contract" character of the partnership form by making it one degree more difficult for a group of partners to alter the relative economic positions of their fellow partners by admitting new partners to the partnership. It highlights, however, the need to review partnership agreement provisions governing amendments to the agreement to make sure they include appropriate limitations. The provision for decisions to be made exclusively by certain groups or classes of limited or general partners adds another degree of flexibility in the structuring of limited partnerships. A limited partnership with only one or a few limited partners who each have a substantial economic stake in the partnership will have greater flexibility in structuring limited partner participation in crucial decisions of the partnership. Partnerships with a large number of limited partners may wish to designate a small group of limited partners who have a special interest or special expertise to make decisions regarding certain partnership matters. 2. Safe Harbor Activities and Liability to Third Parties The 1988 amendments also revised provisions regarding safe harbor activities of limited partners. Most of these amendments are in the nature of clarifications, but considering the importance of limited liability to the limited partners who join a limited partnership, and to counsel asked to opine on limited liability, additional clarity in this area is beneficial. Many of the clarifications are express inclusions, as safe harbor activities, of actions that are the legal equivalents of activities expressly permitted by the 1985 Delaware

21 1990] LIMITED PARTNERSHIPS The 1985 Delaware Act protected limited partners who processed or exercised enumerated "powers." Recognizing that some safe harbor provisions related to the status of a limited partner, the 1988 amendments broaden the introductory language of the safe harbor provision to include the words "having or acting in [one] or more of the following capacities."82 Under the 1988 Delaware Act, a limited partner may be an independent contractor for, or transact business with, the limited partnership or a general partner, may be a partner of a partnership that is a general partner of the limited partnership, or may be a fiduciary or beneficiary of an estate or trust that is a general partner. 03 A limited partner may also be a contractor for, or an agent or employee of, a limited partnership or a general partner, or an officer, director or stockholder of a corporate general partner, as was permitted by the 1985 Delaware Act."" Under the 1985 Delaware Act, a limited partner could transact business with the limited partnership, lend money to the limited partnership, and guarantee or assume one or more specific obligations of the partnership. 85 The 1988 amendments expand those powers to include borrowing money from the partnership and engaging in such transactions not only with the partnership but also with a general partner, and further provide that guarantees or assumptions need not be with respect to specific obligations." In addition, the permission to act as a surety, guarantor or endorser for, or to provide collateral for, the limited partnership is extended to permit these acts with respect to a general partner. 87 The 1985 Delaware Act permitted limited partners to take any actions required or permitted by law to bring or pursue a derivative action in the right of a limited partnership. The 1988 amendments clarify that limited partners may also settle or otherwise terminate such actions." Section (b)(8) of the 1988 Delaware Act, the safe harbor provision permitting proposal and approval or disapproval, by voting or otherwise, of certain matters by the limited partners, has been 82. DEL. CODE ANN. tit. 6, (b) (Supp. 1988). 83. Id (b)(1). 84. Id. 85. DEL. CODE ANN. tit. 6, , (b)(3) (Supp. 1986) 86. DEL. CODE ANN. tit. 6, , (b)(3) (Supp. 1988). 87. Id (b)(3). 88. Id (b)(6).

22 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 amended to add as appropriate matters: the election to continue the limited partnership or to continue the business of the limited partnership; 89 the merger or consolidation of the limited partnership; 90 any matter required by the Investment Company Act of 1940, as amended, or the rules or regulations of the Securities and Exchange Commission thereunder, to be approved by the holders of beneficial interests in an investment company; 91 and the indemnification of any partner or other person. 92 In addition, the catch-all provision, permitting limited partners to propose, approve or disapprove of "such other matters as are stated in the partnership agreement" has been revised to permit as well the approval, disapproval or voting on such other matters as are stated "in any other agreement or in writing." ' 93 The "such other matters" language does raise, however, the question of whether matters expressly covered by the safe harbor provisions of section (b)(8)a-k can instead be covered in some other agreement or other writing. Finally, the introductory language of section (b)(8) has been broadened to read "[t]o act or cause the taking or refraining from the taking of any action, including by proposing, approving, consenting or disapproving, by voting or otherwise," and to permit the taking of action by the limited partners by consent (which was only implicit, not express in the 1985 Delaware Act) or by other means. 94 In accordance with other 1988 amendments permitting the use of a limited partner's name in the name of the partnership, the safe harbor section has been revised to state that a limited partner does not participate in the control of the business, and is therefore not liable for the obligations of a limited partnership, by virtue of the fact that all or any part of the name of the limited partner is included in the name of the partnership. 95 Finally, a new subsection has been added that confirms that the safe harbor provisions of section (b) are not self-executing. The provision states that limited partner "rights and powers may 89. Id (b)(8)(a). 90. Id (b)(8)(i). 91. Id (b)(8)0). 92. Id (b)(8)(k). 93. Id (b)(8)(1). 94. Id (b)(8). 95. Id (d).

23 1990] LIMITED PARTNERSHIPS be created only by a certificate of limited partnership, a partnership agreement or any other agreement or in writing, or other sections of this chapter.' '96 Some safe harbor activities enumerated in section (b) are in fact expressly created by other sections of the 1988 Delaware Act. For example, the 1988 amendments provide for the voting of the limited partners to approve a merger or consolidation. 9 1 As another example, under section a partner may lend money to, borrow money from, act as a surety, guarantor or endorser for, guarantee or assume one or more specific obligations of, provide collateral for, and transact other business with the limited partnership, except as otherwise provided in the partnership agreement. However, such sections may not be coextensive with the safe harbor activities provision itself. For example, section , the business transactions provision, refers to guaranty or assumption of "specific obligations" of a limited partnership, whereas the corresponding part of the safe harbor activities provision has been amended to permit guaranty or assumption of obligations of a limited partnership, whether or not specific. 99 In addition, the safe harbor provision, but not the business transactions provision, permits the limited partner to act in these capacities with respect to a general partner as well as the limited partnership itself. 1 0 Finally, the business transactions provision refers to transactions permitted "except as provided in the partnership agreement"; the safe harbor provision provides that the limited partner's powers may be created by the partnership agreement, the certificate of limited partnership, or other agreements or writings.' 0 ' These differences illustrate the need for careful examination of the partnership agreement, other partnership documents and writings, and the 1988 Delaware Act in order to determine which actions by limited partners are protected in a specific set of circumstances. Similarly, the 1988 Delaware Act permits a partnership agreement to provide for decisions to be made exclusively by one or more groups or classes of limited or general partners.10 2 The safe harbor section permits the creation of limited partner voting and approval rights with regard to matters stated "in the partnership agreement 96. Id (e). 97. Id (b). 98. Id Id (b)(3) Id/ Id (1) Id (a).

24 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 or in any other agreement or in writing.' 10 3 Therefore, it may be advisable to include in the partnership agreement, and not in some other agreement or writing, any provisions relating to matters to be decided exclusively by one or more groups or classes of limited partners pursuant to section (a). The provision in the 1988 Delaware Act that limited partners' rights and powers may be created only by the certificate of limited partnership, a partnership agreement or any other agreement or in writing, or by other sections of the Act, argues strongly against use of oral partnership agreements. The partnership agreement or "other agreement" may, of course, be oral. But the difficulty of proving such oral agreements, especially when liability to third parties is at issue and avoidance of such liability depends on the express provisions of the agreement, clearly suggests that prudent parties will reduce to writing the safe harbor provisions protecting limited partners. In the final analysis, under the 1988 Delaware Act, a limited partner can incur liability as a general partner only in unusual circumstances. The liability provisions originally adopted by Delaware, effective in 1983, and subsequently adopted in the 1985 RULPA, provide that a limited partner who does participate in control of the business is liable only to persons who transact business with the limited partnership "reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner."' 14 Considering that the 1988 Delaware Act itself provides for limited partners to be involved in winding up the limited partnership, pursuing derivative actions, and acting as independent contractors, agents or employees of a limited partnership, and that the name of the limited partnership may contain the name of a limited partner, arguably a third party can no longer persuasively assert a reasonable belief that any person acting on behalf of the partnership or any person whose name is included in the limited partnership's name is a general partner. The Act itself (and the fact that the certificate of limited partnership is constructive notice of who is a general partner)' 05 may put third parties on notice that any person with whom they are dealing on behalf of the limited partnership in fact may be a limited partner and may be properly authorized to act on behalf of the limited partnership without exposing such person to liability Id. 303(b)(8)(1) Id (a); 6 U.L.P.A. 303(a) (1976) (amended 1985) DEL. CODE ANN. tit. 6, (Supp. 1988).

25 1990] LIMITED PARTNERSHIPS The requirement that the name of a limited partnership contain the words "Limited Partnership" or the abbreviation "L,P." should also put third parties on notice. Creditors and third parties entering into a transaction with a limited partnership and relying on the credit of general partners (or apparent general partners) would be welladvised to examine the certificate of limited partnership and to take any of the actions they would ordinarily take in dealing with any limited liability entity, such as a corporation, to obtain financial assurances by way of express guarantees of partnership obligations. C. Access to Information The 1985 Delaware Act provided that certain specified information be made available to limited partners, subject to reasonable standards established in the partnership agreement or by the general partners. 0 6 The 1988 amendments add more detailed guidelines for such access, which are in keeping with the current practice of limited partnerships. The 1988 amendments provide that reasonable standards imposed by the partnership on limited partner access to information may include standards governing what information and documents are to be furnished, at what time and location and at whose expense. 1 7 The general partners need only supply to limited partners copies of partnership agreements which are written and powers of attorney which are written, since either may be oral.'1 a More significantly, the 1988 Delaware Act authorizes general partners to keep confidential from limited partners: (1) information which the general partners reasonably believe to be in the nature of trade secrets, (2) other information the disclosure of which the general partners in good faith believe is not in the best interests of the limited partnership, (3) information the disclosure of which the general partners in good faith believe could damage the limited partnership or its business, or (4) information which the limited partnership is required by law or by agreement with a third party to keep confi DEL. CODE ANN. tit. 6, (Supp. 1986). The material which must be made available includes: full information regarding the slatus of the business and financial condition of the partnership, the tax returns, a list of partners, the partnership agreement and certificate of limited partnership with all amendments and powers of attorney, value of property or services contributed or to be contributed by any partner, and such other information as may be just and reasonable. Id DEL. CODE ANN. tit. 6, (a) (Supp. 1988) Id (10), -204(b), -305(a)(4).

26 DELAWARE JOURNAL OF CORPORATE LAW [Vol. 15 dential.' 0 9 The general partners may keep information confidential for such period of time as the general partners deem reasonable." 0 Moreover, it is arguable that because the statute provides that the general partner "shall have the right" to keep material confidential, the right may not be limited by the partnership agreement. Equally significant, a limited partner must now make a written demand for access to information, stating the purpose of the demand."' Any action to enforce any right of inspection must be brought in the Court of Chancery of the State of Delaware. 12 In contrast, the comments to the corresponding 1985 RULPA section concerning limited partner access to information state merely that "[it is assumed that courts will protect limited partnerships from abuses and attempts to misuse Section 305 for improper purposes.' 1 3 The 1988 amendments to the Delaware Act provide a framework for protecting both access to information and abuse of the right to information, and set forth standards to be used in resolving disputes concerning limited partner access to information. In addition to the standards provided by the statute itself, in interpreting this provision, the chancery court will have available to it the well-developed body of Delaware case law regarding access to books and records by stockholders of corporations." 4 The 1988 Delaware Act also provides that the limited partnership may maintain its records in non-written form, as long as they can be converted into written form within a reasonable period of time. ' III. GENERAL PARTNERS A. Admission and Withdrawal Under the 1985 Delaware Act, unless the partnership agreement provided otherwise, additional general partners could be admitted 109. Id (b) Id Id (d) Id (e) U.L.P.A. 305 comment (1976) (amended 1985) See DEL. CODE ANN. tit. 8, 220 (Supp. 1988); 1 R. BALOTTI & J. FINKLESTEIN, THE DELAWARE LAW OF CORPORATIONS AND BUSINESS ORGANIZATIONS (Supp. 1987); D. DREXLER, L. BLACK & A. SPARKS, DELAWARE COR- PORATION LAW AND PRACTICE (1989); 1 E. FOLK, R. WARD & E. WELCH, FOLK ON THE DELAWARE GENERAL CORPORATION LAW 220 (2d ed. 1988) DEL. CODE ANN. tit. 6, (c) (Supp. 1988).

27 1990] LIMITED PARTNERSHIPS only with the "specific" written consent of each partner."1 6 The 1985 Act also provided that certain events of withdrawal would not constitute a withdrawal of a general partner if specific written consent were given by all partners. 1 7 The reference to "specific written consent" could have been interpreted to preclude the giving of consent in advance and require the consent to be contemporaneous in time and to relate to the specific admission of an identified person as a general partner or the specific bankruptcy or insolvency of an identified general partner. To eliminate such concerns, the 1988 amendments delete the word "specific" in these cases, thus clarifying that consent of the partners can be given in advance for a class of cases rather than only contemporaneously with respect to a particular case. 118 In order to avoid inadvertent withdrawal of a corporate general partner that has its charter revoked, the 1988 Delaware Act provides that when a general partner that is a corporation experiences an event of withdrawal upon the revocation of its charter, the event of withdrawal takes effect only if the corporation has not reinstated its charter within 90 days after the date of notice to the corporation of revocation."19 The 1985 Delaware Act, like the 1985 RULPA, mandated withdrawal of a general partner that is an estate when the estate's fiduciary distributes its entire interest in the limited partnership. 2 * In some circumstances, particularly with closely-held limited partnerships, situations arise in which, for estate administration purposes, it is necessary or convenient to distribute partnership interests before a new general partner can be located. Accordingly, the 1988 Delaware Act amends the automatic withdrawal provision for estates to permit the partnership agreement to provide that such a distribution is not an event of withdrawal or, alternatively, that all partners may consent in writing to the estate continuing as a general partner. 22 The 1988 amendments require a general partner who suffers an event of bankruptcy or insolvency that with the passage of time 116. DEL. CODE ANN. tit. 6, (Supp. 1986) Id (4), (5). The specific events relate to the bankruptcy or insolvency of a general partner or the commencement of bankruptcy or insolvency proceedings against a general partner. Id DEL. CODE ANN. tit. 6, , -402(a)(4), (5) (Supp. 1988) Id (a)(9) DEL. CODE ANN. tit. 6, (10) (Supp. 1986); 6 U.L.P.A. 402(10) (1976) (amended 1985) DEL. CODE ANN. tit. 6, (a)(10) (Supp. 1988).