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How Statutory Amendments Can Benefit LLCs and Corporations

How Statutory Amendments Can Benefit LLCs and Corporations

In order to meet the rapidly changing needs of business entities, states regularly modify or update their statutes for corporations, limited liability companies, and other business entities. These statutory amendments can greatly benefit companies, but only if companies follow the proper steps. In many cases, a corporation, LLC, or other entity must file an amendment to its formation document or governing instrument to take advantage of a statutory update.

Limiting Corporate Liability in Delaware

The classic example of a statutory amendment that might benefit a company is when Delaware revised its corporation law to allow corporations to limit the personal liability of directors for certain breaches of duty. This addressed a serious concern that corporations would have trouble finding anyone willing to accept directorships. But to take advantage of this statutory provision—which was subsequently enacted by most other states—a corporation had to amend its certificate of incorporation to add a clause stating that it was limiting director liability.

Recently, Delaware updated its corporation law to allow corporations to require certain lawsuits involving internal affairs to be brought in a Delaware court. In order to benefit from any savings in time and litigation expenses, a corporation would again have to amend its certificate of incorporation or bylaws.

New Statutes May Offer Greater Benefits

On occasion, a state will not just change its business entity statute, it will repeal and replace it with a whole new statute. In 2017 Nebraska will have a new corporation law, Alabama a new limited partnership law, Connecticut a new LLC law, and Pennsylvania new LLC and limited partnership laws.

Because new statutes generally have the most up-to-date governance rules, they provide even greater potential benefits for companies. Under Nebraska’s new corporation law, shareholders will be able to consent to actions without having to hold a meeting by less than unanimous consent. This allows a corporation to act much faster and with less expense.

However, an existing corporation that wants to take advantage of this change in the law will have to amend its articles of incorporation to permit shareholders to act by less than unanimous consent.

In Pennsylvania, the new LLC law permits an existing LLC to become a Benefit LLC, which will have a purpose of creating a general public benefit. Doing so will require an amendment to the Certificate of Formation.


Lawyers with corporations, limited liability companies, or other statutory business entities as clients should be aware of statutory amendments so they can take appropriate actions that will benefit their clients. Legislative tracking can be time-consuming and difficult, but the rewards can be well worth the effort.

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