Clarifying the New Amendments
September 27, 2016
Publication| Corporate Trust & Agency Services
Recent amendments to the Delaware Statutory Trust Act, effective August 1, 2016, provide for the ability to opt out of separate legal entity status. [Read our July 2016 update HERE] Some practitioners have expressed concern that by opting out of separate legal entity status, a Delaware statutory trust might not qualify as a “person” who can be a debtor or a “registered organization” under the UCC.
This concern is unfounded because, under Section 3801(g) of the Delaware Statutory Trust Act, a Delaware statutory trust that opts out of entity status is still an “association.” Under the UCC, the definition of a “person” includes an “association,” and any person, other than a natural person, is an “organization.” In addition, the conditions for qualifying as a “registered organization” under the UCC are met by both ordinary Delaware statutory trusts and those that opt out of entity status.