Other interesting new legislation

Just because I know how you guys love this stuff…
Here’s a look at some other new legislation that has been signed into law this past month:

• House Bill 430
(an act to amend Titles 5, 6 and 11 of the Delaware Code relating to the regulation of debt-management services)
Status: Signed by Governor on 7/17/06

This Bill creates a new chapter to license and regulate non-profit businesses engaged in offering credit counseling and debt management services. The Bill is modeled on the Uniform Debt-Management Services Act.

Not-for-profit debt counseling providers may be licensed with proof of non-profit status and tax exemption.

Applications for licenses must be accompanied by a nonrefundable fee of $2,000 to credit of State Banking Commissioner Regulatory Revolving Fund, a corporate surety bond of at least $500,000, (or irrevocable letter of credit), evidence of insurance against dishonest, fraud, theft and other misconduct of at least $500,000, identification of all trust accounts with an irrevocable consent authorizing the Commissioner to review and examine the trust accounts and overdraft notification agreement similar to what is imposed on all lawyers licensed in the State of Delaware who hold client trust accounts.

This Bill specifies, in detail, the information that must be contained in license application, updated license information, denials of licensure (subject to Delaware Administrative Procedures Act), renewals of licenses and reciprocity of licensure.

The Bill regulates the counseling of consumers before signing a Debt-Management Plan, including financial analysis, identification of which creditors are expected to participate, or not participate or not grant concessions, certain disclaimers and disclosures including whether the provider is receiving any compensation from the consumer’s creditors. All Agreements must have a three business day right of cancellation with complete refund of all fees paid by consumer.

If provider communicates with consumer primarily in a language other than English the provider must furnish all disclosures and documents in that other language.

All pre-Agreement disclosures and disclaimers and Agreements may be made by electronic means if the consumer consents consistent with the Federal Electronic Signatures in Global and National Commerce Act.

The Bill regulates the fees that can be charged, depending on the services being provided, up to a not to exceed maximum.

The Bill provides for the manner of terminating Agreements.

The Bill also provides for prohibited acts by Providers that could involve or lead to collusion, conflicts of interest or other bad practices.

The Bill gives the Delaware Banking Commission full authority to investigate all consumer complaints, impose cease and desist orders, order restitution, civilly prosecute and refer cases to the Delaware attorney general for criminal prosecution.

The Bill also allows for consumers to seek civil damages individually or by class action including punitive damages and attorney’s fees.

The Act will take effect six months after enactment.

• House Bill 445
(an act to amend Chapter 38, Title 12 of the Delaware Code relating to statutory trusts)
Status: Signed by Governor on 7/10/06

This Bill continues the practice of amending periodically the Delaware Statutory Trust Act (the “Act”) to keep it current and to maintain its national preeminence. The following is a Section by Section review of the amendments of the Act.

Section 1. This Bill restores language that was inadvertently deleted by a prior amendment.
Section 2. This Bill confirms the broad scope of the defined term “person”.
Section 3. This Bill confirms that beneficial owners and trustees are bound by governing instruments whether or not executed by them.
Section 4. This Bill deletes a subsection that is duplicative of the new § 3863 of the Act added hereby.
Section 5. This Bill clarifies that duties (including fiduciary duties) may be expanded, restricted and eliminated in a governing instrument. This Bill confirms that a governing instrument may not eliminate the implied contractual covenant of good faith and fair dealing.
Section 6. This Bill clarifies the default exculpation provision in the Act by providing that it only applies with respect to breaches of fiduciary duties.
Section 7. This Bill confirms the flexibility permitted in the Act regarding exculpation.
Section 8. This Bill clarifies that meetings of beneficial owners of a Delaware statutory trust may be held by conference telephone or similar communications equipment unless otherwise provided in a governing instrument.
Section 9. This Bill clarifies that meetings of trustees of a Delaware statutory trust may be held by conference telephone or similar communications equipment unless otherwise provided in a governing instrument.
Section 10. This Bill to add a new subsection (k) to § 3806 clarifies the circumstances under which trustees, beneficial owners or officers, employees, managers or other persons designated in accordance with § 3806(b)(7) may rely on the records of, or information relating to, the statutory trust.
Section 11. This Bill makes a technical change with respect to registered agents.
Sections 12 through 14. This Bill allows the beneficial owners to vote to continue the existence of the statutory trust notwithstanding the governing instrument provides for dissolution, makes some technical changes with respect to the winding up of the affairs of a statutory trust and confirms that a statutory trust’s existence continues until the cancellation of its certificate of trust.
Sections 15, 16 and 17. This Bill makes some technical and conforming changes to the sections of the Act relating to conversion of an entity into a statutory trust and domestication of non-U.S. entities.
Section 18. This Bill confirms the flexibility permitted in the Act with respect to transfer or continuance of domestic statutory trusts.
Section 19. This Bill deletes a subsection that is duplicative of the new § 3863 of the Act added hereby.
Section 20. This Bill adds a new § 3863 of the Act relating to activities not constituting doing business in Delaware.
Section 21. This Bill provides that the proposed amendments of the Act shall become effective on August 1, 2006.

NOTE: THE FOLLOWING SUMMARY OF 2006 LEGISLATION AFFECTING DELAWARE LAWS IS NEITHER AUTHORITATIVE NOR ALL-INCLUSIVE. THIS SUMMARY DOES NOT REPRESENT OFFICIAL POLICY OF THE STATE OF DELAWARE AND HAS BEEN PREPARED ONLY FOR GENERAL INFORMATION PURPOSES AND NOT FOR LEGAL ADVICE.

• ← The Delaware Register of Regulations- August 2006
• Joint Networking Event with the Cecil County Chamber of Commerce on August 11, 2006 →