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90_SB1729
805 ILCS 5/7.65 from Ch. 32, par. 7.65
805 ILCS 5/8.40 from Ch. 32, par. 8.40
805 ILCS 5/8.75 from Ch. 32, par. 8.75
Amends the Business Corporations Act of 1983. Changes the
number of members of the board of directors who may sit on a
committee created by the board from 2 or more to one or more.
Adds to the existing powers of a committee the authority to
fix the pricing terms or the designation and relative rights,
preferences, and limitations of a series of shares with
regard to the issuance or sale or contract for sale of
shares, within certain parameters set by the board, and to
fix the price of shares under an employee benefit plan.
Changes the requirement to allow a majority of disinterested
directors to make indemnification decisions regardless of
whether they are a quorum of all directors. Distinguishes
between officers and directors and employees and agents in
the standard applied for deciding whether indemnification is
available. Requires the corporation to report to the
shareholders of indemnification or expense advancement to
directors, rather than to directors, officers, employees, or
agents.
LRB9009070SMdv
LRB9009070SMdv
1 AN ACT to amend the Business Corporation Act of 1983 by
2 changing Sections 7.65, 8.40, and 8.75.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Business Corporation Act of 1983 is
6 amended by changing Sections 7.65, 8.40, 8.75 as follows:
7 (805 ILCS 5/7.65) (from Ch. 32, par. 7.65)
8 Sec. 7.65. Voting trust agreement. One or more Any
9 number of shareholders of a corporation may create a voting
10 trust for the purpose of conferring upon a trustee or
11 trustees the right to vote or otherwise represent their
12 shares, for a period of not to exceed ten years, by entering
13 into a written voting trust agreement specifying the terms
14 and conditions of the voting trust, and by transferring their
15 shares to such trustee or trustees for the purposes of the
16 agreement. Any such trust agreement shall not become
17 effective until a counterpart of the agreement is deposited
18 with the corporation at its registered office. The
19 counterpart of the voting trust agreement so deposited with
20 the corporation shall be subject to the same right of
21 examination by a shareholder of the corporation, in person or
22 by agent or attorney, as is the record of shareholders of the
23 corporation, and shall be subject to examination by any
24 holder of a beneficial interest in the voting trust, either
25 in person or by agent or attorney, at any reasonable time for
26 any proper purpose.
27 (Source: P.A. 83-1025.)
28 (805 ILCS 5/8.40) (from Ch. 32, par. 8.40)
29 Sec. 8.40. Committees.
30 (a) If the articles of incorporation or by-laws so
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1 provide, a majority of the directors may create one or more
2 committees, each to have one or more members, and appoint
3 members of the board to serve on the committee or committees.
4 A committee's Each committee shall have two or more members
5 shall, who serve at the pleasure of the board.
6 (b) Unless the appointment by the board of directors
7 requires a greater number, a majority of any committee shall
8 constitute a quorum and a majority of a quorum is necessary
9 for committee action. A committee may act by unanimous
10 consent in writing without a meeting and, subject to the
11 provisions of the by-laws or action by the board of
12 directors, the committee by majority vote of its members
13 shall determine the time and place of meetings and the notice
14 required therefor.
15 (c) To the extent specified by the board of directors or
16 in the articles of incorporation or by-laws, each committee
17 may exercise the authority of the board of directors under
18 Section 8.05; provided, however, a committee may not:
19 (1) authorize distributions, except for dividends to be
20 paid with respect to shares of any preferred or special
21 classes or any series thereof;
22 (2) approve or recommend to shareholders any act this
23 Act requires to be approved by shareholders;
24 (3) fill vacancies on the board or on any of its
25 committees;
26 (4) elect or remove officers or fix the compensation of
27 any member of the committee;
28 (5) adopt, amend or repeal the by-laws;
29 (6) approve a plan of merger not requiring shareholder
30 approval;
31 (7) authorize or approve reacquisition of shares, except
32 according to a general formula or method prescribed by the
33 board;
34 (8) authorize or approve the issuance or sale, or
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1 contract for sale, of shares or determine the designation and
2 relative rights, preferences, and limitations of a series of
3 shares, except that the board may direct a committee (i) to
4 fix the specific terms of the issuance or sale or contract
5 for sale including, without limitation, the pricing terms or
6 the designation and relative rights, preferences, and
7 limitations of a series of shares if the board of directors
8 has approved the maximum number of shares to be issued
9 pursuant to such delegated authority, or (ii) to fix the
10 price and or the number of shares to be allocated to
11 particular employees under an employee benefit plan; or
12 (9) amend, alter, repeal, or take action inconsistent
13 with any resolution or action of the board of directors when
14 the resolution or action of the board of directors provides
15 by its terms that it shall not be amended, altered or
16 repealed by action of a committee.
17 (Source: P.A. 86-464.)
18 (805 ILCS 5/8.75) (from Ch. 32, par. 8.75)
19 Sec. 8.75. Indemnification of officers, directors,
20 employees and agents; insurance.
21 (a) A corporation may indemnify any person who was or is
22 a party, or is threatened to be made a party to any
23 threatened, pending or completed action, suit or proceeding,
24 whether civil, criminal, administrative or investigative
25 (other than an action by or in the right of the corporation)
26 by reason of the fact that he or she is or was a director,
27 officer, employee or agent of the corporation, or who is or
28 was serving at the request of the corporation as a director,
29 officer, employee or agent of another corporation,
30 partnership, joint venture, trust or other enterprise,
31 against expenses (including attorneys' fees), judgments,
32 fines and amounts paid in settlement actually and reasonably
33 incurred by such person in connection with such action, suit
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1 or proceeding, if such person acted in good faith and in a
2 manner he or she reasonably believed to be in, or not opposed
3 to the best interests of the corporation, and, with respect
4 to any criminal action or proceeding, had no reasonable cause
5 to believe his or her conduct was unlawful. The termination
6 of any action, suit or proceeding by judgment, order,
7 settlement, conviction, or upon a plea of nolo contendere or
8 its equivalent, shall not, of itself, create a presumption
9 that the person did not act in good faith and in a manner
10 which he or she reasonably believed to be in or not opposed
11 to the best interests of the corporation or, with respect to
12 any criminal action or proceeding, that the person had
13 reasonable cause to believe that his or her conduct was
14 unlawful.
15 (b) A corporation may indemnify any person who was or is
16 a party, or is threatened to be made a party to any
17 threatened, pending or completed action or suit by or in the
18 right of the corporation to procure a judgment in its favor
19 by reason of the fact that such person is or was a director,
20 officer, employee or agent of the corporation, or is or was
21 serving at the request of the corporation as a director,
22 officer, employee or agent of another corporation,
23 partnership, joint venture, trust or other enterprise,
24 against expenses (including attorneys' fees) actually and
25 reasonably incurred by such person in connection with the
26 defense or settlement of such action or suit, if such person
27 acted in good faith and in a manner he or she reasonably
28 believed to be in, or not opposed to, the best interests of
29 the corporation, provided that no indemnification shall be
30 made with respect to any claim, issue, or matter as to which
31 such person has been adjudged to have been liable to the
32 corporation, unless, and only to the extent that the court in
33 which such action or suit was brought shall determine upon
34 application that, despite the adjudication of liability, but
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1 in view of all the circumstances of the case, such person is
2 fairly and reasonably entitled to indemnity for such expenses
3 as the court shall deem proper.
4 (c) To the extent that a director, officer, employee or
5 agent of a corporation has been successful, on the merits or
6 otherwise, in the defense of any action, suit or proceeding
7 referred to in subsections (a) and (b), or in defense of any
8 claim, issue or matter therein, such person shall be
9 indemnified against expenses (including attorneys' fees)
10 actually and reasonably incurred by such person in connection
11 therewith.
12 (d) Any indemnification under subsections (a) and (b)
13 (unless ordered by a court) shall be made by the corporation
14 only as authorized in the specific case, upon a determination
15 that indemnification of the director, officer, employee or
16 agent is proper in the circumstances because he or she has
17 met the applicable standard of conduct set forth in
18 subsections (a) or (b). Such determination shall be made (1)
19 by the board of directors by a majority vote of the a quorum
20 consisting of directors who are were not parties to such
21 action, suit or proceeding, even though less than a quorum,
22 or (2) if there are no such directors, or if such a quorum is
23 not obtainable, or, even if obtainable, if a quorum of
24 disinterested directors so direct directs, by independent
25 legal counsel in a written opinion, or (3) by the
26 shareholders.
27 (e) Expenses, including attorneys' fees, incurred by an
28 officer or director in defending a civil or criminal action,
29 suit or proceeding may be paid by the corporation in advance
30 of the final disposition of such action, suit or proceeding
31 upon receipt of an undertaking by or on behalf of the
32 director or, officer, employee or agent to repay such amount
33 if it shall ultimately be determined that he or she is not
34 entitled to be indemnified by the corporation as authorized
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1 in this Section. The expenses, including attorneys' fees,
2 incurred by other employees and agents in defending a civil
3 or criminal action, suit, or proceeding may be paid on such
4 terms and conditions, if any, as the board of directors deems
5 appropriate.
6 (f) The indemnification and advancement of expenses
7 provided by or granted under the other subsections of this
8 Section shall not be deemed exclusive of any other rights to
9 which those seeking indemnification or advancement of
10 expenses may be entitled under any by-law, agreement, vote of
11 shareholders or disinterested directors, or otherwise, both
12 as to action in his or her official capacity and as to action
13 in another capacity while holding such office.
14 (g) A corporation may purchase and maintain insurance on
15 behalf of any person who is or was a director, officer,
16 employee or agent of the corporation, or who is or was
17 serving at the request of the corporation as a director,
18 officer, employee or agent of another corporation,
19 partnership, joint venture, trust or other enterprise,
20 against any liability asserted against such person and
21 incurred by such person in any such capacity, or arising out
22 of his or her status as such, whether or not the corporation
23 would have the power to indemnify such person against such
24 liability under the provisions of this Section.
25 (h) If a corporation indemnifies has paid indemnity or
26 advances has advanced expenses to a director under this
27 Section, officer, employee or agent, the corporation shall
28 report the indemnification or advance in writing to the
29 shareholders with or before the notice of the next
30 shareholders meeting.
31 (i) For purposes of this Section, references to "the
32 corporation" shall include, in addition to the surviving
33 corporation, any merging corporation (including any
34 corporation having merged with a merging corporation)
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1 absorbed in a merger which, if its separate existence had
2 continued, would have had the power and authority to
3 indemnify its directors, officers, and employees or agents,
4 so that any person who was a director, officer, employee or
5 agent of such merging corporation, or was serving at the
6 request of such merging corporation as a director, officer,
7 employee or agent of another corporation, partnership, joint
8 venture, trust or other enterprise, shall stand in the same
9 position under the provisions of this Section with respect to
10 the surviving corporation as such person would have with
11 respect to such merging corporation if its separate existence
12 had continued.
13 (j) For purposes of this Section, references to "other
14 enterprises" shall include employee benefit plans; references
15 to "fines" shall include any excise taxes assessed on a
16 person with respect to an employee benefit plan; and
17 references to "serving at the request of the corporation"
18 shall include any service as a director, officer, employee or
19 agent of the corporation which imposes duties on, or involves
20 services by such director, officer, employee, or agent with
21 respect to an employee benefit plan, its participants, or
22 beneficiaries. A person who acted in good faith and in a
23 manner he or she reasonably believed to be in the best
24 interests of the participants and beneficiaries of an
25 employee benefit plan shall be deemed to have acted in a
26 manner "not opposed to the best interest of the corporation"
27 as referred to in this Section.
28 (k) The indemnification and advancement of expenses
29 provided by or granted under this Section shall, unless
30 otherwise provided when authorized or ratified, continue as
31 to a person who has ceased to be a director, officer,
32 employee, or agent and shall inure to the benefit of the
33 heirs, executors, and administrators of that person.
34 (Source: P.A. 88-43.)