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Public Act 096-0126


 

Public Act 0126 96TH GENERAL ASSEMBLY



 


 
Public Act 096-0126
 
SB0239 Enrolled LRB096 07539 KTG 17634 b

    AN ACT concerning business.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Limited Liability Company Act is amended by
changing Sections 1-5, 1-10, and 15-5 and adding Section 1-26
as follows:
 
    (805 ILCS 180/1-5)
    Sec. 1-5. Definitions. As used in this Act, unless the
context otherwise requires:
    "Anniversary" means that day every year exactly one or more
years after: (i) the date the articles of organization filed
under Section 5-5 of this Act were filed by the Office of the
Secretary of State, in the case of a limited liability company;
or (ii) the date the application for admission to transact
business filed under Section 45-5 of this Act was filed by the
Office of the Secretary of State, in the case of a foreign
limited liability company.
    "Anniversary month" means the month in which the
anniversary of the limited liability company occurs.
    "Articles of organization" means the articles of
organization filed by the Secretary of State for the purpose of
forming a limited liability company as specified in Article 5.
    "Assumed limited liability company name" means any limited
liability company name other than the true limited liability
company name, except that the identification by a limited
liability company of its business with a trademark or service
mark of which it is the owner or licensed user shall not
constitute the use of an assumed name under this Act.
    "Bankruptcy" means bankruptcy under the Federal Bankruptcy
Code of 1978, Title 11, Chapter 7 of the United States Code.
    "Business" includes every trade, occupation, profession,
and other lawful purpose, whether or not carried on for profit.
    "Contribution" means any cash, property, or services
rendered or a promissory note or other binding obligation to
contribute cash or property or to perform services, that a
person contributes to the limited liability company in that
person's capacity as a member.
    "Court" includes every court and judge having jurisdiction
in a case.
    "Debtor in bankruptcy" means a person who is the subject of
an order for relief under Title 11 of the United States Code, a
comparable order under a successor statute of general
application, or a comparable order under federal, state, or
foreign law governing insolvency.
    "Distribution" means a transfer of money, property, or
other benefit from a limited liability company to a member in
the member's capacity as a member or to a transferee of the
member's distributional interest.
    "Distributional interest" means all of a member's interest
in distributions by the limited liability company.
    "Entity" means a person other than an individual.
    "Federal employer identification number" means either (i)
the federal employer identification number assigned by the
Internal Revenue Service to the limited liability company or
foreign limited liability company or (ii) in the case of a
limited liability company or foreign limited liability company
not required to have a federal employer identification number,
any other number that may be assigned by the Internal Revenue
Service for purposes of identification.
    "Foreign limited liability company" means an
unincorporated entity organized under laws other than the laws
of this State that afford limited liability to its owners
comparable to the liability under Section 10-10 and is not
required to register to transact business under any law of this
State other than this Act.
    "Insolvent" means that a limited liability company is
unable to pay its debts as they become due in the usual course
of its business.
    "Limited liability company" means a limited liability
company organized under this Act.
    "L3C" or "low-profit limited liability company" means a
for-profit limited liability company which satisfies the
requirements of Section 1-26 of this Act and does not have as a
significant purpose the production of income or the
appreciation of property.
    "Manager" means a person, whether or not a member of a
manager-managed company, who is vested with authority under
Section 13-5.
    "Manager-managed company" means a limited liability
company which is so designated in its articles of organization.
    "Member" means a person who becomes a member of the limited
liability company upon formation of the company or in the
manner and at the time provided in the operating agreement or,
if the operating agreement does not so provide, in the manner
and at the time provided in this Act.
    "Member-managed company" means a limited liability company
other than a manager-managed company.
    "Membership interest" means a member's rights in the
limited liability company, including the member's right to
receive distributions of the limited liability company's
assets.
    "Operating agreement" means the agreement under Section
15-5 concerning the relations among the members, managers, and
limited liability company. The term "operating agreement"
includes amendments to the agreement.
    "Organizer" means one of the signers of the original
articles of organization.
    "Person" means an individual, partnership, domestic or
foreign limited partnership, limited liability company or
foreign limited liability company, trust, estate, association,
corporation, governmental body, or other juridical being.
    "Registered office" means that office maintained by the
limited liability company in this State, the address, including
street, number, city and county, of which is on file in the
office of the Secretary of State, at which, any process,
notice, or demand required or permitted by law may be served
upon the registered agent of the limited liability company.
    "Registered agent" means a person who is an agent for
service of process on the limited liability company who is
appointed by the limited liability company and whose address is
the registered office of the limited liability company.
    "Restated articles of organization" means the articles of
organization restated as provided in Section 5-30.
    "State" means a state, territory, or possession of the
United States, the District of Columbia, or the Commonwealth of
Puerto Rico.
    "Transfer" includes an assignment, conveyance, deed, bill
of sale, lease, mortgage, security interest, encumbrance, and
gift.
(Source: P.A. 90-424, eff. 1-1-98.)
 
    (805 ILCS 180/1-10)
    Sec. 1-10. Limited liability company name.
    (a) The name of each limited liability company as set forth
in its articles of organization:
        (1) shall contain the terms "limited liability
    company", "L.L.C.", or "LLC", or, if organized as a
    low-profit limited liability company under Section 1-26 of
    this Act, shall contain the term "L3C";
        (2) may not contain a word or phrase, or an
    abbreviation or derivation thereof, the use of which is
    prohibited or restricted by any other statute of this State
    unless the restriction has been complied with;
        (3) shall consist of letters of the English alphabet,
    Arabic or Roman numerals, or symbols capable of being
    readily reproduced by the Office of the Secretary of State;
        (4) shall not contain any of the following terms:
    "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.,"
    "Co.," "Limited Partnership" or "L.P.";
        (5) shall be the name under which the limited liability
    company transacts business in this State unless the limited
    liability company also elects to adopt an assumed name or
    names as provided in this Act; provided, however, that the
    limited liability company may use any divisional
    designation or trade name without complying with the
    requirements of this Act, provided the limited liability
    company also clearly discloses its name;
        (6) shall not contain any word or phrase that indicates
    or implies that the limited liability company is authorized
    or empowered to be in the business of a corporate fiduciary
    unless otherwise permitted by the Commissioner of the
    Office of Banks and Real Estate under Section 1-9 of the
    Corporate Fiduciary Act. The word "trust", "trustee", or
    "fiduciary" may be used by a limited liability company only
    if it has first complied with Section 1-9 of the Corporate
    Fiduciary Act; and
        (7) shall contain the word "trust", if it is a limited
    liability company organized for the purpose of accepting
    and executing trusts.
    (b) Nothing in this Section or Section 1-20 shall abrogate
or limit the common law or statutory law of unfair competition
or unfair trade practices, nor derogate from the common law or
principles of equity or the statutes of this State or of the
United States of America with respect to the right to acquire
and protect copyrights, trade names, trademarks, service
marks, service names, or any other right to the exclusive use
of names or symbols.
    (c) (Blank).
    (d) The name shall be distinguishable upon the records in
the Office of the Secretary of State from all of the following:
        (1) Any limited liability company that has articles of
    organization filed with the Secretary of State under
    Section 5-5.
        (2) Any foreign limited liability company admitted to
    transact business in this State.
        (3) Any name for which an exclusive right has been
    reserved in the Office of the Secretary of State under
    Section 1-15.
        (4) Any assumed name that is registered with the
    Secretary of State under Section 1-20.
        (5) Any corporate name or assumed corporate name of a
    domestic or foreign corporation subject to the provisions
    of Section 4.05 of the Business Corporation Act of 1983 or
    Section 104.05 of the General Not For Profit Corporation
    Act of 1986.
    (e) The provisions of subsection (d) of this Section shall
not apply if the organizer files with the Secretary of State a
certified copy of a final decree of a court of competent
jurisdiction establishing the prior right of the applicant to
the use of that name in this State.
    (f) The Secretary of State shall determine whether a name
is "distinguishable" from another name for the purposes of this
Act. Without excluding other names that may not constitute
distinguishable names in this State, a name is not considered
distinguishable, for purposes of this Act, solely because it
contains one or more of the following:
        (1) The word "limited", "liability" or "company" or an
    abbreviation of one of those words.
        (2) Articles, conjunctions, contractions,
    abbreviations, or different tenses or number of the same
    word.
(Source: P.A. 92-33, eff. 7-1-01; 93-59, eff. 7-1-03.)
 
    (805 ILCS 180/1-26 new)
    Sec. 1-26. Low-profit limited liability company.
    (a) A low-profit limited liability company shall at all
times significantly further the accomplishment of one or more
charitable or educational purposes within the meaning of
Section 170(c)(2)(B) of the Internal Revenue Code of 1986, 26
U.S.C. 170(c)(2)(B), or its successor, and would not have been
formed but for the relationship to the accomplishment of such
charitable or educational purposes.
    (b) A limited liability company which intends to qualify as
a low-profit limited liability company pursuant to the
provisions of this Section shall so indicate in its articles of
organization, and further state that:
        (1) no significant purpose of the company is the
    production of income or the appreciation of property;
    however, the fact that a person produces significant income
    or capital appreciation shall not, in the absence of other
    factors, be conclusive evidence of a significant purpose
    involving the production of income or the appreciation of
    property; and
        (2) no purpose of the company is to accomplish one or
    more political or legislative purposes within the meaning
    of Section 170(c)(2)(D) of the Internal Revenue Code of
    1986, 26 U.S.C. 170(c)(2)(D), or its successor.
    (c) A company that no longer satisfies the requirements of
this Section 1-26 continues to exist as a limited liability
company and shall promptly amend its articles of organization
so that its name and purpose no longer identify it as a
low-profit limited liability company or L3C.
    (d) Any company operating or holding itself out as a
low-profit limited liability company in Illinois, any company
formed as a low-profit limited liability company under this
Act, and any chief operating officer, director, or manager of
any such company is a "trustee" as defined in Section 3 of the
Charitable Trust Act.
    (e) Nothing in this Section 1-26 prevents a limited
liability company that is not organized under it from electing
a charitable or educational purpose in whole or in part for
doing business under this Act.
 
    (805 ILCS 180/15-5)
    Sec. 15-5. Operating agreement.
    (a) All members of a limited liability company may enter
into an operating agreement to regulate the affairs of the
company and the conduct of its business and to govern relations
among the members, managers, and company. To the extent the
operating agreement does not otherwise provide, this Act
governs relations among the members, managers, and company.
Except as provided in subsection (b) of this Section, an
operating agreement may modify any provision or provisions of
this Act governing relations among the members, managers, and
company.
    (b) The operating agreement may not:
        (1) unreasonably restrict a right to information or
    access to records under Section 10-15;
        (2) vary the right to expel a member in an event
    specified in subdivision (6) of Section 35-45;
        (3) vary the requirement to wind up the limited
    liability company's business in a case specified in
    subdivisions (3) or (4) of Section 35-1;
        (4) restrict rights of a person, other than a manager,
    member, and transferee of a member's distributional
    interest, under this Act;
        (5) restrict the power of a member to dissociate under
    Section 35-50, although an operating agreement may
    determine whether a dissociation is wrongful under Section
    35-50, and it may eliminate or vary the obligation of the
    limited liability company to purchase the dissociated
    member's distributional interest under Section 35-60;
        (6) eliminate or reduce a member's fiduciary duties,
    but may;
            (A) identify specific types or categories of
        activities that do not violate these duties, if not
        manifestly unreasonable; and
            (B) specify the number or percentage of members or
        disinterested managers that may authorize or ratify,
        after full disclosure of all materials facts, a
        specific act or transaction that otherwise would
        violate these duties; or
        (6.5) eliminate or reduce the obligations or purposes a
    low-profit limited liability company undertakes when
    organized under Section 1-26; or
        (7) eliminate or reduce the obligation of good faith
    and fair dealing under subsection (d) of Section 15-3, but
    the operating agreement may determine the standards by
    which the performance of the obligation is to be measured,
    if the standards are not manifestly unreasonable.
    (c) In a limited liability company with only one member,
the operating agreement includes any of the following:
        (1) Any writing, without regard to whether the writing
    otherwise constitutes an agreement, as to the company's
    affairs signed by the sole member.
        (2) Any written agreement between the member and the
    company as to the company's affairs.
        (3) Any agreement, which need not be in writing,
    between the member and the company as to a company's
    affairs, provided that the company is managed by a manager
    who is a person other than the member.
(Source: P.A. 92-33, eff. 7-1-01.)

Effective Date: 1/1/2010