Public Act 90-0424 of the 90th General Assembly
Public Act 90-0424
SB1020 Enrolled LRB9003480JSgc
AN ACT concerning limited liability companies, amending
named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 4. The Corporate Fiduciary Act is amended by
changing Sections 1-5.09, 1-5.11, 1-6, and 3-2 as follows:
(205 ILCS 620/1-5.09) (from Ch. 17, par. 1551-5.09)
Sec. 1-5.09. "Person" means an individual, corporation,
partnership, joint venture, trust estate, limited liability
company, or unincorporated association.
(Source: P.A. 85-858.)
(205 ILCS 620/1-5.11) (from Ch. 17, par. 1551-5.11)
Sec. 1-5.11. Trust company. "Trust company" means a
corporation incorporated or a limited liability company
organized in this State that holds a certificate of authority
issued pursuant to this Act.
(Source: P.A. 89-364, eff. 8-18-95.)
(205 ILCS 620/1-6) (from Ch. 17, par. 1551-6)
Sec. 1-6. General Corporate Powers. A corporate
fiduciary shall have the powers:
(a) if it is a State bank, those powers granted under
Sections 3 and 5 of the Illinois Banking Act, as now or
hereafter amended; and
(b) if it is a State savings and loan association, those
powers granted under Sections 1-6 through 1-8 of the Illinois
Savings and Loan Act of 1985, as now or hereafter amended;
and
(c) if it is a corporation organized under the Business
Corporation Act of 1983, as now or hereafter amended, or a
limited liability company organized under the Limited
Liability Company Act, those powers granted in Sections 4.01
through 4.24 of the Trusts and Trustees Act, as now or
hereafter amended, to the extent the exercise of such powers
by the corporate fiduciary are not contrary to the instrument
containing the appointment of the corporate fiduciary, the
court order appointing the corporate fiduciary or any other
statute specifically limiting the power of the corporate
fiduciary under the circumstances.
The Commissioner may specify powers of corporate
fiduciaries generally or of a particular corporate fiduciary
and by rule or order limit or restrict such powers of
corporate fiduciaries or a particular corporate fiduciary if
he finds the exercise of such power by corporate fiduciaries
generally or of the corporate fiduciary in particular may
tend to be an unsafe or unsound practice, or if such power is
otherwise not in the interest of beneficiaries of any
fiduciary appointment.
(Source: P.A. 86-754.)
(205 ILCS 620/3-2) (from Ch. 17, par. 1553-2)
Sec. 3-2. Change in control.
(a) Before a change may occur in the ownership of
outstanding stock or membership interests of any trust
company whether by sale and purchase, gift, bequest or
inheritance, or any other means, which will result in control
or a change in the control of the trust company or before a
change in the control of a holding company having control of
the outstanding stock or membership interests of a trust
company whether by sale and purchase, gift, bequest or
inheritance, or any other means, which will result in control
or a change in control of the trust company or holding
company, the Commissioner shall be of the opinion and find:
(1) that the general character of its proposed
management, after the change in control, is such as to
assure reasonable promise of competent, successful, safe
and sound operation;
(2) that the future earnings prospects, after the
proposed change in control, are favorable; and
(3) that the prior business affairs of the persons
proposing to obtain control or by the proposed management
personnel, whether as stockholder, director, member,
officer, or customer, were conducted in a safe, sound,
and lawful manner.
(b) Persons desiring to purchase control of an existing
trust company and persons obtaining control by gift, bequest
or inheritance, or any other means shall submit to the
Commissioner:
(1) A statement of financial worth; and
(2) Satisfactory evidence that the prior business
affairs of the persons and the proposed management
personnel, whether as stockholder, director, officer, or
customer, were conducted in a safe, sound, and lawful
manner.
As used in this Section, the term "control" means the
ownership of such amount of stock or membership interests or
ability to direct the voting of such stock or membership
interests as to give power to, directly or indirectly, direct
or cause the direction of the management or policies of the
trust company. A change in ownership of stock which would
result in direct or indirect ownership by a stockholder or
member, an affiliated group of stockholders or members or a
holding company of less than 10% of the outstanding stock or
membership interests shall not be considered a change of
control. A change in ownership of stock or membership
interests which would result in direct or indirect ownership
by a stockholder or member, an affiliated group of
stockholders or members or a holding company of 20% or such
lesser amount which would entitle the holder by applying
cumulative voting to elect one director shall be presumed to
constitute a change of control for purposes of this Section.
If there is any doubt as to whether a change in the ownership
or control of the outstanding stock or membership interests
is sufficient to result in obtaining control thereof or to
effect a change in the control thereof, such doubt shall be
resolved in favor of reporting the facts to the Commissioner.
(c) Whenever a bank makes a loan or loans, secured, or
to be secured, by 25% or more of the outstanding stock of a
trust company, the president or other chief executive officer
of the lending bank shall promptly report such fact to the
Commissioner upon obtaining knowledge of such loan or loans,
except that no report need be made in those cases where the
borrower has been the owner of record of the stock for a
period of one year or more, or the stock is that of a
newly-organized trust company prior to its opening.
(d) (1) Before a purchase of substantially all the
assets and an assumption of substantially all the liabilities
of a trust company or before a purchase of substantially all
the trust assets and an assumption of substantially all the
trust liabilities of a trust company, the Commissioner shall
be of the opinion and find:
(i) that the general character of the acquirer's
proposed management, after the transfer, is such as to
assure reasonable promise of competent, successful, safe,
and sound operation;
(ii) that the acquirer's future earnings prospects,
after the proposed transfer, are favorable;
(iii) that any prior involvement by the acquirer or
by the proposed management personnel, whether as
stockholder, director, officer, agent, or customer, was
conducted in a safe, sound, and lawful manner;
(iv) that customers' interests will not be
jeopardized by the purchase and assumption; and
(v) that adequate provision has been made for all
obligations and trusts as required under Section 7-1 of
this Act.
(2) Persons desiring to purchase substantially all the
assets and assume substantially all the liabilities of a
trust company or to purchase substantially all the trust
assets and assume substantially all the trust liabilities of
a trust company shall submit to the Commissioner:
(i) a statement of financial worth; and
(ii) satisfactory evidence that the prior business
affairs of the persons and the proposed management
personnel, whether as stockholder, director, officer, or
customer, were conducted in a safe, sound, and lawful
manner.
As used in this Section, "substantially all" the assets
or liabilities or the trust assets or trust liabilities of a
trust company means that portion such that their transfer
will materially impair the ability of the trust company to
continue successful, safe, and sound operations or to
continue as a going concern.
(e) The reports required by subsections (a),(b), (c),
and (d) of this Section 3-2 shall contain the following
information to the extent that it is known by the person
making the report: (1) the number of shares involved; (2) the
names of the sellers (or transferors); (3) the names of the
purchasers (or transferees); (4) the names of the beneficial
owners if the shares are registered in another name; (5) the
purchase price; (6) the total number of shares owned by the
sellers (or transferors), the purchasers (or transferees) and
the beneficial owners both immediately before and after the
transaction; and, (7) in the case of a loan, the name of the
borrower, the amount of the loan, and the name of the trust
company issuing the stock securing the loan and the number of
shares securing the loan. In addition to the foregoing, such
reports shall contain such other information as may be
available and which is requested by the Commissioner to
inform the Commissioner of the effect of the transaction upon
the trust company or trust companies whose stock or assets
and liabilities are involved.
(f) Whenever such a change as described in subsection
(a) of this Section 3-2 occurs, each trust company shall
report promptly to the Commissioner any changes or
replacement of its chief executive officer or of any director
occurring in the next 12 month period, including in its
report a statement of the past and current business and
professional affiliations of the new chief executive officer
or directors.
(Source: P.A. 88-408; 89-364, eff. 8-18-95.)
Section 5. The Business Corporation Act of 1983 is
amended by changing Section 13.05 and adding Section 11.39 as
follows:
(805 ILCS 5/11.39 new)
Sec. 11.39. Merger of domestic corporation and limited
liability company.
(a) Any one or more domestic corporations may merge with
or into one or more limited liability companies of this
State, any other state or states of the United States, or the
District of Columbia, if the laws of the other state or
states or the District of Columbia permit the merger. The
domestic corporation or corporations and the limited
liability company or companies may merge with or into a
corporation, which may be any one of these corporations, or
they may merge with or into a limited liability company,
which may be any one of these limited liability companies,
which shall be a domestic corporation or limited liability
company of this State, any other state of the United States,
or the District of Columbia, which permits the merger
pursuant to a plan of merger complying with and approved in
accordance with this Section.
(b) The plan of merger must set forth the following:
(1) The names of the domestic corporation or
corporations and limited liability company or companies
proposing to merge and the name of the domestic
corporation or limited liability company into which they
propose to merge, which is designated as the surviving
entity.
(2) The terms and conditions of the proposed merger
and the mode of carrying the same into effect.
(3) The manner and basis of converting the shares
of each domestic corporation and the interests of each
limited liability company into shares, interests,
obligations, other securities of the surviving entity or
into cash or other property or any combination of the
foregoing.
(4) In the case of a merger in which a domestic
corporation is the surviving entity, a statement of any
changes in the articles of incorporation of the surviving
corporation to be effected by the merger.
(5) Any other provisions with respect to the
proposed merger that are deemed necessary or desirable,
including provisions, if any, under which the proposed
merger may be abandoned prior to the filing of the
articles of merger by the Secretary of State of this
State.
(c) The plan required by subsection (b) of this Section
shall be adopted and approved by the constituent corporation
or corporations in the same manner as is provided in Sections
11.05, 11.15, and 11.20 of this Act and, in the case of a
limited liability company, in accordance with the terms of
its operating agreement, if any, and in accordance with the
laws under which it was formed.
(d) Upon this approval, articles of merger shall be
executed by each constituent corporation and limited
liability company and filed as provided in Section 11.25 of
this Act and shall be recorded with respect to each
constituent corporation as provided in Section 11.45 of this
Act. The merger shall become effective for all purposes of
the laws of this State when and as provided in Section 11.40
of this Act with respect to the merger of corporations of
this State.
(e) If the surviving entity is to be governed by the
laws of the District of Columbia or any state other than this
State, it shall file with the Secretary of State of this
State an agreement that it may be served with process in this
State in any proceeding for enforcement of any obligation of
any constituent corporation or limited liability company of
this State, as well as for enforcement of any obligation of
the surviving corporation or limited liability company
arising from the merger, including any suit or other
proceeding to enforce the shareholders right to dissent as
provided in Section 11.70 of this Act, and shall irrevocably
appoint the Secretary of State of this State as its agent to
accept service of process in any such suit or other
proceedings.
(f) Section 11.50 of this Act shall, insofar as it is
applicable, apply to mergers between domestic corporations
and limited liability companies.
(g) In any merger under this Section, the surviving
entity shall not engage in any business or exercise any power
that a domestic corporation or domestic limited liability
company may not otherwise engage in or exercise in this
State. Furthermore, the surviving entity shall be governed
by the ownership and control restrictions in Illinois law
applicable to that type of entity.
(805 ILCS 5/13.05) (from Ch. 32, par. 13.05)
Sec. 13.05. Admission of foreign corporation. A foreign
corporation organized for profit, before it transacts
business in this State, shall procure a certificate of
authority so to do from the Secretary of State. A foreign
corporation organized for profit, upon complying with the
provisions of this Act, may secure from the Secretary of
State a certificate of authority to transact business in this
State, but no foreign corporation shall be entitled to
procure a certificate of authority under this Act to act as
trustee, executor, administrator, administrator to collect,
or guardian, or in any other like fiduciary capacity in this
State or to transact in this State the business of banking,
insurance, suretyship, or a business of the character of a
building and loan corporation; provided, however, that a
foreign corporation may obtain a certificate of authority
under this Act for the purpose of carrying on the business of
a syndicate or limited syndicate under Article V-1/2 of the
Illinois Insurance Code or for the purpose of carrying on
business as a member of a group including incorporated and
individual unincorporated underwriters under Article V of the
Illinois Insurance Code. A foreign professional service
corporation may secure a certificate of authority to transact
business in this State from the Secretary of State upon
complying with this Act and demonstrating compliance with the
Act regulating the professional service to be rendered by the
professional service corporation. However, no foreign
professional service corporation shall be granted a
certificate of authority unless it complies with the
requirements of the Professional Service Corporation Act
concerning ownership and control by specified licensed
professionals. These professionals must be licensed in the
state of domicile or this State. A foreign corporation shall
not be denied a certificate of authority by reason of the
fact that the laws of the state under which such corporation
is organized governing its organization and internal affairs
differ from the laws of this State, and nothing in this Act
contained shall be construed to authorize this State to
regulate the organization or the internal affairs of such
corporation.
(Source: P.A. 88-143; 88-535.)
Section 10. The Limited Liability Company Act is amended
by changing the heading of Articles 25 and 35 and Sections
1-5, 1-10, 1-25, 1-30, 1-35, 1-40, 5-1, 5-5, 5-15, 5-25,
5-45, 5-50, 10-1, 10-10, 10-15, 15-1, 15-5, 20-5, 25-1,
30-1, 30-5, 30-10, 30-20, 35-1, 35-10, 35-20, 35-30, 40-1,
40-5, 45-1, 45-5, 45-35, 50-1, 50-10, 50-15, and 60-1 and
adding Articles 13 and 37 and Sections 1-43, 15-3, 15-7,
15-20, 25-30, 25-35, 25-45, 25-50, 35-3, 35-4, 35-7, 35-45,
35-50, 35-55, 35-60, 35-65, 35-70, 45-65, 50-50, and 55-15
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. "Book value" of a membership interest means the
aggregate value of a member's total contributions to capital
as recorded on the books of the limited liability company at
the time of contribution, other than contribution of services
or an unexecuted obligation to contribute property or perform
services, adjusted for additional contributions and returns
of contributions, but unadjusted by any operating profits or
losses.
"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 "Foreign limited liability company" means
either (1) an unincorporated entity formed under a statute of
a jurisdiction within the United States comparable to this
Act or (2) if formed under a statute of a foreign country, an
entity having characteristics substantially similar to those
of 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. as determined by the Secretary of
State.
"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" or "company" means a limited
liability company organized and existing under this Act.
"Manager" means a person, whether or not a member of a
manager-managed company, who is vested with authority under
Section 13-5. person elected by the members of a limited
liability company to manage the company pursuant to Section
15-1.
"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 with an
ownership interest in a limited liability company with the
rights and obligations specified under this Article.
"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 share of
the profits and losses of the limited liability company and
the 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 any valid agreement, written or oral, of the members as
to the affairs of a limited liability company. The term
"operating agreement" includes amendments to the agreement.
and the conduct of its business.
"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. 87-1062.)
(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 words "limited
liability company", or "L.L.C.", or "LLC";
(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."; and
(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) The name shall not contain any word or phrase that
indicates or implies that it is organized for any purposes
other than those permitted by this Act as limited by its
articles of organization.
(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.
(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. 87-1062.)
(805 ILCS 180/1-25)
Sec. 1-25. Nature of business. A limited liability
company may be formed for carry on any lawful purpose or
business except:
(1) banking, exclusive of fiduciaries organized for
the purpose of accepting and executing trusts;
(2) insurance unless carried on as a business of a
syndicate or limited syndicate under Article V 1/2 of the
Illinois Insurance Code;
(3) the practice of dentistry unless all the
members and managers are licensed as dentists under the
Illinois Dental Practice Act; or
(4) the practice of medicine unless all the members
and managers are licensed to practice medicine under the
Medical Practice Act of 1987.
(Source: P.A. 88-573, eff. 8-11-94; 89-201, eff. 1-1-96.)
(805 ILCS 180/1-30)
Sec. 1-30. Powers. Each limited liability company
organized and existing under this Act may do all of the
following:
(1) Sue and be sued, complain and defend, and
participate in administrative or other proceedings, in its
name.
(2) Have a seal, which may be altered at pleasure, and
use the same by causing it, or a facsimile thereof, to be
impressed or affixed or in any other manner reproduced,
provided that the affixing of a seal to an instrument shall
not give the instrument additional force or effect, or change
the construction thereof, and the use of a seal is not
mandatory.
(3) Purchase, take, receive, lease as lessee, take by
gift, legacy, or otherwise acquire, own, hold, use, and
otherwise deal in and with any real or personal property, or
any interest therein, wherever situated.
(4) Sell, convey, mortgage, pledge, lease as lessor, and
otherwise dispose of all or any part of its property and
assets.
(5) Lend money to and otherwise assist its members and
employees, except as otherwise provided in the operating
agreement or articles of organization.
(6) Purchase, take, receive, subscribe for or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, loan,
pledge, or otherwise dispose of, and otherwise use and deal
in and with, shares or other interests in or obligations of
other limited liability companies, domestic or foreign
corporations, associations, general or limited partnerships,
or individuals.
(7) Incur liabilities, borrow money for its proper
purposes at any rate of interest the limited liability
company may determine without regard to the restrictions of
any usury law of this State, issue notes, bonds, and other
obligations, secure any of its obligations by mortgage or
pledge or deed of trust of all or any part of its property,
franchises, and income, and make contracts, including
contracts of guaranty and suretyship.
(8) Invest its surplus funds from time to time, lend
money for its proper purposes, and take and hold real and
personal property as security for the payment of funds so
loaned or invested.
(9) Conduct its business, carry on its operations, have
offices within and without this State, and exercise in any
other state, territory, district, or possession of the United
States or in any foreign country the powers granted by this
Act.
(10) Elect managers and appoint agents of the limited
liability company, define their duties, and fix their
compensation.
(11) Enter into or amend an Make and alter one or more
operating agreement agreements, not inconsistent with its
articles of organization or with the laws of this State, for
the administration and regulation of the affairs of the
limited liability company.
(12) Make donations for the public welfare or for
charitable, scientific, religious, or educational purposes,
lend money to the government, and transact any lawful
business in aid of the United States.
(13) Establish deferred compensation plans, pension
plans, profit-sharing plans, bonus plans, option plans, and
other incentive plans for its managers and employees and make
the payments provided for therein.
(14) Become a promoter, partner, member, associate, or
manager of any general partnership, limited partnership,
joint venture or similar association, any other limited
liability company, or other enterprise.
(15) Have and exercise all powers necessary or
convenient to effect any or all of the purposes for which the
limited liability company is organized.
(Source: P.A. 87-1062.)
(805 ILCS 180/1-35)
Sec. 1-35. Registered office and registered agent.
(a) Each limited liability company and foreign limited
liability company shall continuously maintain in this State a
registered agent and registered office, which agent must be
an individual resident of this State, a domestic corporation,
or a foreign corporation having a place of business in, and
authorized to do business in, this State. If the agent is a
corporation, the corporation must be authorized by its
articles of incorporation to act as an agent.
(b) A limited liability company or foreign limited
liability company may change its registered agent or the
address of its registered office pursuant to Section 5-15 or
5-20.
(c) The registered agent may at any time resign by
filing in the Office of the Secretary of State written notice
thereof and by mailing a copy thereof to the limited
liability company or foreign limited liability company at its
principal office as it is known to the resigning registered
agent. The notice must be mailed at least 10 days before the
date of filing thereof with the Secretary of State. The
notice shall be executed by the registered agent, if an
individual, or by a principal officer, if the registered
agent is a corporation. The notice shall set forth all of
the following:
(1) The name of the limited liability company for
which the registered agent is acting.
(2) The name of the registered agent.
(3) The address, including street, number, city and
county of the limited liability company's then registered
office in this State.
(4) That the registered agent resigns.
(5) The effective date of the resignation, which
shall not be sooner than 30 days after the date of
filing.
(6) The address of the principal office of the
limited liability company as it is known to the
registered agent.
(7) A statement that a copy of the notice has been
sent by registered or certified mail to the principal
office of the limited liability company within the time
and in the manner prescribed by this Section.
(Source: P.A. 87-1062.)
(805 ILCS 180/1-40)
Sec. 1-40. Records to be kept.
(a) Each limited liability company shall keep at the
registered office or the principal place of business of the
company named in the articles of organization or other
reasonable locations specified in the operating agreement all
of the following:
(1) A list of the full name and last known address
of each member setting forth the amount of cash each
member has contributed, a description and statement of
the agreed value of the other property or services each
member has contributed or has agreed to contribute in the
future, and the date on which each became a member.
(2) A copy of the articles of organization, as
amended or restated, together with executed copies of any
powers of attorney under which any articles, application,
or certificate has been executed.
(3) Copies of the limited liability company's
federal, State, and local income tax returns and reports,
if any, for the 3 most recent years.
(4) Copies of any then effective written operating
agreement and any amendments thereto and of any financial
statements of the limited liability company for the 3
most recent years.
(5) Unless contained in the articles of
organization or an operating agreement, a writing
prepared by a manager or managers as specifically
authorized by the members or, if there are no managers,
all of the members or the member or members that may be
designated by the members pursuant to limited liability
company action properly taken under Section 10-5, setting
out all of the following:
(A) The times at which or events on the
happening of which any additional contributions
agreed to be made by each member are to be made.
(B) Any right of a member to receive
distributions that include a return of all or any
part of the member's contribution.
(C) Any power of a member to grant the right
to become a member to an assignee of any part of the
member's limited liability company interest, and the
terms and conditions of the power.
(b) Records kept under this Section may be inspected and
copied at the request and expense of any member or legal
representative of a deceased member or member under legal
disability during ordinary business hours.
(Source: P.A. 87-1062.)
(805 ILCS 180/1-43 new)
Sec. 1-43. Supplemental principles of law. Unless
displaced by particular provisions of this Act, the
principles of law and equity supplement this Act.
(805 ILCS 180/5-1)
Sec. 5-1. Organization.
(a) One or more persons, other than natural persons
under 18 years of age, may organize a limited liability
company by executing and delivering articles of organization
to the Secretary of State as specified in Sections 5-5 and
5-45. The organizers need not be members of the limited
liability company. Each organizer of a limited liability
company organized to engage in the practice of medicine shall
be a licensed physician of this State. The execution of the
articles of organization constitutes an affirmation by the
person, under penalty of perjury, that the facts stated
therein are true.
(b) A limited liability company shall have one 2 or more
members.
(c) A limited liability company is a legal entity
distinct from its members.
(Source: P.A. 89-201, eff. 1-1-96.)
(805 ILCS 180/5-5)
Sec. 5-5. Articles of organization.
(a) The articles of organization shall set forth all of
the following:
(1) The name of the limited liability company and
the address of its principal place of business which may,
but need not be a place of business in this State.
(2) The purposes for which the limited liability
company is organized, which may be stated to be, or to
include, the transaction of any or all lawful businesses
for which limited liability companies may be organized
under this Act.
(3) The name of its registered agent and the
address of its registered office.
(4) If the limited liability company is to be
managed by a manager or managers, the names and business
addresses of the initial manager or managers.
(5) If management of the limited liability company
is to be vested in retained, in whole or in part, by the
members under Section 15-1, then the names and addresses
of the initial member or members.
(6) The latest date, if any, upon which the limited
liability company is to dissolve and other events of
dissolution, if any, that may be agreed upon by the
members under Section 35-1 hereof.
(7) The name and address of each organizer.
(8) Any other provision, not inconsistent with law,
that the members elect to set out in the articles of
organization for the regulation of the internal affairs
of the limited liability company, including any
provisions that, under this Act, are required or
permitted to be set out in the operating agreement of the
limited liability company.
(b) A limited liability company is organized at the time
articles of organization are filed by the Secretary of State
or at any later time, not more than 60 days after the filing
of the articles of organization, specified in the articles of
organization.
(c) Articles of organization for the organization of a
limited liability company for the purpose of accepting and
executing trusts shall not be filed by the Secretary of State
until there is delivered to him or her a statement executed
by the Commissioner of the Office of Banks and Real Estate
that the organizers of the limited liability company have
made arrangements with the Commissioner of the Office of
Banks and Real Estate to comply with the Corporate Fiduciary
Act.
(Source: P.A. 87-1062.)
(805 ILCS 180/5-15)
Sec. 5-15. Amendment by managers. A majority of the
managers of a limited liability company may adopt one or more
amendments to its articles of organization without member
action to do any of the following:
(1) To remove the name and address of any manager named
in the articles of organization who is no longer a manager.
(2) To remove the name and address of the initial
registered agent or the address of the initial registered
office, if a statement of change is on file with the
Secretary of State.
(3) To change the company name by substituting the words
"limited liability company" for the abbreviation "L.L.C." or
"LLC" or vice versa, or by adding a geographical attribution
to the name.
(4) To restate its articles of organization as currently
amended; such articles supersede the original articles and
all amendments thereto.
(Source: P.A. 87-1062.)
(805 ILCS 180/5-25)
Sec. 5-25. Articles of amendment. The articles of
amendment shall be executed and filed in duplicate and shall
set forth the following:
(1) The name of the limited liability company.
(2) The text of each amendment adopted.
(3) When the amendment was adopted by the managers:
(A) a statement that the amendment was approved by
not less than the minimum number of managers necessary to
approve the amendment adopted by a majority of the
managers; and
(B) a statement that member action was not
required.
(4) When the amendment was adopted by the members,: a
statement that the amendment was approved by not less than
the minimum number of members necessary to approve the
amendment.
(A) a statement that the amendment was adopted at a
meeting of members by the affirmative vote of not less
than the minimum number of votes necessary to adopt the
amendment, as provided by the articles of organization;
or
(B) a statement that the amendment was adopted by
written consent signed by the members having not less
than the minimum number of votes necessary to adopt the
amendment, as provided by the articles of organization.
(5) The date on which the amendment is to become
effective, if the amendment is to become effective after the
date on which the articles of amendment are filed.
(Source: P.A. 87-1062.)
(805 ILCS 180/5-45)
Sec. 5-45. Forms, execution, acknowledgement and filing.
(a) All reports required by this Act to be filed in the
Office of the Secretary of State shall be made on forms
prescribed and furnished by the Secretary of State. Forms
for all other documents to be filed in the Office of the
Secretary of State shall be furnished by the Secretary of
State upon request therefor, but the use thereof, unless
otherwise specifically prescribed in this Act, shall not be
mandatory.
(b) Whenever any provision of this Act specifically
requires any document to be executed by the limited liability
company in accordance with this Section, unless otherwise
specifically stated in this Act and subject to any additional
provisions of this Act, the document shall be executed, in
ink, as follows:
(1) The articles of organization shall be signed by
the organizer or organizers.
(2) All other documents shall be signed:
(A) by a manager and verified by him or her;
or
(B) if there are no managers, then by the
members or those of them that may be designated by a
majority vote of the members.
(c) The name of a person signing the document and the
capacity in which the person signs shall be stated beneath or
opposite the person's signature.
(d) The execution of any document required by this Act
by a member or manager constitutes an affirmation under the
penalties of perjury that the facts stated therein are true
and that the person has authority to execute the document.
(e) When filed in the Office of the Secretary of State,
an authorization, including a power of attorney, to sign a
record must be in writing, then sworn to, verified, or
acknowledged.
(Source: P.A. 87-1062.)
(805 ILCS 180/5-50)
Sec. 5-50. Amendment or dissolution by judicial act. If
a person required by Section 5-45 to execute an amendment or
articles of dissolution fails or refuses to do so, any other
member and any transferee assignee of a limited liability
company interest, who is adversely affected by the failure or
refusal, may petition a court to direct the amendment or
dissolution. If the court finds that the amendment or
dissolution is proper and that any person so designated has
failed or refused to execute the amendment or articles of
dissolution, it shall order the Secretary of State to record
an appropriate amendment or dissolution.
(Source: P.A. 87-1062.)
(805 ILCS 180/10-1)
Sec. 10-1. Admission of members. After the filing of
the articles of organization, a person who acquires a
membership interest directly from the limited liability
company or is a transferee an assignee of a membership
interest may be admitted as a member as provided in the
operating agreement or in the articles of organization or, if
the operating agreement or articles of organization do not
provide for the admission of those persons, then with
unanimous consent of the members.
(Source: P.A. 87-1062.)
(805 ILCS 180/10-10)
Sec. 10-10. Liability of members and managers.
(a) Except as otherwise provided in subsection (d) of
this Section, the debts, obligations, and liabilities A
member of a limited liability company, whether arising in
contract, tort, or otherwise, are solely the debts,
obligations, and liabilities of the company. A member or
manager is not shall be personally liable for a any act,
debt, obligation, or liability of the company solely by
reason of being or acting as a member or manager limited
liability company or another member or manager to the extent
that a shareholder of an Illinois business corporation is
liable in analogous circumstances under Illinois law.
(b) (Blank). A manager of a limited liability company
shall be personally liable for any act, debt, obligation, or
liability of the limited liability company or another manager
or member to the extent that a director of an Illinois
business corporation is liable in analogous circumstances
under Illinois law.
(c) The failure of a limited liability company to
observe the usual company formalities or requirements
relating to the exercise of its company powers or management
of its business is not a ground for imposing personal
liability on the members or managers for liabilities of the
company.
(d) All or specified members of a limited liability
company are liable in their capacity as members for all or
specified debts, obligations, or liabilities of the company
if:
(1) a provision to that effect is contained in the
articles of organization; and
(2) a member so liable has consented in writing to
the adoption of the provision or to be bound by the
provision.
(Source: P.A. 87-1062.)
(805 ILCS 180/10-15)
Sec. 10-15. Member's right to information Information and
accounting.
(a) A limited liability company shall provide members
and their agents and attorneys access to its records,
including the records required to be kept under Section 1-40,
at the company's principal place of business or other
reasonable locations specified in the operating agreement.
The company shall provide former members and their agents and
attorneys access for proper purposes to records pertaining to
the period during which they were members. The right of
access provides the opportunity to inspect and copy records
during ordinary business hours. The company may impose a
reasonable charge, limited to the costs of labor and
material, for copies of records furnished.
(b) A member has the right upon written demand given to
the limited liability company to obtain at the company's
expense a copy of any written operating agreement. A member
of a limited liability company shall have the right to do all
of the following:
(1) To inspect and copy limited liability company
records required by Section 1-40 to be kept.
(2) To obtain from the manager or managers from time to
time, subject to reasonable standards which may be set forth
in the articles of organization, the operating agreement, or
otherwise established by the manager or managers, upon
reasonable demand for any purpose reasonably related to the
member's interest as a member:
(A) true and full information regarding the state
of the business and financial condition of the limited
liability company and any other information regarding the
affairs of the limited liability company; and
(B) promptly after becoming available, a copy of
the limited liability company's federal, State, and local
income tax returns for each year.
(3) To have a formal accounting of limited liability
company affairs whenever circumstances render it just and
reasonable.
(Source: P.A. 87-1062.)
(805 ILCS 180/Art. 13 heading new)
Article 13. Relations of members and managers to
persons dealing with limited liability company
(805 ILCS 180/13-5 new)
Sec. 13-5. Agency of members and managers.
(a) Subject to subsections (b) and (c):
(1) Each member is an agent of the limited
liability company for the purpose of its business, and an
act of a member, including the signing of an instrument
in the company's name, for apparently carrying on, in the
ordinary course, the company's business or business of
the kind carried on by the company binds the company,
unless the member had no authority to act for the company
in the particular matter and the person with whom the
member was dealing knew or had notice that the member
lacked authority.
(2) An act of a member that is not apparently for
carrying on, in the ordinary course, the company's
business or business of the kind carried on by the
company binds the company only if the act was authorized
by the other members.
(b) Subject to subsection (c), in a manager-managed
company:
(1) A member is not an agent of the company for the
purpose of its business solely by reason of being a
member. Each manager is an agent of the company for the
purpose of its business, and an act of a manager,
including the signing of an instrument in the company's
name, for apparently carrying on, in the ordinary course,
the company's business or business of the kind carried on
by the company binds the company, unless the manager had
no authority to act for the company in the particular
matter and the person with whom the manager was dealing
knew or had notice that the manager lacked authority.
(2) An act of a manager which is not apparently for
carrying on, in the ordinary course, the company's
business or business of the kind carried on by the
company binds the company only if the act was authorized
under Section 15-1.
(c) Unless the articles of organization limit their
authority, any member of a member-managed company or manager
of a manager-managed company may sign and deliver any
instrument transferring or affecting the company's interest
in real property. The instrument is conclusive in favor of a
person who gives value without knowledge of the lack of the
authority of the person signing and delivering the
instrument.
(805 ILCS 180/13-10 new)
Sec. 13-10. Limited liability company liable for member
or manager's actionable conduct. A limited liability company
is liable for loss or injury caused to a person, or for a
penalty incurred, as a result of a wrongful act or omission,
or other actionable conduct, of a member or manager acting in
the ordinary course of business of the company or with
authority of the company.
(805 ILCS 180/15-1)
Sec. 15-1. Management of limited liability company.
(a) In a member-managed company:
(1) each member has equal rights in the management
and conduct of the company's business; and
(2) except as otherwise provided in subsection (c)
of this Section, any matter relating to the business of
the company may be decided by a majority of the members.
(b) In a manager-managed company:
(1) each manager has equal rights in the management
and conduct of the company's business;
(2) except as otherwise provided in subsection (c)
of this Section, any matter relating to the business of
the company may be exclusively decided by the manager or,
if there is more than one manager, by a majority of the
managers; and
(3) a manager:
(A) must be designated, appointed, elected,
removed, or replaced by a vote, approval, or consent
of a majority of the members; and
(B) holds office until a successor has been
elected and qualified, unless the manager sooner
resigns or is removed.
(c) The only matters of a member or manager-managed
company's business requiring the consent of all of the
members are the following:
(1) the amendment of the operating agreement under
Section 15-5;
(2) an amendment to the articles of organization
under Article 5;
(3) the compromise of an obligation to make a
contribution under Section 20-5;
(4) the compromise, as among members, of an
obligation of a member to make a contribution or return
money or other property paid or distributed in violation
of this Act;
(5) the making of interim distributions under
subsection (a) of Section 25-1, including the redemption
of an interest;
(6) the admission of a new member;
(7) the use of the company's property to redeem an
interest subject to a charging order;
(8) the consent to dissolve the company under
subdivision (2) of subsection (a) of Section 35-1;
(9) a waiver of the right to have the company's
business wound up and the company terminated under
Section 35-3;
(10) the consent of members to merge with another
entity under Section 37-20; and
(11) the sale, lease, exchange, or other disposal
of all, or substantially all, of the company's property
with or without goodwill.
(d) Action requiring the consent of members or managers
under this Act may be taken without a meeting.
(e) A member or manager may appoint a proxy to vote or
otherwise act for the member or manager by signing an
appointment instrument, either personally or by the member or
manager's attorney-in-fact. Management of the limited
liability company shall be vested in its members; however, if
the articles of organization so provide, the management of
the limited liability company may be vested, in whole or in
part, in a manager or managers who shall be elected by the
members in the manner prescribed by the operating agreement
or articles of organization of the limited liability company.
A manager or managers shall have the authority and
responsibility accorded to them by the operating agreement or
articles of organization, and the members shall not have the
authority and responsibility accorded to the managers, unless
specifically retained by them in the operating agreement or
the articles of organization. If the articles of
organization do not provide for the management of the limited
liability company by a manager or managers, instruments and
documents shall be valid and binding upon the limited
liability company if executed by any one or more of the
members unless otherwise provided in the articles of
organization.
(Source: P.A. 87-1062.)
(805 ILCS 180/15-3 new)
Sec. 15-3. General standards of member and manager's
conduct.
(a) The fiduciary duties a member owes to a
member-managed company and its other members include the duty
of loyalty and the duty of care referred to in subsections
(b) and (c) of this Section.
(b) A member's duty of loyalty to a member-managed
company and its other members includes the following:
(1) to account to the company and to hold as
trustee for it any property, profit, or benefit derived
by the member in the conduct or winding up of the
company's business or derived from a use by the member of
the company's property, including the appropriation of a
company's opportunity;
(2) to act fairly when a member deals with the
company in the conduct or winding up of the company's
business as or on behalf of a party having an interest
adverse to the company; and
(3) to refrain from competing with the company in
the conduct of the company's business before the
dissolution of the company.
(c) A member's duty of care to a member-managed company
and its other members in the conduct of a winding up of the
company's business is limited to refraining from engaging in
grossly negligent or reckless conduct, intentional
misconduct, or a knowing violation of law.
(d) A member shall discharge his or her duties to a
member-managed company and its other members under this Act
or under the operating agreement and exercise any rights
consistent with the obligation of good faith and fair
dealing.
(e) A member of a member-managed company does not
violate a duty or obligation under this Act or under the
operating agreement merely because the member's conduct
furthers the member's own interest.
(f) This Section applies to a person winding up the
limited liability company's business as the personal or legal
representative of the last surviving member as if the person
were a member.
(g) In a manager-managed company:
(1) a member who is not also a manager owes no
duties to the company or to the other members solely by
reason of being a member;
(2) a manager is held to the same standards of
conduct prescribed for members in subsections (b), (c),
(d), and (e) of this Section;
(3) a member who pursuant to the operating
agreement exercises some or all of the authority of a
manager in the management and conduct of the company's
business is held to the standards of conduct in
subsections (b), (c), (d), and (e) of this Section to the
extent that the member exercises the managerial authority
vested in a manager by this Act; and
(4) a manager is relieved of liability imposed by
law for violations of the standards prescribed by
subsections (b), (c), (d), and (e) to the extent of the
managerial authority delegated to the members by the
operating agreement.
(805 ILCS 180/15-5)
Sec. 15-5. Operating agreement.
(a) Except as otherwise provided in subsection (b) of
this Section, 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.
(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
(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. The power
to adopt, alter, amend, or repeal the operating agreement
of a limited liability company shall be vested in the
members of the company unless vested in the manager or
managers of the company by the articles of organization.
A new operating agreement may be adopted by the members
unless prohibited by the articles of organization. The
operating agreement may contain any provisions for the
regulation and management of the affairs of the limited
liability company not inconsistent with law or the
articles of organization.
(Source: P.A. 87-1062.)
(805 ILCS 180/15-7 new)
Sec. 15-7. Member and manager's right to payments and
reimbursement.
(a) A limited liability company shall reimburse a member
or manager for payments made and indemnify a member or
manager for liabilities incurred by the member or manager in
the ordinary course of the business of the company or for the
preservation of its business or property.
(b) A limited liability company shall reimburse a member
for an advance to the company beyond the amount of
contribution the member agreed to make.
(c) A payment or advance made by a member that gives
rise to an obligation of a limited liability company under
subsection (a) or (b) of this Section constitutes a loan to
the company upon which interest accrues from the date of the
payment or advance.
(d) A member is not entitled to remuneration for
services performed for a limited liability company, except
for reasonable compensation for services rendered in winding
up the business of the company.
(805 ILCS 180/15-20 new)
Sec. 15-20. Actions by members.
(a) A member may maintain an action against a limited
liability company or another member for legal or equitable
relief, with or without an accounting as to the company's
business, to enforce all of the following:
(1) The member's rights under the operating
agreement.
(2) The member's rights under this Act.
(3) The rights and otherwise protect the interests
of the member, including rights and interests arising
independently of the member's relationship to the
company.
(b) The accrual, and any time limited for the assertion,
of a right of action for a remedy under this Section is
governed by other law. A right to an accounting upon a
dissolution and winding up does not revive a claim barred by
law.
(805 ILCS 180/20-5)
Sec. 20-5. Member's liability for contributions.
(a) (Blank). A promise by a member to contribute to the
limited liability company is not enforceable unless set out
in a writing signed by the member.
(b) (Blank). Except as provided in the operating
agreement or in the articles of organization, a member is
obligated to the limited liability company to perform any
enforceable promise to contribute cash or property or to
perform services, even if the member is unable to perform
because of death, disability, or any other reason. If a
member does not make the member's required contribution of
property or services, the member is obligated, at the option
of the limited liability company, to contribute cash equal to
that portion of the value, as stated in the limited liability
company records required to be kept by Section 1-40, of the
contribution that has not been made.
(c) A member's obligation to contribute money, property,
or other benefit to, or to perform services for, a limited
liability company is not excused by the member's death,
disability, or other inability to perform personally. If a
member does not make the required contribution of property or
services, the member is obligated at the option of the
company to contribute money equal to the value of that
portion of the stated contribution which has not been made.
(d) A creditor of a limited liability company who
extends credit or otherwise acts in reliance on an obligation
described in subsection (c), and without notice of any
compromise under subdivision (4) of subsection (c) of Section
15-1, may enforce the original obligation.
(Source: P.A. 87-1062.)
(805 ILCS 180/Art. 25 heading)
ARTICLE 25. Distributions and Resignation
(805 ILCS 180/25-1)
Sec. 25-1. Interim distributions.
(a) Any distributions made by a limited liability
company before its dissolution and winding up must be in
equal shares.
(b) A member has no right to receive, and may not be
required to accept, a distribution in kind. Except as
provided in this Article or Article 35, a member is entitled
to receive distributions from a limited liability company at
the times or upon the happening of the events specified in
the articles of organization or operating agreement or as the
manager or managers shall specify or, if there are no
managers, as the members shall specify pursuant to action
properly taken pursuant to Section 10-5.
(Source: P.A. 87-1062.)
(805 ILCS 180/25-30 new)
Sec. 25-30. Limitations on distributions.
(a) A distribution may not be made if:
(1) the limited liability company would not be able
to pay its debts as they become due in the ordinary
course of business; or
(2) the company's total assets would be less than
the sum of its total liabilities plus the amount that
would be needed, if the company were to be dissolved,
wound up, and terminated at the time of the distribution,
to satisfy the preferential rights upon dissolution,
winding up, and termination of members whose preferential
rights are superior to those receiving the distribution.
(b) A limited liability company may base a determination
that a distribution is not prohibited under subsection (a) of
this Section on financial statements prepared on the basis of
accounting practices and principles that are reasonable in
the circumstances or on a fair valuation or other method that
is reasonable in the circumstances.
(c) Except as otherwise provided in subsection (e) of
this Section, the effect of a distribution under subsection
(a) of this Section is measured:
(1) in the case of distribution by purchase,
redemption, or other acquisition of a distributional
interest in a limited liability company, as of the date
money or other property is transferred or debt incurred
by the company; and
(2) in all other cases, as of the date the:
(A) distribution is authorized if the payment
occurs within 120 days after the date of
authorization; or
(B) payment is made if it occurs more than 120
days after the date of authorization.
(d) A limited liability company's indebtedness to a
member incurred by reason of a distribution made in
accordance with this Section is at parity with the company's
indebtedness to its general, unsecured creditors.
(e) Indebtedness of a limited liability company,
including indebtedness issued in connection with or as part
of a distribution, is not considered a liability for purposes
of determinations under subsection (a) of this Section if its
terms provide that payment of principal and interest are made
only if and to the extent that payment of a distribution to
members could then be made under this Section. If the
indebtedness is issued as a distribution, each payment of
principal or interest on the indebtedness is treated as a
distribution, the effect of which is measured on the date the
payment is made.
(805 ILCS 180/25-35 new)
Sec. 25-35. Liability for unlawful distributions.
(a) A member of a member-managed company or a member or
manager of a manager-managed company who votes for or assents
to a distribution made in violation of Section 25-30, the
articles of organization, or the operating agreement is
personally liable to the company for the amount of the
distribution that exceeds the amount that could have been
distributed without violating Section 25-30, the articles of
organization, or the operating agreement if it is established
that the member or manager did not perform the member or
manager's duties in compliance with Section 15-3.
(b) A member of a manager-managed company who knew a
distribution was made in violation of Section 25-30, the
articles of organization, or the operating agreement is
personally liable to the company, but only to the extent that
the distribution received by the member exceeded the amount
that could have been properly paid under Section 25-30.
(c) A member or manager against whom an action is
brought under this Section may implead in the action:
(1) all other members or managers who voted for or
assented to the distribution in violation of subsection
(a) of this Section and may compel contribution from
them; and
(2) all members who received a distribution in
violation of subsection (b) of this Section and may
compel contribution from the member in the amount
received in violation of subsection (b) of this Section.
(d) A proceeding under this Section is barred unless it
is commenced within 2 years after the distribution.
(805 ILCS 180/25-45 new)
Sec. 25-45. Known claims against dissolved limited
liability company.
(a) A dissolved limited liability company may dispose of
the known claims against it by following the procedure
described in this Section.
(b) A dissolved limited liability company shall notify
its known claimants in writing of the dissolution. The
notice must:
(1) specify the information required to be included
in a claim;
(2) provide a mailing address where the claim is to
be sent;
(3) state the deadline for receipt of the claim,
which may not be less than 120 days after the date the
written notice is received by the claimant; and
(4) state that the claim will be barred if not
received by the deadline.
(c) A claim against a dissolved limited liability
company is barred if the requirements of subsection (b) of
this Section are met, and:
(1) the claim is not received by the specified
deadline; or
(2) in the case of a claim that is timely received
but rejected by the dissolved company, the claimant does
not commence a proceeding to enforce the claim within 90
days after the receipt of the notice of the rejection.
(d) For purposes of this Section, the term "claim" does
not include a contingent liability or a claim based on an
event occurring after the effective date of dissolution.
(805 ILCS 180/25-50 new)
Sec. 25-50. Other claims against dissolved limited
liability company.
(a) A dissolved limited liability company may publish
notice of its dissolution and request persons having claims
against the company to present them in accordance with the
notice.
(b) The notice must:
(1) be published at least once in a newspaper of
general circulation in the county in which the dissolved
limited liability company's principal office is located
or, if none in this State, in which its designated office
is or was last located;
(2) describe the information required to be
contained in a claim and provide a mailing address where
the claim is to be sent; and
(3) state that a claim against the limited
liability company is barred unless a proceeding to
enforce the claim is commenced within 5 years after
publication of the notice.
(c) If a dissolved limited liability company publishes a
notice in accordance with subsection (b) of this Section, the
claim of each of the following claimants is barred unless the
claimant commences a proceeding to enforce the claim against
the dissolved company within 5 years after the publication
date of the notice:
(1) a claimant who did not receive written notice
under Section 25-45;
(2) a claimant whose claim was timely sent to the
dissolved company but not acted on; and
(3) a claimant whose claim is contingent or based
on an event occurring after the effective date of
dissolution.
(d) A claim not barred under this Section may be
enforced:
(1) against the dissolved limited liability
company, to the extent of its undistributed assets; or
(2) if the assets have been distributed in
liquidation, against a member of the dissolved company to
the extent of the member's proportionate share of the
claim or the company's assets distributed to the member
in liquidation, whichever is less, but a member's total
liability for all claims under this Section may not
exceed the total amount of assets distributed to the
member.
(805 ILCS 180/30-1)
Sec. 30-1. Member's distributional Nature of membership
interest.
(a) A member is not a co-owner of, and has no
transferable interest in, property of a limited liability
company.
(b) A distributional interest in a limited liability
company is personal property and, subject to Sections 30-5
and 30-10, may be transferred in whole or in part.
(c) An operating agreement may provide that a
distributional interest may be evidenced by a certificate of
the interest issued by the limited liability company and,
subject to Section 30-10, may also provide for the transfer
of any interest represented by the certificate. The interest
of each member in a limited liability company is personal
property.
(Source: P.A. 87-1062.)
(805 ILCS 180/30-5)
Sec. 30-5. Transfer of a distributional Assignment of
membership interest. A transfer of a distributional interest
does not entitle the transferee to become or to exercise any
rights of a member. A transfer entitles the transferee to
receive, to the extent transferred, only the distributions to
which the transferor would be entitled. Unless provided
otherwise in the articles of organization or the operating
agreement, if the members of the limited liability company,
other than the member proposing to dispose of the interest,
do not approve of the proposed transfer or assignment by
unanimous consent, the transferee or assignee of the interest
shall have no right to participate in the management of the
business and affairs of the limited liability company or to
become a member.
(Source: P.A. 87-1062.)
(805 ILCS 180/30-10)
Sec. 30-10. Rights of a transferee assignee.
(a) A transferee of a distributional interest may become
a member of a limited liability company if and to the extent
that the transferor gives the transferee the right in
accordance with authority described in the operating
agreement or all other members consent.
(b) A transferee who has become a member, to the extent
transferred, has the rights and powers, and is subject to the
restrictions and liabilities, of a member under the operating
agreement of a limited liability company and this Act. A
transferee who becomes a member also is liable for the
transferor member's obligations to make contributions under
Section 20-5 and for obligations under Section 25-35 to
return unlawful distributions, but the transferee is not
obligated for the transferor member's liabilities unknown to
the transferee at the time the transferee becomes a member.
(c) Whether or not a transferee of a distributional
interest becomes a member under subsection (a) of this
Section, the transferor is not released from liability to the
limited liability company under the operating agreement or
this Act.
(d) A transferee who does not become a member is not
entitled to participate in the management or conduct of the
limited liability company's business, require access to
information concerning the company's transactions, or inspect
or copy any of the company's records.
(e) A transferee who does not become a member is
entitled to:
(1) receive, in accordance with the transfer,
distributions to which the transferor would otherwise be
entitled;
(2) receive, upon dissolution and winding up of the
limited liability company's business:
(A) in accordance with the transfer, the net
amount otherwise distributable to the transferor;
and
(B) a statement of account only from the date
of the latest statement of account agreed to by all
the members; and
(3) seek under subdivision (6) of Section 35-1 a
judicial determination that it is equitable to dissolve
and wind up the company's business.
(f) A limited liability company need not give effect to
a transfer until it has notice of the transfer. A transferee
or assignee of a membership interest who does not become a
substituted member shall be entitled to receive only the
share of profits or other compensation by way of income and
the return of contributions to which that member otherwise
would be entitled.
(Source: P.A. 87-1062.)
(805 ILCS 180/30-20)
Sec. 30-20. Rights of creditor of a member.
(a) On application by a judgment creditor of a member of
a limited liability company or of a member's transferee, a
court having jurisdiction may charge the distributional
interest of the judgment debtor to satisfy the judgment. The
court may appoint a receiver of the share of the
distributions due or to become due to the judgment debtor and
make all other orders, directions, accounts, and inquiries
the judgment debtor might have made or which the
circumstances may require to give effect to the charging
order.
(b) A charging order constitutes a lien on the judgment
debtor's distributional interest. The court may order a
foreclosure of a lien on a distributional interest subject to
the charging order at any time. A purchaser at the
foreclosure sale has the rights of a transferee.
(c) at any time before foreclosure, a distributional
interest in a limited liability company that is charged may
be redeemed:
(1) by the judgment debtor;
(2) with property other than the company's
property, by one or more of the other members; or
(3) with the company's property, but only if
permitted by the operating agreement.
(d) This Act does not affect a member's right under
exemption laws with respect to the member's distributional
interest in a limited liability company.
(e) This Section provides the exclusive remedy by which
a judgment creditor of a member or a transferee may satisfy a
judgment out of the judgment debtor's distributional interest
in a limited liability company. On application to a court of
competent jurisdiction by any judgment creditor of a member,
the court may charge the member's share of profits and right
to distributions with payment of the unsatisfied amount of
the judgment with interest. To the extent so charged, the
judgment creditor has only the rights of an assignee. This
Article shall not deprive any member of the benefit of any
exemption laws applicable to his interest in the limited
liability company.
(Source: P.A. 87-1062.)
(805 ILCS 180/Art. 35 heading)
Article 35. Dissolution and Dissociation
(805 ILCS 180/35-1)
Sec. 35-1. Events causing dissolution and winding up of
company's business. A limited liability company is dissolved,
and, unless continued pursuant to subsection (b) of Section
35-3, its business must be wound up, upon the occurrence of
any of the following events:
(1) An event specified in the operating agreement.
(2) Consent of the number or percentage of members
specified in the operating agreement.
(3) An event that makes it unlawful for all or
substantially all of the business of the company to be
continued, but any cure of illegality within 90 days after
notice to the company of the event is effective retroactively
to the date of the event for purposes of this Section.
(4) On application by a member or a dissociated member,
upon entry of a judicial decree that:
(A) the economic purpose of the company is likely
to be unreasonably frustrated;
(B) another member has engaged in conduct relating
to the company's business that makes it not reasonably
practicable to carry on the company's business with that
member;
(C) it is not otherwise reasonably practicable to
carry on the company's business in conformity with the
articles of organization and the operating agreement;
(D) the company failed to purchase the petitioner's
distributional interest as required by Section 35-60; or
(E) the managers or members in control of the
company have acted, are acting, or will act in a manner
that is illegal, oppressive, or fraudulent with respect
to the petitioner.
(5) On application by a transferee of a member's
interest, a judicial determination that it is equitable to
wind up the company's business.
(6) Administrative dissolution under Section 35-25. A
limited liability company organized under this Act shall be
dissolved and its affairs shall be wound up upon the
happening of the first to occur of any of the following
events:
(1) At the time or upon the happening of events
specified in the articles of organization.
(2) Upon the agreement of the members, which shall be in
writing and, unless otherwise provided in the articles of
organization, unanimous.
(3) Unless provided otherwise in the articles of
organization or the operating agreement, upon the death,
retirement, resignation, bankruptcy, court declaration of
incompetence with respect to, or dissolution of, a member or
upon the occurrence of any other event that terminates the
continued membership of a member in the limited liability
company, unless within 90 days after the event there are at
least 2 remaining members and all the remaining members agree
to continue the business of the limited liability company.
(4) Entry of a decree of judicial dissolution under
Section 35-5.
(5) Administrative dissolution under Section 35-25.
(Source: P.A. 87-1062.)
(805 ILCS 180/35-3 new)
Sec. 35-3. Limited liability company continues after
dissolution.
(a) Subject to subsection (b) of this Section, a limited
liability company continues after dissolution only for the
purpose of winding up its business.
(b) At any time after the dissolution of a limited
liability company and before the winding up of its business
is completed, the members, including a dissociated member
whose dissociation caused the dissolution, may unanimously
waive the right to have the company's business wound up and
the company terminated. In that case:
(1) the limited liability company resumes carrying
on its business as if dissolution had never occurred and
any liability incurred by the company or a member after
the dissolution and before the waiver is determined as if
the dissolution had never occurred; and
(2) the rights of a third party accruing under
subsection (a) of Section 35-7 or arising out of conduct
in reliance on the dissolution before the third party
knew or received a notification of the waiver are not
adversely affected.
(805 ILCS 180/35-4 new)
Sec. 35-4. Right to wind up limited liability company's
business.
(a) After dissolution, a member who has not wrongfully
dissociated may participate in winding up a limited liability
company's business, but on application of any member,
member's legal representative, or transferee, the Circuit
Court, for good cause shown, may order judicial supervision
of the winding up.
(b) A legal representative of the last surviving member
may wind up a limited liability company's business.
(c) A person winding up a limited liability company's
business may preserve the company's business or property as a
going concern for a reasonable time, prosecute and defend
actions and proceedings, whether civil, criminal, or
administrative, settle and close the company's business,
dispose of and transfer the company's property, discharge the
company's liabilities, distribute the assets of the company
pursuant to Section 35-10, settle disputes by mediation or
arbitration, and perform other necessary acts.
(805 ILCS 180/35-7 new)
Sec. 35-7. Member or manager's power and liability as
agent after dissolution.
(a) A limited liability company is bound by a member or
manager's act after dissolution that:
(1) is appropriate for winding up the company's
business; or
(2) would have bound the company under Section 13-5
before dissolution, if the other party to the transaction
did not have notice of the dissolution.
(b) A member or manager who, with knowledge of the
dissolution, subjects a limited liability company to
liability by an act that is not appropriate for winding up
the company's business is liable to the company for any
damage caused to the company arising from the liability.
(805 ILCS 180/35-10)
Sec. 35-10. Distribution of assets in winding up limited
liability company's business upon dissolution.
(a) In winding up a limited liability company's
business, the assets of the company must be applied to
discharge its obligations to creditors, including members who
are creditors. Any surplus must be applied to pay in money
the net amount distributable to members in accordance with
their right to distributions under subsection (b) of this
Section.
(b) Each member is entitled to a distribution upon the
winding up of the limited liability company's business,
consisting of a return of all contributions that have not
previously been returned and a distribution of any remainder
in equal shares. Upon the winding up of a limited liability
company, the assets shall be distributed in the following
order:
(1) to creditors, including members who are creditors,
to the extent permitted by law, in satisfaction of
liabilities of the limited liability company other than
liabilities for distributions to members under Section 25-1
or 25-10;
(2) except as provided in the operating agreement or in
the articles of organization, to members and former members
of the limited liability company in satisfaction of the
limited liability company's obligations for distributions due
and owing under Section 25-1 or 25-10;
(3) except as provided in the operating agreement or in
the articles of organization, to members of the limited
liability company for the return of their contributions; and
(4) except as provided in the operating agreement or in
the articles of organization, to the members of the limited
liability company in the proportions in which the members
share in distributions under Section 20-15.
(Source: P.A. 87-1062.)
(805 ILCS 180/35-20)
Sec. 35-20. Filing of articles of dissolution.
(a) Duplicate originals of the articles of dissolution
shall be delivered to the Secretary of State. If the
Secretary of State finds that the articles of dissolution
conform to law, he or she shall, when all required fees have
been paid:
(1) endorse on each duplicate original the word
"Filed" and the date of the filing thereof; and
(2) file one duplicate original in his or her
office.
(b) A duplicate original of the articles of dissolution
shall be returned to the representative of the dissolved
limited liability company. Upon the filing of the articles
of dissolution, the existence of the company shall terminate
cease, and its articles of organization shall be deemed
cancelled, except for the purpose of suits, other
proceedings, and appropriate action as provided in this
Article. The manager or managers or member or members at the
time of termination dissolution, or those that remain, shall
thereafter be trustee trustees for the members and creditors
of the terminated dissolved limited liability company and, in
that capacity, shall have authority to convey or distribute
any company property discovered after termination dissolution
and take any other action that may be necessary on behalf of
and in the name of the terminated dissolved limited liability
company.
(Source: P.A. 87-1062.)
(805 ILCS 180/35-30)
Sec. 35-30. Procedure for administrative dissolution.
(a) After the Secretary of State determines that one or
more grounds exist under Section 35-25 for the administrative
dissolution of a limited liability company, the Secretary of
State shall send a notice of delinquency by regular mail to
each delinquent limited liability company at its registered
office, or if the limited liability company has failed to
maintain a registered office, to the member or manager at the
last known office of the member or manager.
(b) If the limited liability company does not correct
the default within 90 days following the date of the notice
of delinquency, the Secretary of State shall thereupon
dissolve the limited liability company by issuing a notice of
dissolution that recites the grounds for dissolution and its
effective date. The Secretary of State shall file the
original of the notice in his or her office and mail one copy
to the limited liability company at its registered office.
(c) Upon the administrative dissolution of a limited
liability company, terminates its business existence, and a
dissolved limited liability company shall continue for only
the purpose of winding up its business. not thereafter carry
on any business. However, A dissolved limited liability
company may take all action authorized under Section 1-30 or
necessary to wind up and liquidate its business and affairs
and terminate.
(Source: P.A. 87-1062.)
(805 ILCS 180/35-45 new)
Sec. 35-45. Events causing member's dissociation. A
member is dissociated from a limited liability company upon
the occurrence of any of the following events:
(1) The company's having notice of the member's express
will to withdraw upon the date of notice or on a later date
specified by the member.
(2) An event agreed to in the operating agreement as
causing the member's dissociation.
(3) Upon transfer of all of a member's distributional
interest, other than a transfer for security purposes or a
court order charging the member's distributional interest
that has not been foreclosed.
(4) The member's expulsion pursuant to the operating
agreement.
(5) The member's expulsion by unanimous vote of the
other members if:
(A) it is unlawful to carry on the company's
business with the member;
(B) there has been a transfer of substantially all
of the member's distributional interest, other than a
transfer for security purposes or a court order charging
the member's distributional interest that has not been
foreclosed;
(C) within 90 days after the company notifies a
corporate member that it will be expelled because it has
filed a certificate of dissolution or the equivalent, its
charter has been revoked, or its right to conduct
business has been suspended by the jurisdiction of its
incorporation, the member fails to obtain a revocation of
the certificate of dissolution or a reinstatement of its
charter or its right to conduct business; or
(D) a partnership or a limited liability company
that is a member has been dissolved and its business is
being wound up.
(6) On application by the company or another member, the
member's expulsion by judicial determination because the
member:
(A) engaged in wrongful conduct that adversely and
materially affected the company's business;
(B) willfully or persistently committed a material
breach of the operating agreement or of a duty owed to the
company or the other members under Section 15-3; or
(C) engaged in conduct relating to the company's
business that makes it not reasonably practicable to carry on
the business with the member.
(7) The member's:
(A) becoming a debtor in bankruptcy;
(B) executing an assignment for the benefit of
creditors;
(C) seeking, consenting to, or acquiescing in the
appointment of a trustee, receiver, or liquidator of the
member or of all or substantially all of the member's
property; or
(D) failing, within 90 days after the appointment,
to have vacated or stayed the appointment of a trustee,
receiver, or liquidator of the member or of all or
substantially all of the member's property obtained
without the member's consent or acquiescence, or failing
within 90 days after the expiration of a stay to have the
appointment vacated.
(8) In the case of a member who is an individual:
(A) the member's death;
(B) the appointment of a guardian or general
conservator for the member; or
(C) a judicial determination that the member has
otherwise become incapable of performing the member's
duties under the operating agreement.
(9) In the case of a member that is a trust or is acting
as a member by virtue of being a trustee of a trust,
distribution of the trust's entire rights to receive
distributions from the company, but not merely by reason of
the substitution of a successor trustee.
(10) In the case of a member that is an estate or is
acting as a member by virtue of being a personal
representative of an estate, distribution of the estate's
entire rights to receive distributions from the company, but
not merely the substitution of a successor personal
representative.
(11) Termination of the existence of a member if the
member is not an individual, estate, or trust other than a
business trust.
(805 ILCS 180/35-50 new)
Sec. 35-50. Member's power to dissociate; wrongful
dissociation.
(a) A member has the power to dissociate from a limited
liability company at any time, rightfully or wrongfully, by
express will under subdivision (1) of Section 35-45.
(b) The member's dissociation from a limited liability
company is wrongful only if it is in breach of an express
provision of the agreement.
(c) A member who wrongfully dissociates from a limited
liability company is liable to the company and to the other
members for damages caused by the dissociation. The
liability is in addition to any other obligation of the
member to the company or to the other members.
(d) If a limited liability company does not dissolve and
wind up its business as a result of a member's wrongful
dissociation under subsection (b) of this Section, damages
sustained by the company for the wrongful dissociation must
be offset against distributions otherwise due the member
after the dissociation.
(805 ILCS 180/35-55 new)
Sec. 35-55. Effect of member's dissociation.
(a) Upon a member's dissociation the company must cause
the dissociated member's distributional interest to be
purchased under Section 35-60.
(b) Upon a member's dissociation from a limited
liability company:
(1) the member's right to participate in the
management and conduct of the company's business
terminates, except as otherwise provided in Section 35-4,
and the member ceases to be a member and is treated the
same as a transferee of a member;
(2) the member's fiduciary duties terminate, except
as provided in subdivision (3) of this subsection (b);
and
(3) the member's duty of loyalty under subdivisions
(1) and (2) of subsection (b) of Section 15-3 and duty of
care under subsection (c) of Section 15-3 continue only
with regard to matters arising and events occurring
before the member's dissociation, unless the member
participates in winding up the company's business
pursuant to Section 35-4.
(805 ILCS 180/35-60 new)
Sec. 35-60. Company purchase of distributional interest.
(a) A limited liability company shall purchase a
distributional interest of a member for its fair value
determined as of the date of the member's dissociation if the
member's dissociation does not result in a dissolution and
winding up of the company's business under Section 35-1.
(b) A limited liability company must deliver a purchase
offer to the dissociated member whose distributional interest
is entitled to be purchased not later than 30 days after the
date determined under subsection (a) of this Section. The
purchase offer must be accompanied by:
(1) a statement of the company's assets and
liabilities as of the date determined under subsection
(a) of this Section;
(2) the latest available balance sheet and income
statement, if any; and
(3) an explanation of how the estimated amount of
the payment was calculated.
(c) If the price and other terms of a purchase of a
distributional interest are fixed or are to be determined by
the operating agreement, the price and terms so fixed or
determined govern the purchase unless the purchaser defaults.
If a default occurs, the dissociated member is entitled to
commence a proceeding to have the company dissolved under
Section 35-1.
(d) If an agreement to purchase the distributional
interest is not made within 120 days after the date
determined under subsection (a) of this Section, the
dissociated member, within another 120 days, may commence a
proceeding against the limited liability company to enforce
the purchase. The company at its expense shall notify in
writing all of the remaining members, and any other person
the court directs, of the commencement of the proceeding.
The jurisdiction of the court in which the proceeding is
commenced under this subsection (d) is plenary and exclusive.
(e) The court shall determine the fair value of the
distributional interest in accordance with the standards set
forth in Section 35-65 together with the terms for the
purchase. Upon making these determinations, the court shall
order the limited liability company to purchase or cause the
purchase of the interest.
(f) Damages for wrongful dissociation under Section
35-50, and all other amounts owing, whether or not currently
due, from the dissociated member to a limited liability
company, must be offset against the purchase price.
(805 ILCS 180/35-65 new)
Sec. 35-65. Court action to determine fair value of
distributional interest.
(a) In an action brought to determine the fair value of
a distributional interest in a limited liability company, the
court shall:
(1) determine the fair value of the interest,
considering among other relevant evidence the going
concern value of the company, any agreement among some or
all of the members fixing the price or specifying a
formula for determining value of distributional interests
for any other purpose, the recommendations of any
appraiser appointed by the court, and any legal
constraints on the company's ability to purchase the
interest;
(2) specify the terms of the purchase, including,
if appropriate, terms for installment payments,
subordination of the purchase obligation to the rights of
the company's other creditors, security for a deferred
purchase price, and a covenant not to compete or other
restriction on a dissociated member; and
(3) require the dissociated member to deliver an
assignment of the interest to the purchaser upon receipt
of the purchase price or the first installment of the
purchase price.
(b) After the dissociated member delivers the
assignment, the dissociated member has no further claim
against the company, its members, officers, or managers, if
any, other than a claim to any unpaid balance of the purchase
price and a claim under any agreement with the company or the
remaining members that is not terminated by the court.
(c) If the purchase is not completed in accordance with
the specified terms, the company shall be dissolved upon
application under item (D) of subdivision (4) of Section
35-1. If a limited liability company is so dissolved, the
dissociated member has the same rights and priorities in the
company's assets as if the sale had not been ordered.
(d) If the court finds that a party to the proceeding
acted arbitrarily, vexatiously, or not in good faith, it may
award one or more other parties their reasonable expenses,
including attorney's fees and the expenses of appraisers or
other experts, incurred in the proceeding. The finding may
be based on the company's failure to make an offer to pay or
to comply with Section 35-60.
(e) Interest must be paid on the amount awarded from the
date determined under subsection (a) of Section 35-60 to the
date of payment.
(805 ILCS 180/35-70 new)
Sec. 35-70. Dissociated member's power to bind limited
liability company. For 2 years after a member dissociates
without the dissociation resulting in a dissolution and
winding up of a limited liability company's business, the
company, including a surviving company under Article 37, is
bound by an act of the dissociated member that would have
bound the company under Section 13-5 before dissociation only
if at the time of entering into the transaction the other
party:
(1) reasonably believed that the dissociated member was
then a member;
(2) did not have notice of the member's dissociation;
and
(3) is not deemed to have had notice under Section
35-15.
(805 ILCS 180/Art. 37 heading new)
Article 37. Conversions and mergers
(805 ILCS 180/37-5 new)
Sec. 37-5. Definitions. In this Article:
"Corporation" means a corporation under the Business
Corporation Act of 1983, a predecessor law, or comparable law
of another jurisdiction.
"General partner" means a partner in a partnership and a
general partner in a limited partnership.
"Limited partner" means a limited partner in a limited
partnership.
"Limited partnership" means a limited partnership created
under the Revised Uniform Limited Partnership Act, a
predecessor law, or comparable law of another jurisdiction.
"Partner" includes a general partner and a limited
partner.
"Partnership" means a general partnership under the
Uniform Partnership Act, a predecessor law, or comparable law
of another jurisdiction.
"Partnership agreement" means an agreement among the
partners concerning the partnership or limited partnership.
"Shareholder" means a shareholder in a corporation.
(805 ILCS 180/37-10 new)
Sec. 37-10. Conversion of partnership or limited
partnership to limited liability company.
(a) A partnership or limited partnership may be
converted to a limited liability company pursuant to this
Section if conversion to a limited liability company is
permitted under the law governing the partnership or limited
partnership.
(b) The terms and conditions of a conversion of a
partnership or limited partnership to a limited liability
company must be approved by all of the partners or by a
number or percentage of the partners required for conversion
in the partnership agreement.
(c) An agreement of conversion must set forth the terms
and conditions of the conversion of the interests of partners
of a partnership or of a limited partnership, as the case may
be, into interests in the converted limited liability company
or the cash or other consideration to be paid or delivered as
a result of the conversion of the interests of the partners,
or a combination thereof.
(d) After a conversion is approved under subsection (b)
of this Section, the partnership or limited partnership shall
file articles of organization in the office of the Secretary
of State that satisfy the requirements of Section 5-5 and
contain all of the following:
(1) A statement that the partnership or limited
partnership was converted to a limited liability company
from a partnership or limited partnership, as the case
may be.
(2) Its former name.
(3) A statement of the number of votes cast by the
partners entitled to vote for and against the conversion
and, if the vote is less than unanimous, the number or
percentage required to approve the conversion under
subsection (b) of this Section.
(4) In the case of a limited partnership, a
statement that the certificate of limited partnership
shall be canceled as of the date the conversion took
effect.
(e) In the case of a limited partnership, the filing of
articles of organization under subsection (d) of this Section
cancels its certificate of limited partnership as of the date
the conversion took effect.
(f) A conversion takes effect when the articles of
organization are filed in the office of the Secretary of
State or on a date specified in the articles of organization
not later than 30 days subsequent to the filing of the
articles of organization.
(g) A general partner who becomes a member of a limited
liability company as a result of a conversion remains liable
as a partner for an obligation incurred by the partnership or
limited partnership before the conversion takes effect.
(h) A general partner's liability for all obligations of
the limited liability company incurred after the conversion
takes effect is that of a member of the company. A limited
partner who becomes a member as a result of a conversion
remains liable only to the extent the limited partner was
liable for an obligation incurred by the limited partnership
before the conversion takes effect.
(805 ILCS 180/37-15 new)
Sec. 37-15. Effect of conversion; entity unchanged.
(a) A partnership or limited partnership that has been
converted under this Article is for all purposes the same
entity that existed before the conversion.
(b) When a conversion takes effect:
(1) all property owned by the converting
partnership or limited partnership vests in the limited
liability company;
(2) all debts, liabilities, and other obligations
of the converting partnership or limited partnership
continue as obligations of the limited liability company;
(3) an action or proceeding pending by or against
the converting partnership or limited partnership may be
continued as if the conversion had not occurred;
(4) except as prohibited by other law, all of the
rights, privileges, immunities, powers, and purposes of
the converting partnership or limited partnership vest in
the limited liability company; and
(5) except as otherwise provided in the agreement
of conversion under Section 37-10, all of the partners of
the converting partnership continue as members of the
limited liability company.
(805 ILCS 180/37-20 new)
Sec. 37-20. Merger of entities.
(a) Pursuant to a plan of merger approved under
subsection (c) of this Section, a limited liability company
may be merged with or into one or more limited liability
companies, foreign limited liability companies, corporations,
foreign corporations, partnerships, foreign partnerships,
limited partnerships, foreign limited partnerships, or other
domestic or foreign entities if merger with or into a limited
liability company is permitted under the law governing the
domestic or foreign entity.
(b) A plan of merger must set forth all of the
following:
(1) The name of each entity that is a party to the
merger.
(2) The name of the surviving entity into which the
other entities will merge.
(3) The type of organization of the surviving
entity.
(4) The terms and conditions of the merger.
(5) The manner and basis for converting the
interests, shares, obligations, or other securities of
each party to the merger into interests, shares,
obligations, or other securities of the surviving entity,
or into money or other property in whole or in part.
(6) The street address of the surviving entity's
principal place of business.
(c) A plan of merger must be approved:
(1) in the case of a limited liability company that
is a party to the merger, by all of the members or by a
number or percentage of members specified in the
operating agreement;
(2) in the case of a foreign limited liability
company that is a party to the merger, by the vote
required for approval of a merger by the law of the state
or foreign jurisdiction in which the foreign limited
liability company is organized;
(3) in the case of a partnership or domestic
limited partnership that is a party to the merger, by the
vote required for approval of a conversion under Section
37-5(b); and
(4) in the case of any other entities that are
parties to the merger, by the vote required for approval
of a merger by the law of this State or of the state or
foreign jurisdiction in which the entity is organized
and, in the absence of such a requirement, by all the
owners of interests in the entity.
(d) After a plan of merger is approved and before the
merger takes effect, the plan may be amended or abandoned as
provided in the plan.
(e) The merger is effective upon the filing of the
articles of merger with the Secretary of State, or a later
date as specified in the articles of merger not lat