Public Act 096-0649
 
SB1390 Enrolled LRB096 08993 AJO 19132 b

    AN ACT concerning business.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The General Not For Profit Corporation Act of
1986 is amended by changing Sections 101.80, 103.12, 107.10,
107.40, 107.50, 107.75, 108.05, 108.10, 108.35, 108.45,
108.60, 108.70, and 110.30 as follows:
 
    (805 ILCS 105/101.80)  (from Ch. 32, par. 101.80)
    Sec. 101.80. Definitions. As used in this Act, unless the
context otherwise requires, the words and phrases defined in
this Section shall have the meanings set forth herein.
    (a) "Anniversary" means that day each year exactly one or
more years after:
        (1) The date of filing the articles of incorporation
    prescribed by Section 102.10 of this Act, in the case of a
    domestic corporation;
        (2) The date of filing the application for authority
    prescribed by Section 113.15 of this Act in the case of a
    foreign corporation;
        (3) The date of filing the statement of acceptance
    prescribed by Section 101.75 of this Act, in the case of a
    corporation electing to accept this Act; or
        (4) The date of filing the articles of consolidation
    prescribed by Section 111.25 of this Act in the case of a
    consolidation.
    (b) "Anniversary month" means the month in which the
anniversary of the corporation occurs.
    (c) "Articles of incorporation" means the original
articles of incorporation including the articles of
incorporation of a new corporation set forth in the articles of
consolidation or set forth in a statement of election to accept
this Act, and all amendments thereto, whether evidenced by
articles of amendment, articles of merger or statement of
correction affecting articles. Restated articles of
incorporation shall supersede the original articles of
incorporation and all amendments thereto prior to the effective
date of filing the articles of amendment incorporating the
restated articles of incorporation. In the case of a
corporation created by a Special Act of the Legislature,
"Articles of incorporation" means the special charter and any
amendments thereto made by Special Act of the Legislature or
pursuant to general laws.
    (d) "Board of directors" means the group of persons vested
with the management of the affairs of the corporation
irrespective of the name by which such group is designated.
    (e) "Bylaws" means the code or codes of rules adopted for
the regulation or management of the affairs of the corporation
irrespective of the name or names by which such rules are
designated.
    (f) "Corporation" or "domestic corporation" means a
domestic not-for-profit corporation subject to the provisions
of this Act, except a foreign corporation.
    (g) "Delivered," for the purpose of determining if any
notice required by this Act is effective, means:
        (1) Transferred or presented to someone in person;
        (2) Deposited in the United States mail addressed to
    the person at his, her or its address as it appears on the
    records of the corporation, with sufficient first-class
    postage prepaid thereon;
        (3) Posted at such place and in such manner or
    otherwise transmitted to the person's premises as may be
    authorized and set forth in the articles of incorporation
    or the bylaws; or
        (4) Transmitted by electronic means to the e-mail
    address, facsimile number, or other contact information
    appearing that appears on the records of the corporation as
    may be authorized or approved and set forth in the articles
    of incorporation or the bylaws.
    (h) "Foreign corporation" means a not-for-profit
corporation as defined and organized under the laws other than
the laws of this State, for a purpose or purposes for which a
corporation may be organized under this Act.
    (i) "Incorporator" means one of the signers of the original
articles of incorporation.
    (j) "Insolvent" means that a corporation is unable to pay
its debts as they become due in the usual course of the conduct
of its affairs.
    (k) "Member" means a person or any organization, whether
not for profit or otherwise, having membership rights in a
corporation in accordance with the provisions of its articles
of incorporation or bylaws.
    (l) "Net assets," for the purpose of determining the
authority of a corporation to make distributions, is equal to
the difference between the assets of the corporation and the
liabilities of the corporation.
    (m) "Not-for-profit corporation" means a corporation
subject to this Act and organized solely for one or more of the
purposes authorized by Section 103.05 of this Act.
    (n) "Registered office" means that office maintained by the
corporation in this State, the address 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 corporation.
    (o) "Special charter" means the charter granted to a
corporation created by special act of the Legislature whether
or not the term "charter" or "special charter" is used in such
special act.
    (p) Unless otherwise prohibited by To the extent permitted
in the articles of incorporation or the bylaws of the
corporation, actions required to be "written", to be "in
writing", to have "written consent", to have "written approval"
and the like by or of members, directors, or committee members
shall include any communication transmitted or received by
electronic means.
(Source: P.A. 92-33, eff. 7-1-01; 92-572, eff. 6-26-02.)
 
    (805 ILCS 105/103.12)  (from Ch. 32, par. 103.12)
    Sec. 103.12. Private foundations - Federal tax laws. In the
absence of an express provision to the contrary in its articles
of incorporation, a corporation, as defined in Section 509 of
the Internal Revenue Code of 1986, as may be amended from time
to time 1954, during the period it is a private foundation:
    (a) Shall not engage in any act of self-dealing as defined
in Section 4941(d) thereof;
    (b) Shall distribute its income for each taxable year at
such time and in such manner as not to become subject to the
tax on undistributed income imposed by Section 4942 thereof;
    (c) Shall not retain any excess business holdings as
defined in Section 4943(c) thereof;
    (d) Shall not make any investment in such manner as to
subject it to tax under Section 4944 thereof;
    (e) Shall not make any taxable expenditure as defined in
Section 4945(d) thereof.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/107.10)  (from Ch. 32, par. 107.10)
    Sec. 107.10. Informal action by members entitled to vote.
(a) Unless otherwise provided in the articles of incorporation
or the bylaws, any action required by this Act to be taken at
any annual or special meeting of the members entitled to vote,
or any other action which may be taken at a meeting of the
members entitled to vote, may be taken by ballot without a
meeting in writing by mail, e-mail, or any other electronic
means pursuant to which the members entitled to vote thereon
are given the opportunity to vote for or against the proposed
action, and the action receives approval by a majority of the
members casting votes, or such larger number as may be required
by the Act, the articles of incorporation, or the bylaws,
provided that the number of members casting votes would
constitute a quorum if such action had been taken at a meeting.
Voting must remain open for not less than 5 days from the date
the ballot is delivered; provided, however, in the case of a
removal of one or more directors, a merger, consolidation,
dissolution or sale, lease or exchange of assets, the voting
must remain open for not less than 20 days from the date the
ballot is delivered. without a meeting and without a vote, if a
consent in writing, setting forth the action so taken, shall be
signed either: (i) by all of the members entitled to vote with
respect to the subject matter thereof, or (ii) by the members
having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at
which all members entitled to vote thereon were present and
voting.
    (b) Such informal action by members If such consent is
signed by less than all of the members entitled to vote, then
such consent shall become effective only: (1) if, at least 5
days prior to the effective date of such informal action
consent, a notice in writing of the proposed action is
delivered to all of the members entitled to vote with respect
to the subject matter thereof. , and (2) if, after the
effective date of such consent, prompt notice in writing of the
taking of the corporate action without a meeting is delivered
to those members entitled to vote who have not consented in
writing.
    (c) In the event that the action which is approved
consented to is such as would have required the filing of a
certificate under any other Section of this Act if such action
had been voted on by the members at a meeting thereof, the
certificate filed under such other Section shall state, in lieu
of any statement required by such Section concerning any vote
of members, that an informal vote written consent has been
conducted given in accordance with the provisions of this
Section and that written notice has been delivered as provided
in this Section.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/107.40)  (from Ch. 32, par. 107.40)
    Sec. 107.40. Voting. (a) The right of the members, or any
class or classes of members, to vote may be limited, enlarged
or denied to the extent specified in the articles of
incorporation or the bylaws. Unless so limited, enlarged or
denied, each member, regardless of class, shall be entitled to
one vote on each matter submitted to a vote of members.
    (b) The articles of incorporation or the bylaws may provide
that in all elections for directors every member entitled to
vote shall have the right to cumulate his or her vote and to
give one candidate a number of votes equal to his or her vote
multiplied by the number of directors to be elected, or to
distribute such votes on the same principle among as many
candidates as he or she shall think fit.
    (c) If a corporation has no members or its members have no
right to vote with respect to a particular matter, the
directors shall have the sole voting power with respect to such
matter.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/107.50)  (from Ch. 32, par. 107.50)
    Sec. 107.50. Proxies. A member entitled to vote may vote in
person or, unless the articles of incorporation or the bylaws
explicitly prohibit otherwise provide, by proxy executed in
writing by the member or by that member's duly authorized
attorney-in-fact. No proxy shall be valid after 11 months from
the date of its execution, unless otherwise provided in the
proxy. Unless otherwise prohibited by the articles of
incorporation or bylaws, the election of directors, officers,
or representatives by members may be conducted by mail, e-mail,
or any other electronic means as set forth in subsection (a) of
Section 107.10. Where directors or officers are to be elected
by members, the bylaws may provide that such elections may be
conducted by mail.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/107.75)  (from Ch. 32, par. 107.75)
    Sec. 107.75. Books and records.
    (a) Each corporation shall keep correct and complete books
and records of account and shall also keep minutes of the
proceedings of its members, board of directors and committees
having any of the authority of the board of directors; and
shall keep at its registered office or principal office a
record giving the names and addresses of its members entitled
to vote. Any voting member shall have the right to examine, in
person or by agent, at any reasonable time or times, the
corporation's books and records of account and minutes, and to
make extracts therefrom, but only for a proper purpose. In
order to exercise this right, a voting member must make written
demand upon the corporation, stating with particularity the
records sought to be examined and the purpose therefor. If the
corporation refuses examination, the voting member may file
suit in the circuit court of the county in which either the
registered agent or principal office of the corporation is
located to compel by mandamus or otherwise such examination as
may be proper. If a voting member seeks to examine books or
records of account the burden of proof is upon the voting
member to establish a proper purpose. If the purpose is to
examine minutes, the burden of proof is upon the corporation to
establish that the voting member does not have a proper
purpose. All books and records of a corporation may be
inspected by any member entitled to vote, or that member's
agent or attorney, for any proper purpose at any reasonable
time.
    (b) A residential cooperative not-for-profit corporation
containing 50 or more single family units with individual unit
legal descriptions based upon a recorded plat of a subdivision
and located in a county with a population between 780,000 and
3,000,000 shall keep an accurate and complete account of all
transfers of membership and shall, on a quarterly basis, record
all transfers of membership with the county clerk of the county
in which the residential cooperative is located. Additionally,
a list of all transfers of membership shall be available for
inspection by any member of the corporation.
(Source: P.A. 91-465, eff. 8-6-99.)
 
    (805 ILCS 105/108.05)  (from Ch. 32, par. 108.05)
    Sec. 108.05. Board of directors.
    (a) Each corporation shall have a board of directors, and
except as provided in articles of incorporation, the affairs of
the corporation shall be managed by or under the direction of
the board of directors.
    (b) The articles of incorporation or bylaws may prescribe
qualifications for directors. A director need not be a resident
of this State or a member of the corporation unless the
articles of incorporation or bylaws so prescribe. The articles
of incorporation or the bylaws may prescribe other
qualifications for directors.
    (c) Unless otherwise provided in the articles of
incorporation or bylaws, the board of directors, by the
affirmative vote of a majority of the directors then in office,
shall have authority to establish reasonable compensation of
all directors for services to the corporation as directors,
officers or otherwise, notwithstanding the provisions of
Section 108.60 of this Act.
    (d) No director may act by proxy on any matter.
(Source: P.A. 95-368, eff. 8-23-07.)
 
    (805 ILCS 105/108.10)  (from Ch. 32, par. 108.10)
    Sec. 108.10. Number, election and resignation of
directors. (a) The board of directors of a corporation shall
consist of three or more directors. The number of directors
shall be fixed by the bylaws, except the number of initial
directors shall be fixed by the incorporators in the articles
of incorporation. In the absence of a bylaw fixing the number
of directors, the number shall be the same as that fixed in the
articles of incorporation. The number of directors may be
increased or decreased from time to time by amendment to the
bylaws.
    (b) The bylaws may establish a variable range for the size
of the board by prescribing a minimum and maximum (which may
not be less than 3 or exceed the minimum by more than 5) number
of directors. If a variable range is established, unless the
bylaws otherwise provide, the number of directors may be fixed
or changed from time to time, within the minimum and maximum,
by the directors without further amendment to the bylaws.
    (c) The terms of all directors expire at the next meeting
for the election of directors following their election unless
their terms are staggered under subsection (e). The term of a
director elected to fill a vacancy expires at the next annual
meeting of the members entitled to vote at which his or her
predecessor's term would have expired or in accordance with
Section 108.30 of this Act. The term of a director elected as a
result of an increase in the number of directors expires at the
next annual meeting of members entitled to vote unless the term
is staggered under subsection (e).
    (d) Despite the expiration of a director's term, he or she
continues to serve until the next meeting of members or
directors entitled to vote on directors at which directors are
elected. An amendment to the bylaws decreasing A decrease in
the number of directors or eliminating the position of a
director elected or appointed by persons or entities other than
the members may shorten the terms of incumbent directors;
provided, however, such amendment has been approved by the
party with the authority to elect or appoint such directors
does not shorten an incumbent director's term.
    (e) The articles of incorporation or the bylaws may provide
that directors may be divided into classes and the terms of
office of several classes need not be uniform. Each director
shall hold office for the term for which he is elected and
until his successor shall have been elected and qualified.
    (f) If the articles of incorporation or bylaws authorize
dividing the members into classes, the articles or bylaws may
also authorize the election of all or a specified number or
percentage of directors by one or more authorized classes of
members.
    (g) A director may resign at any time by written notice
delivered to the board of directors, its chairman, or to the
president or secretary of the corporation. A resignation is
effective when the notice is delivered unless the notice
specifies a future date. The pending vacancy may be filled
before the effective date, but the successor shall not take
office until the effective date.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/108.35)  (from Ch. 32, par. 108.35)
    Sec. 108.35. Removal of directors. (a) One or more of the
directors may be removed, with or without cause. In the case of
a corporation having a board of directors which is classified
in accordance with subsection 108.10(e) of this Act, the
articles of incorporation or bylaws may provide that such
directors may only be removed for cause no director may be
removed except for cause if the articles of incorporation or
the bylaws so provide.
    (b) In the case of a corporation with no members or with no
members entitled to vote on directors, a director may be
removed by the affirmative vote of a majority of the directors
then in office present and voting at a meeting of the board of
directors at which a quorum is present.
    (c) In the case of a corporation with members entitled to
vote for directors, no director may be removed, except as
follows:
    (1) A director may be removed by the affirmative vote of
two-thirds of the votes present and voted, either in person or
by proxy.
    (2) No director shall be removed at a meeting of members
entitled to vote unless the written notice of such meeting is
delivered to all members entitled to vote on removal of
directors. Such notice shall state that a purpose of the
meeting is to vote upon the removal of one or more directors
named in the notice. Only the named director or directors may
be removed at such meeting.
    (3) In the case of a corporation having cumulative voting,
if less than the entire board is to be removed, no director may
be removed, with or without cause, if the votes cast against
his or her removal would be sufficient to elect him or her if
then cumulatively voted at an election of the entire board of
directors.
    (4) If a director is elected by a class of voting members
entitled to vote, directors or other electors, that director
may be removed only by the same class of members entitled to
vote, directors or electors which elected the director.
    (d) The provisions of subsections (a), (b) and (c) shall
not preclude the Circuit Court from removing a director of the
corporation from office in a proceeding commenced either by the
corporation or by members entitled to vote holding at least 10
percent of the outstanding votes of any class if the court
finds (1) the director is engaged in fraudulent or dishonest
conduct or has grossly abused his or her position to the
detriment of the corporation, and (2) removal is in the best
interest of the corporation. If the court removes a director,
it may bar the director from reelection for a period prescribed
by the court. If such a proceeding is commenced by a member
entitled to vote, such member shall make the corporation a
party defendant.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/108.45)  (from Ch. 32, par. 108.45)
    Sec. 108.45. Informal action by directors. (a) Unless
specifically prohibited by the articles of incorporation or
bylaws, any action required by this Act to be taken at a
meeting of the board of directors of a corporation, or any
other action which may be taken at a meeting of the board of
directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors and all of any
nondirector committee members entitled to vote with respect to
the subject matter thereof, or by all the members of such
committee, as the case may be.
    (b) The consent shall be evidenced by one or more written
approvals, each of which sets forth the action taken and
provides a written record of approval bears the signature of
one or more directors or committee members. All the approvals
evidencing the consent shall be delivered to the secretary to
be filed in the corporate records. The action taken shall be
effective when all the directors or the committee members, as
the case may be, have approved the consent unless the consent
specifies a different effective date.
    (c) Any such consent signed by all the directors or all the
committee members, as the case may be, shall have the same
effect as a unanimous vote and may be stated as such in any
document filed with the Secretary of State under this Act.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/108.60)  (from Ch. 32, par. 108.60)
    Sec. 108.60. Director conflict of interest. (a) If a
transaction is fair to a corporation at the time it is
authorized, approved, or ratified, the fact that a director of
the corporation is directly or indirectly a party to the
transaction is not grounds for invalidating the transaction.
    (b) In a proceeding contesting the validity of a
transaction described in subsection (a), the person asserting
validity has the burden of proving fairness unless:
    (1) The material facts of the transaction and the
director's interest or relationship were disclosed or known to
the board of directors or a committee consisting entirely of
directors and the board or committee authorized, approved or
ratified the transaction by the affirmative votes of a majority
of disinterested directors, even though the disinterested
directors be less than a quorum; or
    (2) The material facts of the transaction and the
director's interest or relationship were disclosed or known to
the members entitled to vote, if any, and they authorized,
approved or ratified the transaction without counting the vote
of any member who is an interested director.
    (c) The presence of the director, who is directly or
indirectly a party to the transaction described in subsection
(a), or a director who is otherwise not disinterested, may be
counted in determining whether a quorum is present but may not
be counted when the board of directors or a committee of the
board takes action on the transaction.
    (d) For purposes of this Section, a director is
"indirectly" a party to a transaction if the other party to the
transaction is an entity in which the director has a material
financial interest or of which the director is an officer,
director or general partner.
    (e) The provisions of this Section do not apply where a
director of the corporation is directly or indirectly a party
to a transaction involving a grant or contribution, without
consideration, by one organization to another.
(Source: P.A. 84-1423.)
 
    (805 ILCS 105/108.70)  (from Ch. 32, par. 108.70)
    Sec. 108.70. Limited Liability of directors, officers,
board members, and persons who serve without compensation.
    (a) No director or officer serving without compensation,
other than reimbursement for actual expenses, of a corporation
organized under this Act or any predecessor Act and exempt, or
qualified for exemption, from taxation pursuant to Section
501(c) of the Internal Revenue Code of 1986, as amended, shall
be liable, and no cause of action may be brought, for damages
resulting from the exercise of judgment or discretion in
connection with the duties or responsibilities of such director
or officer unless the act or omission involved willful or
wanton conduct.
    (b) No director of a corporation organized under this Act
or any predecessor Act for the purposes identified in items
(14), (19), (21) and (22) of subsection (a) of Section 103.05
of this Act, and exempt or qualified for exemption from
taxation pursuant to Section 501(c) of the Internal Revenue
Code of 1986, as amended, shall be liable, and no cause of
action may be brought for damages resulting from the exercise
of judgment or discretion in connection with the duties or
responsibilities of such director, unless: (1) such director
earns in excess of $25,000 $5,000 per year from his duties as
director, other than reimbursement for actual expenses; or (2)
the act or omission involved willful or wanton conduct.
    (b-5) Except for willful and wanton conduct, no volunteer
board member serving without compensation, other than
reimbursement for actual expenses, of a corporation organized
under this Act or any predecessor Act and exempt, or qualified
for exemption, from taxation pursuant to Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, shall be liable,
and no action may be brought, for damages resulting from any
action of the executive director concerning the false reporting
of or intentional tampering with financial records of the
organization, where the actions of the executive director
result in legal action.
    This subsection (b-5) shall not apply to any action taken
by the Attorney General (i) in the exercise of his or her
common law or statutory power and duty to protect charitable
assets or (ii) in the exercise of his or her authority to
enforce the laws of this State that apply to trustees of a
charity, as that term is defined in the Charitable Trust Act
and the Solicitation for Charity Act.
    (c) No person who, without compensation other than
reimbursement for actual expenses, renders service to or for a
corporation organized under this Act or any predecessor Act and
exempt or qualified for exemption from taxation pursuant to
Section 501(c)(3) of the Internal Revenue Code of 1986, as
amended, shall be liable, and no cause of action may be
brought, for damages resulting from an act or omission in
rendering such services, unless the act or omission involved
willful or wanton conduct.
    (d) (Blank).
    (e) Nothing in this Section is intended to bar any cause of
action against the corporation or change the liability of the
corporation arising out of an act or omission of any director,
officer or person exempt from liability for negligence under
this Section.
(Source: P.A. 95-342, eff. 1-1-08.)
 
    (805 ILCS 105/110.30)  (from Ch. 32, par. 110.30)
    Sec. 110.30. Articles of amendment.
    (a) Except as provided in Section 110.40 of this Act, the
articles of amendment shall be executed and filed in duplicate
in accordance with Section 101.10 of this Act and shall set
forth:
        (1) The name of the corporation;
        (2) The text of each amendment adopted;
        (3) If the amendment was adopted pursuant to Section
    110.15 of this Act:
            (i) A statement that the amendment received the
        affirmative vote of a majority of the directors in
        office, at a meeting of the board of directors, and the
        date of the meeting; or
            (ii) A statement that the amendment was adopted by
        written consent, signed by all the directors in office,
        in compliance with Section 108.45 of this Act;
        (4) If the amendment was adopted pursuant to Section
    110.20 of this Act:
            (i) A statement that the amendment was adopted at a
        meeting of members entitled to vote by the affirmative
        vote of the members having not less than the minimum
        number of votes necessary to adopt such amendment, as
        provided by this Act, the articles of incorporation or
        the bylaws, and the date of the meeting; or
            (ii) A statement that the amendment was adopted by
        written consent signed by members entitled to vote
        having not less than the minimum number of votes
        necessary to adopt such amendment, as provided by this
        Act, the articles of incorporation, or the bylaws, in
        compliance with Section 107.10 of this Act.
        (5) If the amendment restates the articles of
    incorporation, the amendment shall so state and shall set
    forth:
            (i) The text of the articles as restated;
            (ii) The date of incorporation, the name under
        which the corporation was incorporated, subsequent
        names, if any, that the corporation adopted pursuant to
        amendment of its articles of incorporation, and the
        effective date of any such amendments;
            (iii) The address of the registered office and the
        name of the registered agent on the date of filing the
        restated articles.
            The articles as restated must include all the
        information required by subsection (a) of Section
        102.10 of this Act, except that the articles need not
        set forth the information required by paragraphs 3, 4
        or 5 thereof. If any provision of the articles of
        incorporation is amended in connection with the
        restatement, the articles of amendment shall clearly
        identify such amendment.
        (6) If, pursuant to Section 110.35 of this Act, the
    amendment is to become effective subsequent to the date on
    which the articles of amendment are filed, the date on
    which the amendment is to become effective.
        (7) If the amendment revives the articles of
    incorporation and extends the period of corporate
    duration, the amendment shall so state and shall set forth:
            (i) The date the period of duration expired under
        the articles of incorporation;
            (ii) A statement that the period of duration will
        be perpetual, or, if a limited duration is to be
        provided, the date to which the period of duration is
        to be extended; and
            (iii) A statement that the corporation has been in
        continuous operation since before the date of
        expiration of its original period of duration.
    (b) When the provisions of this Section have been complied
with, the Secretary of State shall file the articles of
amendment.
(Source: P.A. 92-33, eff. 7-1-01.)