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| 1 | AN ACT concerning business.
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| 2 | Be it enacted by the People of the State of Illinois,
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| 3 | represented in the General Assembly:
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| 4 | Section 5. The Limited Liability Company Act is amended by | ||||||
| 5 | changing Section 15-3 as follows:
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| 6 | (805 ILCS 180/15-3)
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| 7 | Sec. 15-3. General standards of member and manager's | ||||||
| 8 | conduct.
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| 9 | (a) The fiduciary duties a member owes to a member-managed | ||||||
| 10 | company and its
other members include the duty of loyalty and | ||||||
| 11 | the duty of care referred to in
subsections (b) and (c) of this | ||||||
| 12 | Section.
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| 13 | (b) A member's duty of loyalty to a member-managed company | ||||||
| 14 | and its other
members includes the following:
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| 15 | (1) to account to the company and to hold as trustee | ||||||
| 16 | for it any property,
profit, or benefit derived by the | ||||||
| 17 | member in the conduct or winding up of the
company's | ||||||
| 18 | business or derived from a use by the member of the | ||||||
| 19 | company's
property, including the appropriation of a | ||||||
| 20 | company's opportunity;
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| 21 | (2) to act fairly when a member deals with the company | ||||||
| 22 | in the conduct or
winding up of the company's business as | ||||||
| 23 | or on behalf of a party having an
interest adverse to the | ||||||
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| 1 | company; and
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| 2 | (3) to refrain from competing with the company in the | ||||||
| 3 | conduct of the
company's business before the dissolution of | ||||||
| 4 | the company.
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| 5 | (c) A member's duty of care to a member-managed company and | ||||||
| 6 | its other
members in the conduct of and winding up of the | ||||||
| 7 | company's business is limited to
refraining from engaging in | ||||||
| 8 | grossly negligent or reckless conduct, intentional
misconduct, | ||||||
| 9 | or a knowing violation of law.
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| 10 | (d) A member shall discharge his or her duties to a | ||||||
| 11 | member-managed company
and its other members under this Act or | ||||||
| 12 | under the operating agreement and
exercise any rights | ||||||
| 13 | consistent with the obligation of good faith and fair
dealing.
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| 14 | (e) A member of a member-managed company does not violate a | ||||||
| 15 | duty or
obligation under this Act or under the operating | ||||||
| 16 | agreement merely because the
member's conduct furthers the | ||||||
| 17 | member's own interest.
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| 18 | (f) This Section applies to a person winding up the limited | ||||||
| 19 | liability
company's business as the personal or legal | ||||||
| 20 | representative of the last
surviving member as if the person | ||||||
| 21 | were a member.
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| 22 | (g) In a manager-managed company:
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| 23 | (1) a member who is not also a manager owes no duties | ||||||
| 24 | to the company or to
the other members solely by reason of | ||||||
| 25 | being a member;
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| 26 | (2) a manager is held to the same standards of conduct | ||||||
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| 1 | prescribed for
members in subsections (b), (c), (d), and | ||||||
| 2 | (e) of this Section;
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| 3 | (3) a member who pursuant to the operating agreement | ||||||
| 4 | exercises some or all
of the authority of a manager in the | ||||||
| 5 | management and conduct of the company's
business is held to | ||||||
| 6 | the standards of conduct in subsections (b),
(c), (d), and | ||||||
| 7 | (e) of this Section to the extent that the member exercises | ||||||
| 8 | the
managerial authority vested in a manager by this Act; | ||||||
| 9 | and
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| 10 | (4) a manager is relieved of liability imposed by law | ||||||
| 11 | for violations of
the
standards prescribed by subsections
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| 12 | (b), (c), (d), and (e) to the extent of the managerial | ||||||
| 13 | authority delegated to
the members by the operating | ||||||
| 14 | agreement.
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| 15 | (Source: P.A. 95-331, eff. 8-21-07.)
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