Illinois General Assembly - Full Text of SB2797
Illinois General Assembly

Previous General Assemblies

Full Text of SB2797  101st General Assembly




State of Illinois
2019 and 2020


Introduced 2/4/2020, by Sen. Robert F. Martwick


805 ILCS 180/15-5

    Amends the Limited Liability Company Act. Provides that a limited liability company's operating agreement may not restrict the duty to act fairly as described in the Act. Provides that the operating agreement may identify the standards by which the obligation to act fairly is measured.

LRB101 16401 KTG 65779 b





SB2797LRB101 16401 KTG 65779 b

1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Limited Liability Company Act is amended by
5changing Section 15-5 as follows:
6    (805 ILCS 180/15-5)
7    Sec. 15-5. Operating agreement.
8    (a) All members of a limited liability company may enter
9into an operating agreement to regulate the affairs of the
10company and the conduct of its business and to govern relations
11among the members, managers, and company. The operating
12agreement may establish that a limited liability company is a
13manager-managed limited liability company and the rights and
14duties under this Act of a person in the capacity of a manager.
15To the extent the operating agreement does not otherwise
16provide, this Act governs relations among the members,
17managers, and company. Except as provided in subsections (b),
18(c), (d), and (e) of this Section, an operating agreement may
19modify any provision or provisions of this Act governing
20relations among the members, managers, and company.
21    (b) The operating agreement may not:
22        (1) unreasonably restrict a right to information or
23    access to records under Section 1-40 or Section 10-15;



SB2797- 2 -LRB101 16401 KTG 65779 b

1        (2) vary the right to expel a member in an event
2    specified in subdivision (6) of Section 35-45;
3        (3) vary the requirement to wind up the limited
4    liability company's business in a case specified in
5    subdivision (4), (5), or (6) of subsection (a) of Section
6    35-1;
7        (4) restrict rights of a person, other than a manager,
8    member, and transferee of a member's distributional
9    interest, under this Act;
10        (5) restrict the power of a member to dissociate under
11    Section 35-50, although an operating agreement may
12    determine whether a dissociation is wrongful under Section
13    35-50;
14        (6) (blank);
15        (6.5) eliminate or reduce the obligations or purposes a
16    low-profit limited liability company undertakes when
17    organized under Section 1-26;
18        (7) eliminate or reduce the obligation of good faith
19    and fair dealing under subsection (d) of Section 15-3, but
20    the operating agreement may determine the standards by
21    which the performance of the member's duties or the
22    exercise of the member's rights is to be measured;
23        (8) eliminate, vary, or restrict the priority of a
24    statement of authority over provisions in the articles of
25    organization as provided in subsection (h) of Section
26    13-15;



SB2797- 3 -LRB101 16401 KTG 65779 b

1        (9) vary the law applicable under Section 1-65;
2        (10) vary the power of the court under Section 5-50; or
3        (11) restrict the right to approve a merger,
4    conversion, or domestication under Article 37 or the Entity
5    Omnibus Act of a member that will have personal liability
6    with respect to a surviving, converted, or domesticated
7    organization.
8    (c) The operating agreement may:
9        (1) restrict or eliminate a fiduciary duty, other than
10    the duty to act fairly as described in paragraph (2) of
11    subsection (b) of Section 15-3 or the duty of care
12    described in subsection (c) of Section 15-3, but only to
13    the extent the restriction or elimination in the operating
14    agreement is clear and unambiguous;
15        (2) identify specific types or categories of
16    activities that do not violate any fiduciary duty; and
17        (3) alter the duty of care, except to authorize
18    intentional misconduct or knowing violation of law; and .
19        (4) identify the standards by which the obligation to
20    act fairly is measured.
21    (d) The operating agreement may specify the method by which
22a specific act or transaction that would otherwise violate the
23duty of loyalty may be authorized or ratified by one or more
24disinterested and independent persons after full disclosure of
25all material facts.
26    (e) The operating agreement may alter or eliminate the



SB2797- 4 -LRB101 16401 KTG 65779 b

1right to payment or reimbursement for a member or manager
2provided by Section 15-7 and may eliminate or limit a member or
3manager's liability to the limited liability company and
4members for money damages, except for:
5        (1) subject to subsections (c) and (d) of this Section,
6    breach of the duties as required in subdivisions (1), (2),
7    and (3) of subsection (b) of Section 15-3 and subsection
8    (g) of Section 15-3;
9        (2) a financial benefit received by the member or
10    manager to which the member or manager is not entitled;
11        (3) a breach of a duty under Section 25-35;
12        (4) intentional infliction of harm on the company or a
13    member; or
14        (5) an intentional violation of criminal law.
15    (f) A limited liability company is bound by and may enforce
16the operating agreement, whether or not the company has itself
17manifested assent to the operating agreement.
18    (g) A person that becomes a member of a limited liability
19company is deemed to assent to the operating agreement.
20    (h) An operating agreement may be entered into before,
21after, or at the time of filing of articles of organization
22and, whether entered into before, after, or at the time of the
23filing, may be made effective as of the time of formation of
24the limited liability company or as of the time or date
25provided in the operating agreement.
26(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)