Illinois General Assembly - Full Text of Public Act 094-0394
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Public Act 094-0394




Public Act 094-0394
SB0533 Enrolled LRB094 09955 RXD 40213 b

    AN ACT concerning business.
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
    Section 5. The Business Corporation Act of 1983 is amended
by changing Section 12.56 and adding Section 7.90 as follows:
    (805 ILCS 5/7.90 new)
    Sec. 7.90. Waiver.
    (a) Unless otherwise provided in the articles of
incorporation, a shareholder who executes and delivers to the
corporation a written instrument irrevocably waiving the right
(i) to vote any shares held by such shareholder, whether for
the election of directors or otherwise, (ii) to be a director
or officer of the corporation, and (iii) in any other manner to
control, directly or indirectly, corporate actions or the
election or removal of any director or officer of the
corporation, and who at the time of such waiver is not a
director or officer of the corporation, shall have no fiduciary
duty to the corporation or any of its shareholders arising out
of the fact that such person is a shareholder of the
corporation. No such waiver shall affect any breach of
fiduciary duty arising prior to the effective date of the
    (b) The corporation shall give prompt notice of such waiver
to the remaining shareholders, except that no such notice need
be given by a corporation that has shares listed on a national
securities exchange or regularly traded in a market maintained
by one or more members of a national or affiliated securities
    (c) The waiver referred to in this Section shall not affect
any other rights or obligations of the shareholder, including
but not limited to the rights under Sections 7.80, 11.65,
11.70, 12.55 and 12.56 of this Act.
    (d) Shares that cannot be voted because of a waiver under
this Section shall not be counted in determining the number of
shares necessary for a quorum or for shareholder action under
Section 7.60 of this Act. A waiver under this Section shall not
apply to any transferee of the shares.
    (e) The waiver referred to in this Section is specifically
enforceable in accordance with the principles of equity.
    (f) This Section is not intended to describe or suggest the
circumstances under which any fiduciary duty arises or exists,
including with respect to any shareholder who fails to make a
waiver under this Section.
    (805 ILCS 5/12.56)
    Sec. 12.56. Shareholder remedies: non-public corporations.
    (a) In an action by a shareholder in a corporation that has
no shares listed on a national securities exchange or regularly
traded in a market maintained by one or more members of a
national or affiliated securities association, the Circuit
Court may order one or more of the remedies listed in
subsection (b) if it is established that:
        (1) The directors are deadlocked, whether because of
    even division in the number of directors or because of
    greater than majority voting requirements in the articles
    of incorporation or the by-laws or otherwise, in the
    management of the corporate affairs; the shareholders are
    unable to break the deadlock; and either irreparable injury
    to the corporation is thereby caused or threatened or the
    business of the corporation can no longer be conducted to
    the general advantage of the shareholders; or
        (2) The shareholders are deadlocked in voting power and
    have failed, for a period that includes at least 2
    consecutive annual meeting dates, to elect successors to
    directors whose terms have expired and either irreparable
    injury to the corporation is thereby caused or threatened
    or the business of the corporation can no longer be
    conducted to the general advantage of the shareholders; or
        (3) The directors or those in control of the
    corporation have acted, are acting, or will act in a manner
    that is illegal, oppressive, or fraudulent with respect to
    the petitioning shareholder whether in his or her capacity
    as a shareholder, director, or officer; or
        (4) The corporation assets are being misapplied or
    (b) The relief which the court may order in an action under
subsection (a) includes but is not limited to the following:
        (1) The performance, prohibition, alteration, or
    setting aside of any action of the corporation or of its
    shareholders, directors, or officers of or any other party
    to the proceedings;
        (2) The cancellation or alteration of any provision in
    the corporation's articles of incorporation or by-laws;
        (3) The removal from office of any director or officer;
        (4) The appointment of any individual as a director or
        (5) An accounting with respect to any matter in
        (6) The appointment of a custodian to manage the
    business and affairs of the corporation to serve for the
    term and under the conditions prescribed by the court;
        (7) The appointment of a provisional director to serve
    for the term and under the conditions prescribed by the
        (8) The submission of the dispute to mediation or other
    forms of non-binding alternative dispute resolution;
        (9) The payment of dividends;
        (10) The award of damages to any aggrieved party;
        (11) The purchase by the corporation or one or more
    other shareholders of all, but not less than all, of the
    shares of the petitioning shareholder for their fair value
    and on the terms determined under subsection (e); or
        (12) The dissolution of the corporation if the court
    determines that no remedy specified in subdivisions (1)
    through (11) or other alternative remedy is sufficient to
    resolve the matters in dispute. In determining whether to
    dissolve the corporation, the court shall consider among
    other relevant evidence the financial condition of the
    corporation but may not refuse to dissolve the corporation
    solely because it has accumulated earnings or current
    operating profits.
    (c) The remedies set forth in subsection (b) shall not be
exclusive of other legal and equitable remedies which the court
may impose.
    (d) In determining the appropriate relief to order pursuant
to this Section, the court may take into consideration the
reasonable expectations of the corporation's shareholders as
they existed at the time the corporation was formed and
developed during the course of the shareholders' relationship
with the corporation and with each other.
    (e) If the court orders a share purchase, it shall:
            (i) Determine the fair value of the shares, with or
        without the assistance of appraisers, taking into
        account any impact on the value of the shares resulting
        from the actions giving rise to a petition under this
            (ii) Consider any financial or legal constraints
        on the ability of the corporation or the purchasing
        shareholder to purchase the shares;
            (iii) Specify the terms of the purchase,
        including, if appropriate, terms for installment
        payments, interest at the rate and from the date
        determined by the court to be equitable, subordination
        of the purchase obligation to the rights of the
        corporation's other creditors, security for a deferred
        purchase price, and a covenant not to compete or other
        restriction on the seller;
            (iv) Require the seller to deliver all of his or
        her shares to the purchaser upon receipt of the
        purchase price or the first installment of the purchase
        price; and
            (v) Retain jurisdiction to enforce the purchase
        order by, among other remedies, ordering the
        corporation to be dissolved if the purchase is not
        completed in accordance with the terms of the purchase
    The purchase ordered pursuant to this subsection (e) shall
be consummated within 20 days after the date the order becomes
final unless before that time the corporation files with the
court a notice of its intention to dissolve and articles of
dissolution are properly filed with the Secretary of State
within 50 days after filing the notice with the court.
    After the purchase order is entered and before the purchase
price is fully paid, any party may petition the court to modify
the terms of the purchase and the court may do so if it finds
that such changes are equitable.
    Unless the purchase order is modified by the court, the
selling shareholder shall have no further rights as a
shareholder from the date the seller delivers all of his or her
shares to the purchaser or such other date specified by the
    If the court orders shares to be purchased by one or more
other shareholders, in allocating the shares to be purchased by
the other shareholders, unless equity requires otherwise, the
court shall attempt to preserve the existing distribution of
voting rights and other designations, preferences,
qualifications, limitations, restrictions and special or
relative rights among the holders of the class or classes and
may direct that holders of a specific class or classes shall
not participate in the purchase.
    (f) When the relief requested by the petition includes the
purchase of the petitioner's shares, then at At any time within
90 days after the filing of the petition under this Section, or
at such time determined by the court to be equitable, the
corporation or one or more shareholders may elect to purchase
all, but not less than all, of the shares owned by the
petitioning shareholder for their fair value. An election
pursuant to this Section shall state in writing the amount
which the electing party will pay for the shares.
        (1) The election shall be irrevocable unless the court
    determines that it is equitable to set aside or modify the
        (2) If the election to purchase is filed by one or more
    shareholders, the corporation shall, within 10 days
    thereafter, give written notice to all shareholders. The
    notice must state: (i) the name and number of shares owned
    by the petitioner; (ii) the name and number of shares owned
    by each electing shareholder; and (iii) the amount which
    each electing party will pay for the shares and must advise
    the recipients of their right to join in the election to
    purchase shares. Shareholders who wish to participate must
    file notice of their intention to join in a purchase no
    later than 30 days after the date of the notice to them or
    at such time as the court in its discretion may allow. All
    shareholders who have filed an election or notice of their
    intention to participate in the election to purchase
    thereby become parties to the proceeding and shall
    participate in the purchase in proportion to their
    ownership of shares as of the date the first election was
    filed, unless they otherwise agree or the court otherwise
        (3) The court in its discretion may allow the
    corporation and all non-petitioning shareholders to file
    an election to purchase the petitioning shareholder's
    shares at a higher price. If the court does so, it shall
    allow other shareholders an opportunity to join in the
    purchase at the higher price in accordance with their
    proportionate ownership interest.
        (4) After an election has been filed by the corporation
    or one or more shareholders, the proceeding filed under
    this Section may not be discontinued or settled, nor may
    the petitioning shareholder sell or otherwise dispose of
    his or her shares, unless the court determines that it
    would be equitable to the corporation and the shareholders,
    other than the petitioner, to permit the discontinuance,
    settlement, sale, or other disposition. In considering
    whether equity exists to approve any settlement, the court
    may take into consideration the reasonable expectations of
    the shareholders as set forth in subsection (d), including
    any existing agreement among the shareholders.
        (5) If, within 30 days of the filing of the latest
    election allowed by the court, the parties reach agreement
    as to the fair value and terms of purchase of the
    petitioner's shares, the court shall enter an order
    directing the purchase of petitioner's shares upon the
    terms and conditions agreed to by the parties.
        (6) If the parties are unable to reach an agreement as
    provided for in paragraph (5) of this subsection (f), the
    court, upon application of any party, shall stay the
    proceeding under subsection (a) and shall determine the
    fair value of the petitioner's shares pursuant to
    subsection (e) as of the day before the date on which the
    petition under subsection (a) was filed or as of such other
    date as the court deems appropriate under the
    (g) In any proceeding under this Section, the court shall
allow reasonable compensation to the custodian, provisional
director, appraiser, or other such person appointed by the
court for services rendered and reimbursement or direct payment
of reasonable costs and expenses, which amounts shall be paid
by the corporation.
(Source: P.A. 89-169, eff. 7-19-95; 89-364, eff. 8-18-95;
89-626, eff. 8-9-96.)
    Section 99. Effective date. This Act takes effect July 1,

Effective Date: 8/1/2005