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 
waiver.
    (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 
association.

    (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

    wasted.

    (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

    officer;


        (5) An accounting with respect to any matter in

    dispute;


        (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 
    court;


        (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 
        Section;


            (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 
        order.

    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 
court.

    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

    election.


        (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 
    directs.


        (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

    circumstances.

    (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, 
2005.






Effective Date:  8/1/2005