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Public Act 101-0553


 

Public Act 0553 101ST GENERAL ASSEMBLY

  
  
  

 


 
Public Act 101-0553
 
SB1495 EnrolledLRB101 08080 JLS 53143 b

    AN ACT concerning business.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Limited Liability Company Act is amended by
changing Sections 1-5, 1-40, 10-1, 10-10, 10-15, 13-15, 15-20,
30-1, 35-1, and 35-45 as follows:
 
    (805 ILCS 180/1-5)
    Sec. 1-5. Definitions. As used in this Act, unless the
context otherwise requires:
    "Anniversary" means that day every year exactly one or more
years after: (i) the date the articles of organization filed
under Section 5-5 of this Act were filed by the Office of the
Secretary of State, in the case of a limited liability company;
or (ii) the date the application for admission to transact
business filed under Section 45-5 of this Act was filed by the
Office of the Secretary of State, in the case of a foreign
limited liability company.
    "Anniversary month" means the month in which the
anniversary of the limited liability company occurs.
    "Articles of organization" means the articles of
organization filed by the Secretary of State for the purpose of
forming a limited liability company as specified in Article 5
and all amendments thereto, whether evidenced by articles of
amendment, articles of merger, or a statement of correction
affecting the articles.
    "Assumed limited liability company name" means any limited
liability company name other than the true limited liability
company name, except that the identification by a limited
liability company of its business with a trademark or service
mark of which it is the owner or licensed user shall not
constitute the use of an assumed name under this Act.
    "Bankruptcy" means bankruptcy under the Federal Bankruptcy
Code of 1978, Title 11, Chapter 7 of the United States Code, as
amended from time to time, or any successor statute.
    "Business" includes every trade, occupation, profession,
and other lawful purpose, whether or not carried on for profit.
    "Company" means a limited liability company.
    "Contribution" means any cash, property, services
rendered, or other benefit, or a promissory note or other
binding obligation to contribute cash or property, perform
services, or provide any other benefit, that a person
contributes to the limited liability company in that person's
capacity as a member or in order to become a member.
    "Court" includes every court and judge having jurisdiction
in a case.
    "Debtor in bankruptcy" means a person who is the subject of
an order for relief under Title 11 of the United States Code, a
comparable order under a successor statute of general
application, or a comparable order under federal, state, or
foreign law governing insolvency.
    "Distribution" means a transfer of money, property, or
other benefit from a limited liability company to a member in
the member's capacity as a member or to a transferee of the
member's distributional interest.
    "Distributional interest" means a member's right to
receive distributions of the limited liability company's
assets, but no other rights or interests of a member.
    "Entity" means a person other than an individual.
    "Federal employer identification number" means either (i)
the federal employer identification number assigned by the
Internal Revenue Service to the limited liability company or
foreign limited liability company or (ii) in the case of a
limited liability company or foreign limited liability company
not required to have a federal employer identification number,
any other number that may be assigned by the Internal Revenue
Service for purposes of identification.
    "Foreign limited liability company" means an
unincorporated entity organized under laws other than the laws
of this State that afford limited liability to its owners
comparable to the liability under Section 10-10 and is not
required to register to transact business under any law of this
State other than this Act.
    "Insolvent" means that a limited liability company is
unable to pay its debts as they become due in the usual course
of its business.
    "Legal representative" means, without limitation, an
executor, administrator, guardian, personal representative and
agent, including an appointee under a power of attorney.
    "Limited liability company" means a limited liability
company organized under this Act.
    "L3C" or "low-profit limited liability company" means a
for-profit limited liability company which satisfies the
requirements of Section 1-26 of this Act and does not have as a
significant purpose the production of income or the
appreciation of property.
    "Manager" means a person, whether or not a member of a
manager-managed company, who is vested with authority in an
operating agreement as provided in Section 15-1.
    "Manager-managed company" means a limited liability
company that vests authority in a manager or managers in an
operating agreement as provided in Section 15-1.
    "Member" means a person who becomes a member of the limited
liability company upon formation of the company or in the
manner and at the time provided in the operating agreement or,
if the operating agreement does not so provide, in the manner
and at the time provided in this Act.
    "Member-managed company" means a limited liability company
other than a manager-managed company.
    "Membership interest" means all of a member's rights in the
limited liability company, including the member's right to
receive distributions of the limited liability company's
assets.
    "Operating agreement" means the agreement under Section
15-5, whether or not referred to as an operating agreement and
whether oral, in a record, implied, or in any combination
thereof, of all of the members of a limited liability company,
including a sole member, concerning the relations among the
members, managers, and limited liability company. The term
"operating agreement" includes amendments to the agreement.
    "Organizer" means one of the signers of the original
articles of organization.
    "Person" means an individual, partnership, domestic or
foreign limited partnership, limited liability company or
foreign limited liability company, trust, estate, association,
corporation, governmental body, or other juridical being.
    "Professional limited liability company" means a limited
liability company that provides professional services licensed
by the Department of Financial and Professional Regulation and
that is organized under the Professional Limited Liability
Company Act and this Act.
    "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and
is retrievable in perceivable form.
    "Registered office" means that office maintained by the
limited liability company in this State, the address, including
street, number, city and county, 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 limited liability company.
    "Registered agent" means a person who is an agent for
service of process on the limited liability company who is
appointed by the limited liability company and whose address is
the registered office of the limited liability company.
    "Restated articles of organization" means the articles of
organization restated as provided in Section 5-30.
    "Sign" means, with the present intent to authenticate or
adopt a record:
        (1) to execute or adopt a tangible symbol; or
        (2) to attach to or logically associate with the record
    an electronic symbol, sound, or process.
    "State" means a state, territory, or possession of the
United States, the District of Columbia, or the Commonwealth of
Puerto Rico.
    "Transfer" includes an assignment, conveyance, deed, bill
of sale, lease, mortgage, security interest, encumbrance, and
gift.
(Source: P.A. 99-637, eff. 7-1-17; 100-894, eff. 8-14-18.)
 
    (805 ILCS 180/1-40)
    Sec. 1-40. Records to be kept.
    (a) Each limited liability company shall keep at the
principal place of business of the company named in the
articles of organization or other reasonable locations
specified in the operating agreement all of the following:
        (1) A list of the full name and last known address of
    each member setting forth the amount of cash each member
    has contributed, a description and statement of the agreed
    value of the other property or services each member has
    contributed or has agreed to contribute in the future, and
    the date on which each became a member.
        (2) A copy of the articles of organization, as amended
    or restated, together with executed copies of any powers of
    attorney under which any articles, application, or
    certificate has been executed.
        (3) Copies of the limited liability company's federal,
    State, and local income tax returns and reports, if any,
    for the 3 most recent years.
        (4) Copies of any then effective written operating
    agreement and any amendments thereto and of any financial
    statements of the limited liability company for the 3 most
    recent years.
    (b) Records kept under this Section may be inspected and
copied at the request and expense of any member or legal
representative of a deceased member or member under legal
disability during ordinary business hours.
    (c) The rights under subsection (b) of this Section also
extend to a transferee of a distributional interest, but only
for a proper purpose. In order to exercise this right, a
transferee must make written demand upon the limited liability
company, stating with particularity the records sought to be
inspected and the purpose of the demand.
    (d) Within 10 days after receiving a demand pursuant to
subsection (c):
        (1) the company shall provide the information demanded
    or, in a record, a description of the information the
    company will provide, stating a reasonable time within
    which it will be provided and the place where it will be
    provided; and
        (2) if the company declines to provide any demanded
    information, the company shall state its reasons for
    declining to the transferee in a record.
    A transferee may exercise the rights under this subsection
through a legal representative.
    (e) If the company fails to comply with this Section, the
person making a request or demand may file an action to compel
the company to permit the inspection and copying and to obtain
such other legal or equitable relief as may be proper. If the
court finds that the company failed to comply with the
requirements of this Section and, in the case of subsection (c)
or (d), the company acted unreasonably, the court may award the
plaintiff its reasonable costs and attorney's fees incurred in
bringing and prosecuting the action.
(Source: P.A. 99-637, eff. 7-1-17.)
 
    (805 ILCS 180/10-1)
    Sec. 10-1. Admission of members.
    (a) A person becomes a member of a limited liability
company:
        (1) upon formation of the company, as provided in an
    agreement between the organizer and the initial member if
    there is only one member, or as provided in an agreement
    among initial members if there is more than one member;
        (2) after the formation of the company,
            (A) as provided in the operating agreement;
            (B) as the result of a transaction effective under
        Article 37;
            (C) with the consent of all the members; or
            (D) if, within 180 consecutive days after the
        company ceases to have any members:
                (i) the last person to have been a member, or
            the legal representative of that person,
            designates a person to become a member; and
                (ii) the designated person consents to become
            a member.
            More than one person may be designated to become a
        member under this clause (D).
    (b) A person that acquires a distributional interest, but
that does not become a member, has merely the rights of a
transferee under Sections 30-5 and 30-10.
    (c) A person may become a member without acquiring a
distributional interest and without making or being obligated
to make a contribution to the limited liability company.
(Source: P.A. 99-637, eff. 7-1-17.)
 
    (805 ILCS 180/10-10)
    Sec. 10-10. Liability of members and managers.
    (a) Except as otherwise provided in subsection (d) of this
Section, the debts, obligations, and liabilities of a limited
liability company, whether arising in contract, tort, or
otherwise, are solely the debts, obligations, and liabilities
of the company. A member or manager is not personally liable
for a debt, obligation, or liability of the company solely by
reason of being or acting as a member or manager.
    (a-5) Nothing in subsection (a) or subsection (d) limits
the personal liability of a member or manager imposed under law
other than this Act, including, but not limited to, agency,
contract, and tort law. The purpose of this subsection (a-5) is
to overrule the interpretation of subsections (a) and (d) set
forth in Dass v. Yale, 2013 IL App (1st) 122520, and Carollo v.
Irwin, 2011 IL App (1st) 102765, and clarify that under
existing law a member or manager of a limited liability company
may be liable under law other than this Act for its own
wrongful acts or omissions, even when acting or purporting to
act on behalf of a limited liability company. This subsection
is therefore intended to be applicable to actions with respect
to which all timely appeals have not exhausted before the
effective date of this amendatory Act of the 101st General
Assembly as well as to all actions commenced on or after the
effective date of this amendatory Act of the 101st General
Assembly.
    (b) (Blank).
    (c) The failure of a limited liability company to observe
the usual company formalities or requirements relating to the
exercise of its company powers or management of its business is
not a ground for imposing personal liability on the members or
managers for liabilities of the company.
    (d) All or specified members of a limited liability company
are liable in their capacity as members for all or specified
debts, obligations, or liabilities of the company if:
        (1) a provision to that effect is contained in the
    articles of organization; and
        (2) a member so liable has consented in writing to the
    adoption of the provision or to be bound by the provision.
(Source: P.A. 90-424, eff. 1-1-98.)
 
    (805 ILCS 180/10-15)
    Sec. 10-15. Right of members and dissociated members to
information.
    (a) A company shall furnish information when any member
demands it in a record concerning the company's activities,
financial condition, and other circumstances of the company's
business necessary to the proper exercise of a member's rights
and duties under the operating agreement or this Act or that is
otherwise material to the member's membership interest in the
company of a member, unless the company knows that the member
already knows that information.
    (b) The following rules apply when a member makes a demand
for information under this Section:
        (1) During regular business hours and at a reasonable
    location and time specified by the company, a member may
    obtain from the company, inspect, and copy information for
    a purpose consistent with subsection (a).
        (2) Within 10 days after receiving a demand pursuant to
    subsection (a):
            (A) the company shall provide the information
        demanded or, in a record, a description of the
        information the company will provide, stating a
        reasonable time within which it will be provided and
        the place where it will be provided; and
            (B) if the company declines to provide any demanded
        information, the company shall state its reasons for
        declining to the member in a record.
    (c) Whenever this Act or an operating agreement provides
for a member to give or withhold consent to a matter, before
the consent is given or withheld, the company shall, without
demand, provide the member with all information that is known
to the company that is material to the member's decision.
    (d) Within 10 days after a demand made in a record received
by the limited liability company, a dissociated member may have
access to information to which the person was entitled while a
member if the information pertains to the period during which
the person was a member, and the person seeks the information
in good faith for a purpose consistent with subsection (a). The
company shall respond to a demand made pursuant to this
subsection in the manner provided in subdivisions (A) and (B)
of paragraph (2) of subsection (b).
    (e) A limited liability company may charge a person that
makes a demand under this Section the reasonable costs of
copying, limited to the costs of labor and material.
    (f) A member or dissociated member may exercise rights
under this Section through an agent or, in the case of an
individual under legal disability, a legal representative. Any
restriction or condition imposed by the operating agreement or
under subsection (h) applies both to the agent or legal
representative and the member or dissociated member.
    (g) The rights under this Section do not extend to a person
as transferee.
    (h) In addition to any restriction or condition stated in
its operating agreement, the limited liability company, as a
matter within the ordinary course of its activities, may impose
reasonable restrictions and conditions on access to and use of
information to be furnished under this Section including, but
not limited to, the designation of information such as trade
secrets or information subject to confidentiality agreements
with third parties as confidential with appropriate
nondisclosure and safeguarding obligations. In a dispute
concerning the reasonableness of a restriction or designation
under this subsection, the company has the burden of proving
reasonableness.
    (i) This Section does not limit or restrict the right to
inspect and copy records as provided in subsection (b) of
Section 1-40.
    (j) If the company fails to provide any information
required to be provided by this Section, the person entitled to
the information may file an action to compel the company to
provide the information and to obtain such other legal or
equitable relief as may be proper. If the court finds that the
company failed to comply with the requirements of this Section,
the court may award the plaintiff its reasonable costs and
attorney's fees incurred in bringing and prosecuting the
action. The court may, in connection with any information
described in subsection (h), impose such restrictions and
conditions on access to and use of such information as it deems
appropriate based on the reasonable needs of the company and
the member in question.
(Source: P.A. 99-637, eff. 7-1-17.)
 
    (805 ILCS 180/13-15)
    Sec. 13-15. Statement of authority.
    (a) A limited liability company may deliver to the
Secretary of State for filing a statement of authority. The
statement shall be executed and filed in accordance with
Section 5-45 of this Act and:
        (1) must include the name of the company and the
    address of its principal place of business; and
        (2) may state the authority, or limitations on the
    authority, of any member or manager of the company or any
    other person to:
            (A) execute an instrument transferring real
        property held in the name of the company; or
            (B) enter into other transactions on behalf of, or
        otherwise act for or bind, the company.
    (b) To amend or cancel a statement of authority, a limited
liability company must deliver to the Secretary of State for
filing a statement of amendment or cancellation. The statement
shall be executed and filed in accordance with Section 5-45 of
this Act and must include:
        (1) the name of the limited liability company and the
    address of its principal place of business;
        (2) the date the statement of authority being amended
    or cancelled became effective; and
        (3) the contents of the amendment or a declaration that
    the statement of authority is canceled.
    (c) Except as otherwise provided in subsections (e) and
(f), a limitation on the authority of a member or manager of
the limited liability company contained in a statement of
authority is not by itself evidence of knowledge or notice of
the limitation by any person.
    (d) A grant of authority not pertaining to transfers of
real property and contained in a statement of authority is
conclusive in favor of a person that is not a member and that
gives value in reliance on the grant, except to the extent that
when the person gives value, the person has knowledge to the
contrary.
    (e) A certified copy of a statement of authority that
grants authority to transfer real property held in the name of
the limited liability company and that is recorded in the
office for recording transfers of the real property is
conclusive in favor of a person that is not a member and that
gives value in reliance on the grant without knowledge to the
contrary.
    (f) If a certified copy of a statement of authority
containing a limitation on the authority to transfer real
property held in the name of a limited liability company is
recorded in the office for recording transfers of that real
property, all persons that are not members are deemed to know
of the limitation.
    (g) Unless previously cancelled by a statement of
cancellation, a statement of authority expires as of the date,
if any, specified in the statement of authority.
    (h) If the articles of organization state the authority or
limitations on the authority of any person on behalf of a
company, the authority stated or limited shall not bind any
person who is not a member or manager until that person
receives actual notice in a record from the company that agency
authority is stated or limited in the articles. If the
authority stated or limited in the articles of organization
conflicts with authority stated or limited in a statement of
authority filed with the Secretary of State under this Section
on behalf of the company, the statement of authority is the
effective statement and a person who is not a member or manager
may rely upon the terms of the filed statement of authority
notwithstanding conflicting terms in the articles of
organization.
(Source: P.A. 99-637, eff. 7-1-17.)
 
    (805 ILCS 180/15-20)
    Sec. 15-20. Actions by members.
    (a) A member may maintain an action against a limited
liability company, a manager, or another member for legal or
equitable relief, with or without an accounting as to the
company's business, to enforce all of the following:
        (1) The member's rights under the operating agreement.
        (2) The member's rights under this Act.
        (3) The rights and otherwise protect the interests of
    the member, including rights and interests arising
    independently of the member's relationship to the company.
    (b) The accrual, and any time limited for the assertion, of
a right of action for a remedy under this Section is governed
by other law. A right to an accounting upon a dissolution and
winding up does not revive a claim barred by law.
(Source: P.A. 90-424, eff. 1-1-98.)
 
    (805 ILCS 180/30-1)
    Sec. 30-1. Member's distributional interest.
    (a) A member is not a co-owner of, and has no transferable
interest in, property of a limited liability company.
    (b) A distributional interest in a limited liability
company is personal property and, subject to Sections 30-5 and
30-10, may be transferred in whole or in part.
    (c) An operating agreement may provide that a
distributional interest may be evidenced by a certificate of
the interest issued by the limited liability company and,
subject to Section 30-10, may also provide for the transfer of
any interest represented by the certificate.
    (d) Except as provided in subsection (b), the rights,
powers, and interest of a member, including a member described
in subsection (c) of Section 10-1, may not be transferred
except in accordance with authority described in the operating
agreement or if all other members consent.
(Source: P.A. 90-424, eff. 1-1-98.)
 
    (805 ILCS 180/35-1)
    Sec. 35-1. Events causing dissolution and winding up of
company's business.
    (a) A limited liability company is dissolved and its
business must be wound up upon the occurrence of any of the
following events:
        (1) An event or circumstance that causes the
    dissolution of a company by the express terms of the
    operating agreement.
        (2) The consent of all members.
        (3) The passage of 180 consecutive days during which
    the company has no members.
        (4) On application by a member or a dissociated member,
    upon entry of a judicial decree that:
            (A) the economic purpose of the company has been or
        is likely to be unreasonably frustrated;
            (B) the conduct of all or substantially all of the
        company's activities is unlawful;
            (C) it is not otherwise reasonably practicable to
        carry on the company's business in conformity with the
        articles of organization and the operating agreement.
        (5) On application by a member or transferee of a
    distributional interest, upon entry of a judicial decree
    that the managers or those members in control of the
    company:
            (A) have acted, are acting, or will act in a manner
        that is illegal or fraudulent; or
            (B) have acted or are acting in a manner that is
        oppressive and was, is, or will be directly harmful to
        the applicant.
        (6) Administrative dissolution under Section 35-25.
    (b) In a proceeding under subdivision (4) or (5) of
subsection (a), the court may order a remedy other than
dissolution including, but not limited to, a buyout of the
applicant's distributional membership interest.
(Source: P.A. 99-637, eff. 7-1-17.)
 
    (805 ILCS 180/35-45)
    Sec. 35-45. Events causing member's dissociation. A member
is dissociated from a limited liability company upon the
occurrence of any of the following events:
        (1) The company's having notice of the member's express
    will to dissociate withdraw upon the date of notice or on a
    later date specified by the member.
        (2) An event agreed to in the operating agreement as
    causing the member's dissociation.
        (3) Upon transfer of all of a member's distributional
    interest, other than a transfer for security purposes or a
    court order charging the member's distributional interest
    that has not been foreclosed.
        (4) The member's expulsion pursuant to the operating
    agreement.
        (5) The member's expulsion by unanimous vote of the
    other members if:
            (A) it is unlawful to carry on the company's
        business with the member;
            (B) there has been a transfer of substantially all
        of the member's distributional interest, other than a
        transfer for security purposes or a court order
        charging the member's distributional interest that has
        not been foreclosed;
            (C) within 90 days after the company notifies a
        corporate member that it will be expelled because it
        has filed a certificate of dissolution or the
        equivalent, its charter has been revoked, or its right
        to conduct business has been suspended by the
        jurisdiction of its incorporation, the member fails to
        obtain a revocation of the certificate of dissolution
        or a reinstatement of its charter or its right to
        conduct business; or
            (D) a partnership or a limited liability company
        that is a member has been dissolved and its business is
        being wound up.
        (6) On application by the company or another member,
    the member's expulsion by judicial determination because
    the member:
            (A) engaged in wrongful conduct that adversely and
        materially affected the company's business;
            (B) willfully or persistently committed a material
        breach of the operating agreement or of a duty owed to
        the company or the other members under Section 15-3; or
            (C) engaged in conduct relating to the company's
        business that makes it not reasonably practicable to
        carry on the business with the member.
        (7) The member's:
            (A) becoming a debtor in bankruptcy;
            (B) executing an assignment for the benefit of
        creditors;
            (C) seeking, consenting to, or acquiescing in the
        appointment of a trustee, receiver, or liquidator of
        the member or of all or substantially all of the
        member's property; or
            (D) failing, within 90 days after the appointment,
        to have vacated or stayed the appointment of a trustee,
        receiver, or liquidator of the member or of all or
        substantially all of the member's property obtained
        without the member's consent or acquiescence, or
        failing within 90 days after the expiration of a stay
        to have the appointment vacated.
        (8) In the case of a member who is an individual:
            (A) the member's death;
            (B) the appointment of a guardian or general
        conservator for the member; or
            (C) a judicial determination that the member has
        otherwise become incapable of performing the member's
        duties under the operating agreement.
        (9) In the case of a member that is a trust or is
    acting as a member by virtue of being a trustee of a trust,
    distribution of the trust's entire rights to receive
    distributions from the company, but not merely by reason of
    the substitution of a successor trustee.
        (10) In the case of a member that is an estate or is
    acting as a member by virtue of being a personal
    representative of an estate, distribution of the estate's
    entire rights to receive distributions from the company,
    but not merely the substitution of a successor personal
    representative.
        (11) Termination of the existence of a member if the
    member is not an individual, estate, or trust other than a
    business trust.
        (12) In the case of a company that participates in a
    merger under Article 37, if:
            (A) the company is not the surviving entity; or
            (B) otherwise as a result of the merger, the person
        ceases to be a member.
        (13) The company participates in a conversion under the
    Entity Omnibus Act.
        (14) The company participates in a domestication under
    the Entity Omnibus Act, if, as a result, the person ceases
    to be a member.
(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)

Effective Date: 1/1/2020