Public Act 094-0889
 
HB5376 Enrolled LRB094 18006 LCT 53310 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 Sections 6.15, 8.75, 11.70, and 12.56 as follows:
 
    (805 ILCS 5/6.15)  (from Ch. 32, par. 6.15)
    Sec. 6.15. Issuance of fractional shares or scrip. A
corporation may, but shall not be obliged to, issue a
certificate for a fractional share, and, by action of its board
of directors, may in lieu thereof, pay cash equal to the fair
value of said fractional share, or issue scrip in registered or
bearer form which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip
aggregating a full share. A certificate for a fractional share
shall, but scrip shall not unless otherwise provided therein,
entitle the holder to exercise fractional voting rights, to
receive dividends thereon and to participate in any of the
assets of the corporation in the event of liquidation. The
board of directors may cause such scrip to be issued subject to
the condition that it shall become void if not exchanged for
certificates representing full shares before a specified date,
or subject to the condition that the shares for which such
scrip is exchangeable may be sold by the corporation or by an
agent on behalf of the holder thereof and the proceeds thereof
distributed to the holders of such scrip or subject to any
other conditions which the board of directors may deem
advisable.
    For purposes of this Section, "fair value", with respect to
the cashout of a fractional share, means the proportionate
interest of the fractional share in the corporation, without
any discount for minority status or, absent extraordinary
circumstance, lack of marketability.
(Source: P.A. 83-1025.)
 
    (805 ILCS 5/8.75)  (from Ch. 32, par. 8.75)
    Sec. 8.75. Indemnification of officers, directors,
employees and agents; insurance.
    (a) A corporation may indemnify any person who was or is a
party, or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an
action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or
agent of the corporation, or who is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person
acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in
good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the
corporation or, with respect to any criminal action or
proceeding, that the person had reasonable cause to believe
that his or her conduct was unlawful.
    (b) A corporation may indemnify any person who was or is a
party, or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that such person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such
action or suit, if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed
to, the best interests of the corporation, provided that no
indemnification shall be made with respect to any claim, issue,
or matter as to which such person has been adjudged to have
been liable to the corporation, unless, and only to the extent
that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper.
    (c) To the extent that a present or former director,
officer or employee of a corporation has been successful, on
the merits or otherwise, in the defense of any action, suit or
proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in
connection therewith, if the person acted in good faith and in
a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the corporation.
    (d) Any indemnification under subsections (a) and (b)
(unless ordered by a court) shall be made by the corporation
only as authorized in the specific case, upon a determination
that indemnification of the present or former director,
officer, employee or agent is proper in the circumstances
because he or she has met the applicable standard of conduct
set forth in subsections (a) or (b). Such determination shall
be made with respect to a person who is a director or officer
at the time of the determination: (1) by the majority vote of
the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, (2) by a committee
of the directors who are not parties to such action, suit, or
proceeding, even though less than a quorum, designated by a
majority vote of the directors, even though less than a quorum,
(3) if there are no such directors, or if the directors so
direct, by independent legal counsel in a written opinion, or
(4) by the shareholders.
    (e) Expenses (including attorney's fees) incurred by an
officer or director in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified
by the corporation as authorized in this Section. Such expenses
(including attorney's fees) incurred by former directors and
officers or other employees and agents may be so paid on such
terms and conditions, if any, as the corporation deems
appropriate.
    (f) The indemnification and advancement of expenses
provided by or granted under the other subsections of this
Section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any by-law, agreement, vote of
shareholders or disinterested directors, or otherwise, both as
to action in his or her official capacity and as to action in
another capacity while holding such office.
    (g) A corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer,
employee or agent of the corporation, or who is or was serving
at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to
indemnify such person against such liability under the
provisions of this Section.
    (h) If a corporation indemnifies or advances expenses to a
director or officer under subsection (b) of this Section, the
corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the
next shareholders meeting.
    (i) For purposes of this Section, references to "the
corporation" shall include, in addition to the surviving
corporation, any merging corporation (including any
corporation having merged with a merging corporation) absorbed
in a merger which, if its separate existence had continued,
would have had the power and authority to indemnify its
directors, officers, and employees or agents, so that any
person who was a director, officer, employee or agent of such
merging corporation, or was serving at the request of such
merging corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the
provisions of this Section with respect to the surviving
corporation as such person would have with respect to such
merging corporation if its separate existence had continued.
    (j) For purposes of this Section, references to "other
enterprises" shall include employee benefit plans; references
to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by
such director, officer, employee, or agent with respect to an
employee benefit plan, its participants, or beneficiaries. A
person who acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interest of the corporation" as referred to in this
Section.
    (k) The indemnification and advancement of expenses
provided by or granted under this Section shall, unless
otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors,
and administrators of that person.
    (l) The changes to this Section made by this amendatory Act
of the 92nd General Assembly apply only to actions commenced on
or after the effective date of this amendatory Act of the 92nd
General Assembly.
(Source: P.A. 91-464, eff. 1-1-00; 92-33, eff. 7-1-01.)
 
    (805 ILCS 5/11.70)  (from Ch. 32, par. 11.70)
    Sec. 11.70. Procedure to Dissent.
    (a) If the corporate action giving rise to the right to
dissent is to be approved at a meeting of shareholders, the
notice of meeting shall inform the shareholders of their right
to dissent and the procedure to dissent. If, prior to the
meeting, the corporation furnishes to the shareholders
material information with respect to the transaction that will
objectively enable a shareholder to vote on the transaction and
to determine whether or not to exercise dissenters' rights, a
shareholder may assert dissenters' rights only if the
shareholder delivers to the corporation before the vote is
taken a written demand for payment for his or her shares if the
proposed action is consummated, and the shareholder does not
vote in favor of the proposed action.
    (b) If the corporate action giving rise to the right to
dissent is not to be approved at a meeting of shareholders, the
notice to shareholders describing the action taken under
Section 11.30 or Section 7.10 shall inform the shareholders of
their right to dissent and the procedure to dissent. If, prior
to or concurrently with the notice, the corporation furnishes
to the shareholders material information with respect to the
transaction that will objectively enable a shareholder to
determine whether or not to exercise dissenters' rights, a
shareholder may assert dissenter's rights only if he or she
delivers to the corporation within 30 days from the date of
mailing the notice a written demand for payment for his or her
shares.
    (c) Within 10 days after the date on which the corporate
action giving rise to the right to dissent is effective or 30
days after the shareholder delivers to the corporation the
written demand for payment, whichever is later, the corporation
shall send each shareholder who has delivered a written demand
for payment a statement setting forth the opinion of the
corporation as to the estimated fair value of the shares, the
corporation's latest balance sheet as of the end of a fiscal
year ending not earlier than 16 months before the delivery of
the statement, together with the statement of income for that
year and the latest available interim financial statements, and
either a commitment to pay for the shares of the dissenting
shareholder at the estimated fair value thereof upon
transmittal to the corporation of the certificate or
certificates, or other evidence of ownership, with respect to
the shares, or instructions to the dissenting shareholder to
sell his or her shares within 10 days after delivery of the
corporation's statement to the shareholder. The corporation
may instruct the shareholder to sell only if there is a public
market for the shares at which the shares may be readily sold.
If the shareholder does not sell within that 10 day period
after being so instructed by the corporation, for purposes of
this Section the shareholder shall be deemed to have sold his
or her shares at the average closing price of the shares, if
listed on a national exchange, or the average of the bid and
asked price with respect to the shares quoted by a principal
market maker, if not listed on a national exchange, during that
10 day period.
    (d) A shareholder who makes written demand for payment
under this Section retains all other rights of a shareholder
until those rights are cancelled or modified by the
consummation of the proposed corporate action. Upon
consummation of that action, the corporation shall pay to each
dissenter who transmits to the corporation the certificate or
other evidence of ownership of the shares the amount the
corporation estimates to be the fair value of the shares, plus
accrued interest, accompanied by a written explanation of how
the interest was calculated.
    (e) If the shareholder does not agree with the opinion of
the corporation as to the estimated fair value of the shares or
the amount of interest due, the shareholder, within 30 days
from the delivery of the corporation's statement of value,
shall notify the corporation in writing of the shareholder's
estimated fair value and amount of interest due and demand
payment for the difference between the shareholder's estimate
of fair value and interest due and the amount of the payment by
the corporation or the proceeds of sale by the shareholder,
whichever is applicable because of the procedure for which the
corporation opted pursuant to subsection (c).
    (f) If, within 60 days from delivery to the corporation of
the shareholder notification of estimate of fair value of the
shares and interest due, the corporation and the dissenting
shareholder have not agreed in writing upon the fair value of
the shares and interest due, the corporation shall either pay
the difference in value demanded by the shareholder, with
interest, or file a petition in the circuit court of the county
in which either the registered office or the principal office
of the corporation is located, requesting the court to
determine the fair value of the shares and interest due. The
corporation shall make all dissenters, whether or not residents
of this State, whose demands remain unsettled parties to the
proceeding as an action against their shares and all parties
shall be served with a copy of the petition. Nonresidents may
be served by registered or certified mail or by publication as
provided by law. Failure of the corporation to commence an
action pursuant to this Section shall not limit or affect the
right of the dissenting shareholders to otherwise commence an
action as permitted by law.
    (g) The jurisdiction of the court in which the proceeding
is commenced under subsection (f) by a corporation is plenary
and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the power described
in the order appointing them, or in any amendment to it.
    (h) Each dissenter made a party to the proceeding is
entitled to judgment for the amount, if any, by which the court
finds that the fair value of his or her shares, plus interest,
exceeds the amount paid by the corporation or the proceeds of
sale by the shareholder, whichever amount is applicable.
    (i) The court, in a proceeding commenced under subsection
(f), shall determine all costs of the proceeding, including the
reasonable compensation and expenses of the appraisers, if any,
appointed by the court under subsection (g), but shall exclude
the fees and expenses of counsel and experts for the respective
parties. If the fair value of the shares as determined by the
court materially exceeds the amount which the corporation
estimated to be the fair value of the shares or if no estimate
was made in accordance with subsection (c), then all or any
part of the costs may be assessed against the corporation. If
the amount which any dissenter estimated to be the fair value
of the shares materially exceeds the fair value of the shares
as determined by the court, then all or any part of the costs
may be assessed against that dissenter. The court may also
assess the fees and expenses of counsel and experts for the
respective parties, in amounts the court finds equitable, as
follows:
        (1) Against the corporation and in favor of any or all
    dissenters if the court finds that the corporation did not
    substantially comply with the requirements of subsections
    (a), (b), (c), (d), or (f).
        (2) Against either the corporation or a dissenter and
    in favor of any other party if the court finds that the
    party against whom the fees and expenses are assessed acted
    arbitrarily, vexatiously, or not in good faith with respect
    to the rights provided by this Section.
    If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters
similarly situated and that the fees for those services should
not be assessed against the corporation, the court may award to
that counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who are benefited. Except as
otherwise provided in this Section, the practice, procedure,
judgment and costs shall be governed by the Code of Civil
Procedure.
    (j) As used in this Section:
        (1) "Fair value", with respect to a dissenter's shares,
    means the proportionate interest of the shareholder in the
    corporation, without discount for minority status or,
    absent extraordinary circumstance, lack of marketability,
    value of the shares immediately before the consummation of
    the corporate action to which the dissenter objects
    excluding any appreciation or depreciation in anticipation
    of the corporate action, unless exclusion would be
    inequitable.
        (2) "Interest" means interest from the effective date
    of the corporate action until the date of payment, at the
    average rate currently paid by the corporation on its
    principal bank loans or, if none, at a rate that is fair
    and equitable under all the circumstances.
(Source: P.A. 86-1156.)
 
    (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.
    For purposes of this subsection (e), "fair value", with
respect to a petitioning shareholder's shares, means the
proportionate interest of the shareholder in the corporation,
without any discount for minority status or, absent
extraordinary circumstances, lack of marketability.
    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 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. 94-394, eff. 8-1-05.)