HB3577eng 102ND GENERAL ASSEMBLY

HB3577 Engrossed LRB102 13245 JLS 18589 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 Worker Cooperative Association Act is amended by changing Sections 25, 35, and 60 and by adding Sections 12, 16, 21, 22, 36, 37, 61, 62, and 63 as follows:

(805 ILCS 317/12 new)

Sec. 12. Powers of Secretary of State and rulemaking.

(a) The Secretary of State shall have the power and authority reasonably necessary to administer this Act efficiently and to perform the duties imposed in this Act. The Secretary of State's function under this Act is to be a central depository for the articles of organization and applications for admission required by this Act and to record the assumed names used by limited worker cooperative associations.

(b) The Secretary of State shall have the power and authority to adopt rules, in accordance with the Illinois Administrative Procedure Act, necessary to administer this Act efficiently and to perform the duties imposed in this Act.

(805 ILCS 317/16 new)

Sec. 16. Application of the Limited Liability Company Act. The Limited Liability Company Act applies to limited worker cooperative associations, and they shall enjoy the powers and privileges and be subject to the duties, restrictions, and liabilities of limited liability companies, except where inconsistent with the letter and purpose of this Act. This Act shall take precedence in the event of any conflict with the provisions of the Limited Liability Company Act or other laws.

(805 ILCS 317/21 new)

Sec. 21. Limited worker cooperative association; name.

(a) The name of each limited worker cooperative association organized, existing, or subject to the provisions of this Act:

(1) shall contain the terms "Limited Worker Cooperative Association", "LWCA", or "L.W.C.A.".

(2) may not contain a word or phrase, or an abbreviation or derivation thereof, the use of which is prohibited or restricted by any other statute of this State unless the restriction has been complied with;

(3) shall consist of letters of the English alphabet, Arabic or Roman numerals, or symbols capable of being readily reproduced by the Office of the Secretary of State;

(4) shall not contain any of the following terms: "Corporation", "Corp.", "Incorporated", "Inc.", "Ltd.", "Co.", "LLC", "Limited Partnership", or "L.P.";

(5) shall be the name under which the limited worker cooperative association transacts business in this State unless the limited worker cooperative association also elects to adopt an assumed name or names as provided in this Act; however, the limited worker cooperative association may use any divisional designation or trade name without complying with the requirements of this Act if the limited worker cooperative association also clearly discloses its name;

(6) shall not contain any word or phrase that indicates or implies that the limited worker cooperative association is authorized or empowered to be in the business of a corporate fiduciary unless otherwise permitted by the Secretary of Financial and Professional Regulation under Section 1-9 of the Corporate Fiduciary Act. The word "trust", "trustee", or "fiduciary" may be used by a limited worker cooperative association only if it has first complied with Section 1-9 of the Corporate Fiduciary Act; and

(7) shall contain the word "trust", if it is a limited worker cooperative association organized for the purpose of accepting and executing trusts.

(b) Nothing in this Act shall abrogate or limit the common law or statutory law of unfair competition or unfair trade practices, nor derogate from the common law or principles of equity or the statutes of this State or of the United States of America with respect to the right to acquire and protect copyrights, trade names, trademarks, service marks, service names, or any other right to the exclusive use of names or symbols.

(c) The name shall be distinguishable upon the records in the Office of the Secretary of State from the name of all of the following:

(1) Any limited worker cooperative that has articles of organization filed with the Secretary of State.

(2) Any limited liability company that has articles of organization filed with the Secretary of State under Section 5-5 of the Limited Liability Company Act.

(3) Any foreign limited liability company admitted to transact business in this State.

(4) Any name for which an exclusive right has been reserved in the Office of the Secretary of State under Section 1-15 of the Limited Liability Company Act.

(5) Any assumed name that is registered with the Secretary of State under Section 1-20 of the Limited Liability Company Act.

(6) Any corporate name or assumed corporate name of a domestic or foreign corporation subject to the provisions of Section 4.05 of the Business Corporation Act of 1983 or Section 104.05 of the General Not For Profit Corporation Act of 1986.

(d) Subsection (c) of this Section shall not apply if the organizer files with the Secretary of State a certified copy of a final judgment of a court establishing the prior right of the applicant to the use of that name in this State.

(e) The Secretary of State shall determine whether a name is distinguishable from another name for the purposes of this Act. Without excluding other names that may not constitute distinguishable names in this State, a name is not considered distinguishable, for purposes of this Act, solely because it contains one or more of the following:

(1) The word "limited", "worker", "cooperative", or "association" or an abbreviation of one of those words.

(2) Articles, conjunctions, contractions, abbreviations, or different tenses or number of the same word.

(805 ILCS 317/22 new)

Sec. 22. Forms, execution, acknowledgment, and filing.

(a) All reports required by this Act to be filed in the Office of the Secretary of State shall be made on forms prescribed and furnished by the Secretary of State. Forms for all other documents to be filed in the Office of the Secretary of State shall be furnished by the Secretary of State upon request.

(b) Whenever any provision of this Act specifically requires any document to be executed by the limited worker cooperative association in accordance with this Section, unless otherwise specifically stated in this Act and subject to any additional provisions of this Act, the document shall be signed as follows:

(1) The initial articles of organization shall be signed by the organizer or organizers.

(2) A document filed on behalf of a dissolved limited worker cooperative association that has no members must be signed by the person winding up the association's activities under Section 35-4 of the Limited Liability Company Act.

(3) Any other document must be signed by a person authorized by the limited worker cooperative association to sign it.

(c) The name of a person signing the document and the capacity in which the person signs shall be stated beneath or opposite the person's signature.

(d) The execution of any document required by this Act by a person constitutes an affirmation under the penalties of perjury that the facts stated therein are true and that the person has authority to execute the document.

(e) When filed in the Office of the Secretary of State, an authorization, including a power of attorney, to sign a record must be in writing, then sworn to, verified, or acknowledged.

(805 ILCS 317/25)

Sec. 25. Articles of organization. (a) The articles of organization of a limited worker cooperative association shall state:

(1) the domestic entity name of the limited worker cooperative association;

(2) the purposes for which the limited worker cooperative association is formed, which may be for any lawful purpose;

(3) the registered agent name and registered agent address of the association's initial registered agent;

(4) the street address and, if different, mailing address of the association's initial principal office;

(5) the true name and street address and, if different, mailing address of each organizer; and

(6) any other provision, not inconsistent with law, that the worker-members, members, or organizers elect to set out in the articles for the regulation of the internal affairs of the worker cooperative, including any provisions that, under this Act, are required or permitted to be set out in the cooperative agreement; and bylaws of the worker cooperative.

(7) a statement that the association is a worker cooperative or a collective worker cooperative, if applicable.

(b) A limited worker cooperative association is organized at the time the articles of organization are filed by the Secretary of State or at any later time, not more than 60 days after the filing of the articles of organization, specified in the articles of organization.

(Source: P.A. 101-292, eff. 1-1-20; revised 9-4-20.)

(805 ILCS 317/35)

Sec. 35. Cooperative agreement Bylaws.

(a) A cooperative agreement Bylaws shall include:

(1) a statement of the capital structure of the limited worker cooperative association;

(2) the classes or other types of members' interests and the relative rights, preferences, privileges, and restrictions granted to or imposed upon each class or other type of member's interest, including:

(A) a statement concerning the manner in which profits and losses are allocated and distributions are made among members and, if community investors are authorized, the manner in which profits and losses are allocated and how distributions are made among investor members and between members and community investors;

(B) a statement designating voting and other governance rights of each class or other type of members' interests and, if relevant, community investors, including which members have voting power and any restriction on voting power;

(3) a statement of the method for admission of members;

(4) a statement that a member's interest is transferable, if it is to be transferable, and a statement of the conditions upon which it may be transferred;

(5) a statement concerning:

(A) whether persons that are not members but conduct business with the association may be permitted to share in allocations of profits and losses and receive distributions; and

(B) the manner in which profits and losses are allocated and distributions are made with respect to those persons; and

(6) a statement of the number and terms of directors or the method by which the number and terms are determined; and

(7) a statement addressing members' contributions.

(b) A cooperative agreement Bylaws may contain any other provision for managing and regulating the affairs of the association.

(c) The cooperative agreement may not:

(1) unreasonably restrict a right to information or access to records available under Section 1-40 or Section 10-15 of the Limited Liability Company Act;

(2) vary the right to expel a member in an event specified in subdivision (6) of Section 35-45 of the Limited Liability Company Act;

(3) vary the requirement to wind up the limited worker cooperative association's business in a case specified in subdivision (4), (5), or (6) of subsection (a) of Section 35-1 of the Limited Liability Company Act;

(4) restrict rights of a person, other than a director, member, and transferee of a member's distributional interest, under this Act;

(5) restrict the power of a member to dissociate under Section 35-50 of the Limited Liability Company Act, although a cooperative agreement may determine whether a dissociation is wrongful under Section 35-50 of the Limited Liability Company Act;

(6) eliminate or reduce the obligation of good faith and fair dealing under subsection (d) of Section 15-3 of the Limited Liability Company Act, but the cooperative agreement may determine the standards by which the performance of the member's duties or the exercise of the member's rights is to be measured;

(7) eliminate, vary, or restrict the priority of a statement of authority over provisions in the articles of organization as provided in subsection (h) of Section 13-15 of the Limited Liability Company Act;

(8) vary the law applicable under Section 1-65 of the Limited Liability Company Act;

(9) vary the power of the court under Section 5-50 of the Limited Liability Company Act; or

(10) restrict the right to approve a merger, conversion, or domestication under Article 37 of the Limited Liability Company Act or the Entity Omnibus Act of a member that will have personal liability with respect to a surviving, converted, or domesticated organization.

(d) The cooperative agreement may:

(1) restrict or eliminate a fiduciary duty, other than the duty of care described in subsection (c) of Section 15-3 of the Limited Liability Company Act, but only to the extent the restriction or elimination in the cooperative agreement is clear and unambiguous;

(2) identify specific types or categories of activities that do not violate any fiduciary duty; and

(3) alter the duty of care, except to authorize intentional misconduct or knowing violation of law.

(e) The cooperative agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.

(f) The cooperative agreement may alter or eliminate the right to payment or reimbursement for a member or director provided by Section 15-7 of the Limited Liability Company Act and may eliminate or limit a member's or director's liability to the limited worker cooperative association and members for money damages, except for:

(1) subject to subsections (d) and (e) of this Section, breach of the duties as required in subdivisions (1), (2), and (3) of subsection (b) of Section 15-3 of the Limited Liability Company Act;

(2) a financial benefit received by the member or director to which the member or director is not entitled;

(3) a breach of a duty under Section 25-35 of the Limited Liability Company Act;

(4) intentional infliction of harm on the association or a member; or

(5) an intentional violation of criminal law.

(g) A limited worker cooperative association is bound by and may enforce the cooperative agreement, whether or not the association has itself manifested assent to the cooperative agreement.

(h) A person that becomes a member of a limited worker cooperative association is deemed to assent to the cooperative agreement.

(i) A cooperative agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of the filing, may be made effective as of the time of formation of the limited worker cooperative association or as of the time or date provided in the cooperative agreement.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/36 new)

Sec. 36. Annual reports.

(a) A limited worker cooperative association organized under the laws of this State shall file, within the time prescribed by this Act, an annual report setting forth all of the following:

(1) The name of the limited worker cooperative association.

(2) The address, including street and number or rural route number, of its registered office in this State and the name of its registered agent at that address.

(3) The address, including street and number or rural route number of its principal place of business.

(4) The name and business address of all of the directors and any member having the authority of a director.

(5) Additional information that may be necessary or appropriate in order to enable the Secretary of State to administer this Act and to verify the proper amount of fees payable by the limited worker cooperative association.

The annual report shall be made on forms prescribed and furnished by the Secretary of State, and the information therein required by paragraphs (1) through (4) of this subsection (a), both inclusive, shall be given as of the date of execution of the annual report. The annual report shall be executed by a director or, if none, a member designated by the members pursuant to limited worker cooperative association action properly taken under Section 15-1 of the Limited Liability Company Act.

(b) The annual report, together with all fees and charges prescribed by this Act, shall be delivered to the Secretary of State within 60 days immediately preceding the first day of the anniversary month. Proof to the satisfaction of the Secretary of State that, before the first day of the anniversary month of the limited worker cooperative association, the report, together with all fees and charges as prescribed by this Act, was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, shall be deemed a compliance with this requirement. If the Secretary of State finds that the report conforms to the requirements of this Act, he or she shall file it. If the Secretary of State finds that it does not so conform, he or she shall promptly return it to the limited worker cooperative association for any necessary corrections, in which event the penalties prescribed for failure to file the report within the time provided shall not apply if the report is corrected to conform to the requirements of this Act and returned to the Secretary of State within 60 days of the original due date of the report.

(805 ILCS 317/37 new)

Sec. 37. Fees.

(a) The Secretary of State shall charge and collect in accordance with the provisions of this Act and rules adopted under its authority all of the following:

(1) Fees for filing documents.

(2) Miscellaneous charges.

(3) Fees for the sale of lists of filings and for copies of any documents.

(b) The Secretary of State shall charge and collect for all of the following:

(1) Filing articles of organization, $150.

(2) Filing amendments, $50.

(3) Filing a statement of termination, $5.

(4) Filing an application for use of an assumed name, the amount under the fee schedule in Section 50-10 of the Limited Liability Company Act.

(5) Filing an application for change of assumed name, $25.

(6) Filing an application for cancellation of an assumed name, $5.

(7) Filing an annual report of a limited worker cooperative association, $75, if filed as required by this Act, plus a penalty if delinquent.

(8) Filing an application for reinstatement of a limited worker cooperative association, $200.

(9) Filing articles of merger, $100 plus $50 for each party to the merger in excess of the first 2 parties.

(10) Filing a statement of change of address of registered office or change of registered agent, or both, $25.

(11) Filing, amending, or cancelling a statement of authority, $50.

(12) Filing, amending, or cancelling a statement of denial, $10.

(c) The Secretary of State shall charge and collect for furnishing a copy or certified copy of any document, instrument, or paper relating to a limited worker cooperative association, $25.

(805 ILCS 317/60)

Sec. 60. Dissolution and termination. A limited worker cooperative association may be dissolved only by either (1) a two-thirds vote of the assembly, or (2) a majority vote of the assembly as of a supermajority threshold stated in the cooperative agreement, or (3) administratively bylaws that is more than two-thirds. The vote shall be in accordance with Section 55, and upon dissolution of its business and activities must be wound up and terminated in the manner provided under the Limited Liability Company Act for a limited liability company.

(Source: P.A. 101-292, eff. 1-1-20.)

(805 ILCS 317/61 new)

Sec. 61. Grounds for administrative dissolution. The Secretary of State may dissolve any limited worker cooperative association administratively if:

(1) it has failed to file its annual report and pay its fee as required by this Act before the first day of the anniversary month or has failed to pay any required fees, penalties, or charges;

(2) it has failed to file in the Office of the Secretary of State any report after the expiration of the period prescribed for filing the report;

(3) it has misrepresented any material matter in any application, report, affidavit, or other document submitted by the limited worker cooperative association;

(4) it has failed to appoint and maintain a registered agent in Illinois;

(5) a director or member to whom interrogatories have been propounded by the Secretary of State as provided in Section 5-60 of the Limited Liability Company Act fails to answer the interrogatories fully and to timely file the answer in the Office of the Secretary of State; or

(6) it has tendered payment to the Secretary of State which is returned due to insufficient funds, a closed account, or for any other reason, and acceptable payment has not been subsequently tendered.

(805 ILCS 317/62 new)

Sec. 62. Procedure for administrative dissolution.

(a) After the Secretary of State determines that one or more grounds, as set forth in Section 35-25 of the Limited Liability Company Act, exist for the administrative dissolution of a limited worker cooperative association, the Secretary of State shall send a notice of delinquency by regular mail to the delinquent limited worker cooperative association at its registered office or, if the limited worker cooperative association has failed to maintain a registered office, then to the last known address shown on the records of the Secretary of State for the principal place of business of the limited worker cooperative association.

(b) If the limited worker cooperative association does not correct the default described in paragraph (1) or (2) of Section 35-25 of the Limited Liability Company Act within 120 days following the date of the notice of delinquency, the Secretary of State shall thereupon dissolve the limited worker cooperative association by issuing a certificate of dissolution that recites the grounds for dissolution and its effective date. If the limited worker cooperative association does not correct the default described in paragraph (2.5), (3), (4), or (5) of Section 35-25 of the Limited Liability Company Act within 60 days following the notice, the Secretary of State shall dissolve the limited worker cooperative association by issuing a certificate of dissolution that recites the grounds for dissolution and its effective date. The Secretary of State shall file the original of the certificate in his or her office and mail one copy to the limited worker cooperative association at its registered office or, if the limited worker cooperative association has failed to maintain a registered office, then to the last known address shown on the records of the Secretary of State for the principal place of business of the limited worker cooperative association.

(c) Upon the administrative dissolution of a limited worker cooperative association, a dissolved limited worker cooperative association shall continue for only the purpose of winding up its business. A dissolved limited worker cooperative association may take all action authorized under Section 1-30 of the Limited Liability Company Act or otherwise necessary or appropriate to wind up its business and affairs and terminate.

(805 ILCS 317/63 new)

Sec. 63. Reinstatement following dissolution or termination.

(a) A limited worker cooperative association dissolved or terminated under Section 60 may be reinstated by the Secretary of State following the date of issuance of the notice of dissolution or statement of termination upon:

(1) The filing of an application for reinstatement.

(2) The filing with the Secretary of State by the limited worker cooperative association of all reports then due and theretofore becoming due.

(3) The payment to the Secretary of State by the limited worker cooperative association of all fees and penalties then due and theretofore becoming due.

(b) The application for reinstatement shall be executed and filed in duplicate in accordance with Section 25 of this Act and shall set forth all of the following:

(1) The name of the limited worker cooperative association at the time of the issuance of the notice of dissolution or statement of termination.

(2) If the name is not available for use as determined by the Secretary of State at the time of filing the application for reinstatement, the name of the limited worker cooperative association as changed, provided that any change of name is properly effected under Section 1-10 and Section 5-25 of the Limited Liability Company Act.

(3) The date of issuance of the notice of dissolution or statement of termination.

(4) The address, including street and number or rural route number of the registered office of the limited worker cooperative association upon reinstatement thereof and the name of its registered agent at that address upon the reinstatement of the limited worker cooperative association, provided that any change from either the registered office or the registered agent at the time of dissolution is properly reported under Section 1-35 of the Limited Liability Company Act.

(c) When a dissolved or terminated limited worker cooperative association has complied with the provisions of the Section, the Secretary of State shall file the application for reinstatement.

(d) Upon the filing of the application for reinstatement, the limited worker cooperative association existence shall be deemed to have continued without interruption from the date of the issuance of the notice of dissolution or statement of termination. The limited worker cooperative association shall stand revived with the powers, duties, and obligations as if it had not been dissolved or terminated. All acts and proceedings of its members, directors, officers, employees, and agents, acting or purporting to act in that capacity, and which would have been legal and valid but for the dissolution or termination, shall stand ratified and confirmed.

(e) Without limiting the generality of subsection (d), upon the filing of the application for reinstatement, no member, director, or officer shall be personally liable for the debts and liabilities of the limited worker cooperative association incurred during the period of dissolution or termination by reason of the fact that the limited worker cooperative association was dissolved or terminated at the time the debts or liabilities were incurred.