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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Business Corporation Act of 1983 is amended | |||||||||||||||||||||
5 | by changing Section 12.56 and adding Section 7.90 as follows: | |||||||||||||||||||||
6 | (805 ILCS 5/7.90 new) | |||||||||||||||||||||
7 | Sec. 7.90. Waiver.
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8 | (a) Unless otherwise provided in the articles of | |||||||||||||||||||||
9 | incorporation, a shareholder who executes and delivers to the | |||||||||||||||||||||
10 | corporation a written instrument irrevocably waiving the right | |||||||||||||||||||||
11 | (i) to vote any shares held by such shareholder, whether for | |||||||||||||||||||||
12 | the election of directors or otherwise, (ii) to be a director | |||||||||||||||||||||
13 | or officer of the corporation, and (iii) in any other manner to | |||||||||||||||||||||
14 | control, directly or indirectly, corporate actions or the | |||||||||||||||||||||
15 | election or removal of any director or officer of the | |||||||||||||||||||||
16 | corporation, and who at the time of such waiver is not a | |||||||||||||||||||||
17 | director or officer of the corporation, shall have no fiduciary | |||||||||||||||||||||
18 | duty to the corporation or any of its shareholders arising out | |||||||||||||||||||||
19 | of the fact that such person is a shareholder of the | |||||||||||||||||||||
20 | corporation. No such waiver shall affect any breach of | |||||||||||||||||||||
21 | fiduciary duty arising prior to the effective date of the | |||||||||||||||||||||
22 | waiver. | |||||||||||||||||||||
23 | (b) The corporation shall give prompt notice of such waiver | |||||||||||||||||||||
24 | to the remaining shareholders, except that no such notice need | |||||||||||||||||||||
25 | be given by a corporation that has shares listed on a national | |||||||||||||||||||||
26 | securities exchange or regularly traded in a market maintained | |||||||||||||||||||||
27 | by one or more members of a national or affiliated securities | |||||||||||||||||||||
28 | association.
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29 | (c) The waiver referred to in this Section shall not affect | |||||||||||||||||||||
30 | any other rights or obligations of the shareholder, including | |||||||||||||||||||||
31 | but not limited to the rights under Sections 7.80, 11.65, | |||||||||||||||||||||
32 | 11.70, 12.55 and 12.56 of this Act.
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1 | (d) Shares that cannot be voted because of a waiver under | ||||||
2 | this Section shall not be counted in determining the number of | ||||||
3 | shares necessary for a quorum or for shareholder action under | ||||||
4 | Section 7.60 of this Act. A waiver under this Section shall not | ||||||
5 | apply to any transferee of the shares.
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6 | (e) The waiver referred to in this Section is specifically | ||||||
7 | enforceable in accordance with the principles of equity.
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8 | (f) This Section is not intended to describe or suggest the | ||||||
9 | circumstances under which any fiduciary duty arises or exists, | ||||||
10 | including with respect to any shareholder who fails to make a | ||||||
11 | waiver under this Section.
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12 | (805 ILCS 5/12.56)
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13 | Sec. 12.56. Shareholder remedies: non-public corporations.
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14 | (a) In an action by a shareholder in a corporation that has
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15 | no shares listed on a national securities exchange or regularly
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16 | traded in a market maintained by one or more members of a
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17 | national or affiliated securities association, the Circuit | ||||||
18 | Court
may order one or more of the remedies listed in | ||||||
19 | subsection (b) if
it is established that:
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20 | (1) The directors are deadlocked, whether because of
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21 | even division in the number of directors or because of | ||||||
22 | greater than
majority voting requirements in the articles | ||||||
23 | of incorporation or
the by-laws or otherwise, in the | ||||||
24 | management of the corporate
affairs; the shareholders are | ||||||
25 | unable to break the deadlock; and
either irreparable injury | ||||||
26 | to the corporation is thereby caused or
threatened or the | ||||||
27 | business of the corporation can no longer be
conducted to | ||||||
28 | the general advantage of the shareholders; or
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29 | (2) The shareholders are deadlocked in voting power
and | ||||||
30 | have failed, for a period that includes at least 2
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31 | consecutive annual meeting dates, to elect successors to
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32 | directors whose terms have expired and either irreparable | ||||||
33 | injury
to the corporation is thereby caused or threatened | ||||||
34 | or the
business of the corporation can no longer be | ||||||
35 | conducted to the
general advantage of the shareholders; or
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1 | (3) The directors or those in control of the
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2 | corporation have acted, are acting, or will act in a manner | ||||||
3 | that
is illegal, oppressive, or fraudulent with respect to | ||||||
4 | the
petitioning shareholder whether in his or her capacity | ||||||
5 | as a
shareholder, director, or officer; or
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6 | (4) The corporation assets are being misapplied or
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7 | wasted.
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8 | (b) The relief which the court may order in an action under
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9 | subsection (a) includes but is not limited to the following:
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10 | (1) The performance, prohibition, alteration, or
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11 | setting aside of any action of the corporation or of its
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12 | shareholders, directors, or officers of or any other party | ||||||
13 | to the
proceedings;
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14 | (2) The cancellation or alteration of any provision in
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15 | the corporation's articles of incorporation or by-laws;
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16 | (3) The removal from office of any director or
officer;
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17 | (4) The appointment of any individual as a director or
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18 | officer;
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19 | (5) An accounting with respect to any matter in
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20 | dispute;
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21 | (6) The appointment of a custodian to manage the
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22 | business and affairs of the corporation to serve for the | ||||||
23 | term and
under the conditions prescribed by the court;
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24 | (7) The appointment of a provisional director to serve
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25 | for the term and under the conditions prescribed by the | ||||||
26 | court;
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27 | (8) The submission of the dispute to mediation or
other | ||||||
28 | forms of non-binding alternative dispute resolution;
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29 | (9) The payment of dividends;
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30 | (10) The award of damages to any aggrieved party;
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31 | (11) The purchase by the corporation or one or more
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32 | other shareholders of all, but not less than all, of the | ||||||
33 | shares
of the petitioning shareholder for their fair value | ||||||
34 | and on the
terms determined under subsection (e); or
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35 | (12) The dissolution of the corporation if the court
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36 | determines that no remedy specified in subdivisions (1) |
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1 | through
(11) or other alternative remedy is sufficient to | ||||||
2 | resolve the
matters in dispute. In determining whether to | ||||||
3 | dissolve the
corporation, the court shall consider among | ||||||
4 | other relevant
evidence the financial condition of the | ||||||
5 | corporation but may not
refuse to dissolve the corporation | ||||||
6 | solely because it has
accumulated earnings or current | ||||||
7 | operating profits.
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8 | (c) The remedies set forth in subsection (b) shall not be
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9 | exclusive of other legal and equitable remedies which the court
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10 | may impose.
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11 | (d) In determining the appropriate relief to order pursuant
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12 | to this Section, the court may take into consideration the
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13 | reasonable expectations of the corporation's shareholders as | ||||||
14 | they
existed at the time the corporation was formed and | ||||||
15 | developed
during the course of the shareholders' relationship | ||||||
16 | with the
corporation and with each other.
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17 | (e) If the court orders a share purchase,
it shall:
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18 | (i) Determine the fair value of the shares, with or
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19 | without the assistance of appraisers, taking into | ||||||
20 | account any
impact on the value of the shares resulting | ||||||
21 | from the actions
giving rise to a petition under this | ||||||
22 | Section;
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23 | (ii) Consider any financial or legal constraints | ||||||
24 | on the
ability of the corporation or the purchasing | ||||||
25 | shareholder to
purchase the shares;
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26 | (iii) Specify the terms of the purchase, | ||||||
27 | including, if
appropriate, terms for installment | ||||||
28 | payments, interest at the rate
and from the date | ||||||
29 | determined by the court to be equitable,
subordination | ||||||
30 | of the purchase obligation to the rights of the
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31 | corporation's other creditors, security for a deferred | ||||||
32 | purchase
price, and a covenant not to compete or other | ||||||
33 | restriction on the
seller;
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34 | (iv) Require the seller to deliver all of his or | ||||||
35 | her
shares to the purchaser upon receipt of the | ||||||
36 | purchase price or the
first installment of the purchase |
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1 | price; and
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2 | (v) Retain jurisdiction to enforce the purchase | ||||||
3 | order
by, among other remedies, ordering the | ||||||
4 | corporation to be
dissolved if the purchase is not | ||||||
5 | completed in accordance with the
terms of the purchase | ||||||
6 | order.
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7 | The purchase ordered pursuant to this subsection (e) shall
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8 | be consummated within 20 days after the date the order becomes
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9 | final unless before that time the corporation files with the
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10 | court a notice of its intention to dissolve and articles of
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11 | dissolution are properly filed with the Secretary of State | ||||||
12 | within
50 days after filing the notice with the court.
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13 | After the purchase order is entered and before the
purchase | ||||||
14 | price is fully paid, any party may petition the court to
modify | ||||||
15 | the terms of the purchase and the court may do so if it
finds | ||||||
16 | that such changes are equitable.
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17 | Unless the purchase order is modified by the court, the
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18 | selling shareholder shall have no further rights as a | ||||||
19 | shareholder
from the date the seller delivers all of his or her | ||||||
20 | shares to the
purchaser or such other date specified by the | ||||||
21 | court.
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22 | If the court orders shares to be purchased by one or
more | ||||||
23 | other shareholders, in allocating the shares to be purchased
by | ||||||
24 | the other shareholders, unless equity requires otherwise, the
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25 | court shall attempt to preserve the existing distribution of
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26 | voting rights and other designations, preferences,
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27 | qualifications, limitations, restrictions and special or | ||||||
28 | relative
rights among the holders of the class or classes and | ||||||
29 | may direct
that holders of a specific class or classes shall | ||||||
30 | not participate
in the purchase.
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31 | (f) When the relief requested by the petition includes the | ||||||
32 | purchase of the petitioner's shares, then at
At any time within | ||||||
33 | 90 days after the filing of the
petition under this Section, or | ||||||
34 | at such time determined by the
court to be equitable, the | ||||||
35 | corporation or one or more
shareholders may elect to purchase | ||||||
36 | all, but not less than all, of
the shares owned by the |
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1 | petitioning shareholder for their fair
value. An election | ||||||
2 | pursuant to this Section shall state in
writing the amount | ||||||
3 | which the electing party will pay for the
shares.
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4 | (1) The election shall be irrevocable unless the court
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5 | determines that it is equitable to set aside or modify the
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6 | election.
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7 | (2) If the election to purchase is filed by one or
more | ||||||
8 | shareholders, the corporation shall, within 10 days
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9 | thereafter, give written notice to all shareholders. The | ||||||
10 | notice
must state: (i) the name and number of shares owned | ||||||
11 | by the
petitioner; (ii) the name and number of shares owned | ||||||
12 | by each
electing shareholder; and (iii) the amount which | ||||||
13 | each electing
party will pay for the shares and must advise | ||||||
14 | the recipients of
their right to join in the election to | ||||||
15 | purchase shares.
Shareholders who wish to participate must | ||||||
16 | file notice of their
intention to join in a purchase no | ||||||
17 | later than 30 days after the
date of the notice to them or | ||||||
18 | at such time as the court in its
discretion may allow. All | ||||||
19 | shareholders who have filed an
election or notice of their | ||||||
20 | intention to participate in the
election to purchase | ||||||
21 | thereby become parties to the proceeding and
shall | ||||||
22 | participate in the purchase in proportion to their
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23 | ownership of shares as of the date the first election was | ||||||
24 | filed,
unless they otherwise agree or the court otherwise | ||||||
25 | directs.
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26 | (3) The court in its discretion may allow the
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27 | corporation and all non-petitioning shareholders to file | ||||||
28 | an
election to purchase the petitioning shareholder's | ||||||
29 | shares at a
higher price. If the court does so, it shall | ||||||
30 | allow other
shareholders an opportunity to join in the | ||||||
31 | purchase at the higher
price in accordance with their | ||||||
32 | proportionate ownership interest.
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33 | (4) After an election has been filed by the
corporation | ||||||
34 | or one or more shareholders, the proceeding filed
under | ||||||
35 | this Section may not be discontinued or settled, nor may
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36 | the petitioning shareholder sell or otherwise dispose of |
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1 | his or
her shares, unless the court determines that it | ||||||
2 | would be
equitable to the corporation and the shareholders, | ||||||
3 | other than the
petitioner, to permit the discontinuance, | ||||||
4 | settlement, sale, or
other disposition. In considering | ||||||
5 | whether equity exists to
approve any settlement, the court | ||||||
6 | may take into consideration the
reasonable expectations of | ||||||
7 | the shareholders as set forth in
subsection (d), including | ||||||
8 | any existing agreement among the
shareholders.
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9 | (5) If, within 30 days of the filing of the latest
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10 | election allowed by the court, the parties reach agreement | ||||||
11 | as to
the fair value and terms of purchase of the | ||||||
12 | petitioner's shares,
the court shall enter an order | ||||||
13 | directing the purchase of
petitioner's shares upon the | ||||||
14 | terms and conditions agreed to by
the parties.
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15 | (6) If the parties are unable to reach an agreement as
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16 | provided for in paragraph (5) of this subsection (f), the | ||||||
17 | court,
upon application of any party, shall stay the
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18 | proceeding under subsection (a) and shall determine the | ||||||
19 | fair value of the
petitioner's
shares pursuant to | ||||||
20 | subsection (e) as of the day before the date
on which the | ||||||
21 | petition under subsection (a) was filed or as of
such other | ||||||
22 | date as the court deems appropriate under the
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23 | circumstances.
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24 | (g) In any proceeding under this Section, the court shall
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25 | allow reasonable compensation to the custodian, provisional
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26 | director, appraiser, or other such person appointed by the | ||||||
27 | court
for services rendered and reimbursement or direct payment | ||||||
28 | of
reasonable costs and expenses, which amounts shall be paid | ||||||
29 | by the
corporation.
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30 | (Source: P.A. 89-169, eff. 7-19-95; 89-364, eff. 8-18-95; | ||||||
31 | 89-626, eff.
8-9-96.)
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32 | Section 99. Effective date. This Act takes effect July 1, | ||||||
33 | 2005.
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