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90_SB0952eng
New Act
Creates the Choice of Law and Forum Act. Provides that
the parties to a contract relating to an obligation arising
out of a transaction covering not less than $250,000 may
agree that the law of this State shall govern their rights or
duties regardless of whether the contract bears a reasonable
relation to this State, and provides that a person may
maintain an action in this State if those conditions have
been met; sets forth exceptions. Effective January 1, 1998.
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1 AN ACT concerning business.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Business Corporation Act of 1983 is
5 amended by changing Sections 1.80, 14.30, and 15.90 and
6 adding Sections 9.20 and 13.75 as follows:
7 (805 ILCS 5/1.80) (from Ch. 32, par. 1.80)
8 Sec. 1.80. Definitions. As used in this Act, unless the
9 context otherwise requires, the words and phrases defined in
10 this Section shall have the meanings set forth herein.
11 (a) "Corporation" or "domestic corporation" means a
12 corporation subject to the provisions of this Act, except a
13 foreign corporation.
14 (b) "Foreign corporation" means a corporation for profit
15 organized under laws other than the laws of this State, but
16 shall not include a foreign banking corporation organized
17 under the laws of a country other than the United States and
18 holding a certificate of authority from the Commissioner of
19 Banks and Real Estate issued pursuant to the Foreign Banking
20 Office Act.
21 (c) "Articles of incorporation" means the original
22 articles of incorporation, including the articles of
23 incorporation of a new corporation set forth in the articles
24 of consolidation, and all amendments thereto, whether
25 evidenced by articles of amendment, articles of merger,
26 articles of exchange, statement of correction affecting
27 articles, resolution establishing series of shares or a
28 statement of cancellation under Section 9.05. Restated
29 articles of incorporation shall supersede the original
30 articles of incorporation and all amendments thereto prior to
31 the effective date of filing the articles of amendment
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1 incorporating the restated articles of incorporation.
2 (d) "Subscriber" means one who subscribes for shares in
3 a corporation, whether before or after incorporation.
4 (e) "Incorporator" means one of the signers of the
5 original articles of incorporation.
6 (f) "Shares" means the units into which the proprietary
7 interests in a corporation are divided.
8 (g) "Shareholder" means one who is a holder of record of
9 shares in a corporation.
10 (h) "Certificate" representing shares means a written
11 instrument executed by the proper corporate officers, as
12 required by Section 6.35 of this Act, evidencing the fact
13 that the person therein named is the holder of record of the
14 share or shares therein described. If the corporation is
15 authorized to issue uncertificated shares in accordance with
16 Section 6.35 of this Act, any reference in this Act to shares
17 represented by a certificate shall also refer to
18 uncertificated shares and any reference to a certificate
19 representing shares shall also refer to the written notice in
20 lieu of a certificate provided for in Section 6.35.
21 (i) "Authorized shares" means the aggregate number of
22 shares of all classes which the corporation is authorized to
23 issue.
24 (j) "Paid-in capital" means the sum of the cash and
25 other consideration received, less expenses, including
26 commissions, paid or incurred by the corporation, in
27 connection with the issuance of shares, plus any cash and
28 other consideration contributed to the corporation by or on
29 behalf of its shareholders, plus amounts added or transferred
30 to paid-in capital by action of the board of directors or
31 shareholders pursuant to a share dividend, share split, or
32 otherwise, minus reductions as provided elsewhere in this Act
33 from that sum effected by an acquisition and cancellation of
34 its own shares, to the extent of the cost of the reacquired
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1 and cancelled shares or a lesser amount as may be elected by
2 the corporation. Irrespective of the manner of designation
3 thereof by the laws under which a foreign corporation is or
4 may be organized, paid-in capital of a foreign corporation
5 shall be determined on the same basis and in the same manner
6 as paid-in capital of a domestic corporation, for the purpose
7 of computing license fees, franchise taxes and other charges
8 imposed by this Act.
9 (k) "Net assets", for the purpose of determining the
10 right of a corporation to purchase its own shares and of
11 determining the right of a corporation to declare and pay
12 dividends and make other distributions to shareholders is
13 equal to the difference between the assets of the corporation
14 and the liabilities of the corporation.
15 (l) "Registered office" means that office maintained by
16 the corporation in this State, the address of which is on
17 file in the office of the Secretary of State, at which any
18 process, notice or demand required or permitted by law may be
19 served upon the registered agent of the corporation.
20 (m) "Insolvent" means that a corporation is unable to
21 pay its debts as they become due in the usual course of its
22 business.
23 (n) "Anniversary" means that day each year exactly one
24 or more years after:
25 (1) the date on the certificate of incorporation
26 issued under Section 2.10 of this Act, in the case of a
27 domestic corporation;
28 (2) the date on the certificate of authority issued
29 under Section 13.15 of this Act, in the case of a foreign
30 corporation; or
31 (3) the date on the certificate of consolidation
32 issued under Section 11.25 of this Act in the case of a
33 consolidation, unless the plan of consolidation provides
34 for a delayed effective date, pursuant to Section 11.40.
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1 (o) "Anniversary month" means the month in which the
2 anniversary of the corporation occurs.
3 (p) "Extended filing month" means the month (if any)
4 which shall have been established in lieu of the
5 corporation's anniversary month in accordance with Section
6 14.01.
7 (q) "Taxable year" means that 12 month period commencing
8 with the first day of the anniversary month of a corporation
9 through the last day of the month immediately preceding the
10 next occurrence of the anniversary month of the corporation,
11 except that in the case of a corporation that has established
12 an extended filing month "taxable year" means that 12 month
13 period commencing with the first day of the extended filing
14 month through the last day of the month immediately preceding
15 the next occurrence of the extended filing month.
16 (r) "Fiscal year" means the 12 month period with respect
17 to which a corporation ordinarily files its federal income
18 tax return.
19 (s) "Close corporation" means a corporation organized
20 under or electing to be subject to Article 2A of this Act,
21 the articles of incorporation of which contain the provisions
22 required by Section 2.10, and either the corporation's
23 articles of incorporation or an agreement entered into by all
24 of its shareholders provide that all of the issued shares of
25 each class shall be subject to one or more of the
26 restrictions on transfer set forth in Section 6.55 of this
27 Act.
28 (t) "Common shares" means shares which have no
29 preference over any other shares with respect to distribution
30 of assets on liquidation or with respect to payment of
31 dividends.
32 (u) "Delivered", for the purpose of determining if any
33 notice required by this Act is effective, means:
34 (1) transferred or presented to someone in person;
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1 or
2 (2) deposited in the United States Mail addressed
3 to the person at his, her or its address as it appears on
4 the records of the corporation, with sufficient
5 first-class postage prepaid thereon.
6 (v) "Property" means gross assets including, without
7 limitation, all real, personal, tangible, and intangible
8 property.
9 (w) "Taxable period" means that 12-month period
10 commencing with the first day of the second month preceding
11 the corporation's anniversary month in the preceding year and
12 prior to the first day of the second month immediately
13 preceding its anniversary month in the current year, except
14 that, in the case of a corporation that has established an
15 extended filing month, "taxable period" means that 12-month
16 period ending with the last day of its fiscal year
17 immediately preceding the extended filing month. In the case
18 of a newly formed domestic corporation or a newly registered
19 foreign corporation that had not commenced transacting
20 business in this State prior to obtaining a certificate of
21 authority, "taxable period" means that period commencing with
22 the issuance of a certificate of incorporation or, in the
23 case of a foreign corporation, of a certificate of authority,
24 and prior to the first day of the second month immediately
25 preceding its anniversary month in the next succeeding year.
26 (x) "Treasury shares" mean (1) shares of a corporation
27 that have been issued, have been subsequently acquired by and
28 belong to the corporation, and have not been cancelled or
29 restored to the status of authorized but unissued shares and
30 (2) shares (i) declared and paid as a share dividend on the
31 shares referred to in clause (1) or this clause (2), or (ii)
32 issued in a share split of the shares referred to in clause
33 (1) or this clause (2). Treasury shares shall be deemed to
34 be "issued" shares but not "outstanding" shares. Treasury
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1 shares may not be voted, directly or indirectly, at any
2 meeting or otherwise. Shares converted into or exchanged for
3 other shares of the corporation shall not be deemed to be
4 treasury shares.
5 (Source: P.A. 88-151; 89-508, eff. 7-3-96.)
6 (805 ILCS 5/9.20 new)
7 Sec. 9.20. Reduction of paid-in capital.
8 (a) A corporation may reduce its paid-in capital:
9 (1) by resolution of its board of directors by
10 charging against its paid-in capital (i) the paid-in
11 capital represented by shares acquired and cancelled by
12 the corporation as permitted by law, to the extent of the
13 cost from the paid-in capital of the reacquired and
14 cancelled shares or a lesser amount as may be elected by
15 the corporation, (ii) dividends paid on preferred shares,
16 or (iii) distributions as liquidating dividends; or
17 (2) pursuant to an approved reorganization in
18 bankruptcy that specifically directs the reduction to be
19 effected.
20 (b) Notwithstanding anything to the contrary contained
21 in this Act, at no time shall the paid-in capital be reduced
22 to an amount less than the aggregate par value of all issued
23 shares having a par value.
24 (c) Until the report under Section 14.30 has been filed
25 in the Office of the Secretary of State showing a reduction
26 in paid-in capital, the basis of the annual franchise tax
27 payable by the corporation shall not be reduced; provided,
28 however, that in no event shall the annual franchise tax for
29 any taxable year be reduced if the report is not filed prior
30 to the first day of the anniversary month or, in the case of
31 a corporation that has established an extended filing month,
32 the extended filing month of the corporation of that taxable
33 year and before payment of its annual franchise tax.
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1 (d) A corporation that reduced its paid-in capital after
2 December 31, 1986 by one or more of the methods described in
3 subsection (a) may report the reduction pursuant to Section
4 14.30, subject to the restrictions of subsections (b) and
5 (c) of this Section. A reduction in paid-in capital reported
6 pursuant to this subsection shall have no effect for any
7 purpose under this Act with respect to a taxable year ending
8 before the report is filed.
9 (e) Nothing in this Section shall be construed to forbid
10 any reduction in paid-in capital to be effected under Section
11 9.05 of this Act.
12 (805 ILCS 5/13.75 new)
13 Sec. 13.75. Activities that do not constitute
14 transacting business. Without excluding other activities
15 that may not constitute doing business in this State, a
16 foreign corporation shall not be considered to be transacting
17 business in this State, for purposes of this Article 13, by
18 reason of carrying on in this State any one or more of the
19 following activities:
20 (1) maintaining, defending, or settling any
21 proceeding;
22 (2) holding meetings of the board of directors or
23 shareholders or carrying on other activities concerning
24 internal corporate affairs;
25 (3) maintaining bank accounts;
26 (4) maintaining offices or agencies for the
27 transfer, exchange, and registration of the corporation's
28 own securities or maintaining trustees or depositaries
29 with respect to those securities;
30 (5) selling through independent contractors;
31 (6) soliciting or obtaining orders, whether by mail
32 or through employees or agents or otherwise, if orders
33 require acceptance outside this State before they become
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1 contracts;
2 (7) creating or acquiring indebtedness, mortgages,
3 and security interests in real or personal property;
4 (8) securing or collecting debts or enforcing
5 mortgages and security interests in property securing the
6 debts;
7 (9) owning, without more, real or personal
8 property;
9 (10) conducting an isolated transaction that is
10 completed within 120 days and that is not one in the
11 course of repeated transactions of a like nature; or
12 (11) having a corporate officer or director who is
13 a resident of this State.
14 (805 ILCS 5/14.30) (from Ch. 32, par. 14.30)
15 Sec. 14.30. Cumulative report of changes in issued
16 shares or paid-in capital.
17 (a) Each domestic corporation and each foreign
18 corporation authorized to transact business in this State
19 that effects any change in the number of issued shares or the
20 amount of paid-in capital that has not theretofore been
21 reported in any report other than an annual report, interim
22 annual report, or final transition annual report, shall
23 execute and file, in accordance with Section 1.10 of this
24 Act, a report with respect to the changes in its issued
25 shares or paid-in capital:
26 (1) that have occurred subsequent to the last day
27 of the third month preceding its anniversary month in the
28 preceding year and prior to the first day of the second
29 month immediately preceding its anniversary month in the
30 current year; or
31 (2) in the case of a corporation that has
32 established an extended filing month, that have occurred
33 during its fiscal year; or
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1 (3) in the case of a statutory merger or
2 consolidation or an amendment to the corporation's
3 articles of incorporation that affects the number of
4 issued shares or the amount of paid-in capital, that have
5 occurred between the last day of the third month
6 immediately preceding its anniversary month and the date
7 of the merger, or consolidation, or amendment or, in the
8 case of a corporation that has established an extended
9 filing month, that have occurred between the first day of
10 its fiscal year and the date of the merger, or
11 consolidation, or amendment; or
12 (4) in the case of a statutory merger or
13 consolidation or an amendment to the corporation's
14 articles of incorporation that affects the number of
15 issued shares or the amount of paid-in capital, that have
16 occurred between the date of the merger, consolidation,
17 or amendment (but not including the merger, or
18 consolidation, or amendment) and the first day of the
19 second month immediately preceding its anniversary month
20 in the current year, or in the case of a corporation that
21 has established an extended filing month, that have
22 occurred between the date of the merger, consolidation or
23 amendment (but not including the merger, consolidation or
24 amendment) and the last day of its fiscal year.
25 (b) The corporation shall file the report required under
26 subsection (a) not later than (i) the time its annual report
27 is required to be filed in 1992 and in each subsequent year
28 and (ii) not later than the time of filing the articles of
29 merger, consolidation, or amendment to the articles of
30 incorporation that affects the number of issued shares or the
31 amount of paid-in capital of a domestic corporation or the
32 certified copy of merger of a foreign corporation.
33 (c) The report shall net decreases against increases
34 that occur during the same taxable period. The report shall
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1 set forth:
2 (1) The name of the corporation and the state or
3 country under the laws of which it is organized.
4 (2) A statement of the aggregate number of shares
5 which the corporation has authority to issue, itemized by
6 classes and series, if any, within a class.
7 (3) A statement of the aggregate number of issued
8 shares as last reported to the Secretary of State in any
9 document required or permitted by this Act to be filed,
10 other than an annual report, interim annual report or
11 final transition annual report, itemized by classes and
12 series, if any, within a class.
13 (4) A statement, expressed in dollars, of the
14 amount of paid-in capital of the corporation as last
15 reported to the Secretary of State in any document
16 required or permitted by this Act to be filed, other than
17 an annual report, interim annual report or final
18 transition annual report.
19 (5) A statement, if applicable, of the aggregate
20 number of shares issued by the corporation not
21 theretofore reported to the Secretary of State as having
22 been issued, and a statement, expressed in dollars, of
23 the value of the entire consideration received, less
24 expenses, including commissions, paid or incurred in
25 connection with the issuance, for, or on account of, the
26 issuance of the shares, itemized by classes, and series,
27 if any, within a class; and in the case of shares issued
28 as a share dividend, the amount added or transferred to
29 the paid-in capital of the corporation for, or on account
30 of, the issuance of the shares; provided, however, that
31 the report shall also include the date of each issuance
32 made prior to the current reporting period, and the
33 number of issued shares and consideration received in
34 each case.
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1 (6) A statement, if applicable, expressed in
2 dollars, of the amount added or transferred to paid-in
3 capital of the corporation without the issuance of
4 shares; provided, however, that the report shall also
5 include the date of each increase made prior to the
6 current reporting period, and the consideration received
7 in each case.
8 (7) In case of an exchange or reclassification of
9 issued shares resulting in an increase in the amount of
10 paid-in capital, a statement of the manner in which it
11 was effected, and a statement, expressed in dollars, of
12 the amount added or transferred to the paid-in capital of
13 the corporation as a result thereof, except any portion
14 thereof reported under any other subsection of this
15 Section as a part of the consideration received by the
16 corporation for, or on account of, its issued shares;
17 provided, however, that the report shall also include the
18 date of each exchange or reclassification made prior to
19 the current reporting period and the consideration
20 received in each case.
21 (8) If the consideration received for the issuance
22 of any shares not theretofore reported as having been
23 issued consists of labor or services performed or of
24 property, other than cash, then a statement, expressed in
25 dollars, of the value of that consideration as fixed by
26 the board of directors.
27 (9) In the case of a cancellation of shares or a
28 reduction in paid-in capital made pursuant to Section
29 9.20 in connection with the cancellation of shares, the
30 aggregate reduction in paid-in capital resulting from the
31 acquisition of the shares; provided, however, that the
32 report shall also include the date of each reduction made
33 prior to the current reporting period.
34 (10) A statement of the aggregate number of issued
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1 shares itemized by classes and series, if any, within a
2 class, after giving effect to the changes reported.
3 (11) A statement, expressed in dollars, of the
4 amount of paid-in capital of the corporation after giving
5 effect to the changes reported.
6 (d) No additional license fees or franchise taxes shall
7 be payable upon the filing of the report to the extent that
8 license fees or franchise taxes shall have been previously
9 paid by the corporation in respect of shares previously
10 issued which are being exchanged for the shares the issuance
11 of which is being reported, provided those facts are shown in
12 the report.
13 (e) The report shall be made on forms prescribed and
14 furnished by the Secretary of State.
15 (f) Until the report under this Section or a report
16 under Section 14.25 shall have been filed in the Office of
17 the Secretary of State showing a reduction in paid-in
18 capital, the basis of the annual franchise tax payable by the
19 corporation shall not be reduced, provided, however, in no
20 event shall the annual franchise tax for any taxable year be
21 reduced if the report is not filed prior to the first day of
22 the anniversary month or, in the case of a corporation which
23 has established an extended filing month, the extended filing
24 month of the corporation of that taxable year and before
25 payment of its annual franchise tax.
26 (Source: P.A. 86-985; 86-1217; 87-516.)
27 (805 ILCS 5/15.90) (from Ch. 32, par. 15.90)
28 Sec. 15.90. Statute of limitations.
29 (a) Except as otherwise provided in this Section and
30 notwithstanding anything to the contrary contained in any
31 other Section of this Act, no domestic corporation or foreign
32 corporation shall be obligated to pay any annual franchise
33 tax, fee, or penalty or interest thereon imposed under this
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1 Act, nor shall any administrative or judicial sanction
2 (including dissolution) be imposed or enforced nor access to
3 the courts of this State be denied based upon nonpayment
4 thereof more than 7 years after the date of filing the annual
5 report with respect to the period during which the obligation
6 for the tax, fee, penalty or interest arose, unless (1)
7 within that 7 year period the Secretary of State sends a
8 written notice to the corporation to the effect that (A)
9 administrative or judicial action to dissolve the corporation
10 or revoke its certificate of authority for nonpayment of a
11 tax, fee, penalty or interest has been commenced; or (B) the
12 corporation has submitted filed a report but has failed to
13 pay a tax, fee, penalty or interest required to be paid
14 therewith; or (C) a report with respect to an event or action
15 giving rise to an obligation to pay a tax, fee, penalty or
16 interest is required but has not been filed, or has been
17 filed and is in error or incomplete; or (2) the annual report
18 by the corporation was filed with fraudulent intent to evade
19 taxes payable under this Act. A corporation nonetheless
20 shall be required to pay all the annual franchise taxes that
21 would have been payable during the most recent 7 year period
22 due to a previously unreported increase in paid-in capital
23 that occurred prior to that 7 year period and interest and
24 penalties thereon for that period.
25 (b) If within 2 years following a change in control of a
26 corporation the corporation voluntarily pays in good faith
27 all known obligations of the corporation imposed by this
28 Article 15 with respect to reports that were required to have
29 been filed since the beginning of the 7 year period ending on
30 the effective date of the change in control, no action shall
31 be taken to enforce or collect obligations of that
32 corporation imposed by this Article 15 with respect to
33 reports that were required to have been filed prior to that 7
34 year period regardless of whether the limitation period set
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1 forth in subsection (a) is otherwise applicable. For
2 purposes of this subsection (b), a change in control means a
3 transaction, or a series of transactions consummated within a
4 period of 180 consecutive days, as a result of which a person
5 which owned less than 10% of the shares having the power to
6 elect directors of the corporation acquires shares such that
7 the person becomes the holder of 80% or more of the shares
8 having such power. For purposes of this subsection (b) a
9 person means any natural person, corporation, partnership,
10 trust or other entity together with all other persons
11 controlled by, controlling or under common control with such
12 person.
13 (c) Except as otherwise provided in this Section and
14 notwithstanding anything to the contrary contained in any
15 other Section of this Act, no foreign corporation that has
16 not previously obtained a certificate of authority under this
17 Act shall, upon voluntary application for a certificate of
18 authority filed with the Secretary of State prior to January
19 1, 2001, be obligated to pay any tax, fee, penalty, or
20 interest imposed under this Act, nor shall any administrative
21 or judicial sanction be imposed or enforced based upon
22 nonpayment thereof with respect to a period during which the
23 obligation arose that is prior to January 1, 1993 unless (1)
24 prior to receipt of the application for a certificate of
25 authority the Secretary of State had sent written notice to
26 the corporation regarding its failure to obtain a certificate
27 of authority, (2) the corporation had submitted an
28 application for a certificate of authority previously but had
29 failed to pay any tax, fee, penalty or interest to be paid
30 therewith, or (3) the application for a certificate of
31 authority was submitted by the corporation with fraudulent
32 intent to evade taxes payable under this Act. A corporation
33 nonetheless shall be required to pay all taxes and fees due
34 under this Act that would have been payable since January 1,
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1 1993 as a result of commencing the transaction of its
2 business in this State and interest thereon for that period.
3 (Source: P.A. 86-985; 86-1217.)
4 Section 10. The Assumed Business Name Act is amended by
5 changing Section 4 as follows:
6 (805 ILCS 405/4) (from Ch. 96, par. 7)
7 Sec. 4. This Act shall in no way affect or apply to any
8 corporation, limited liability company, limited partnership,
9 or limited liability partnership duly organized under the
10 laws of this State, or any corporation, limited liability
11 company, limited partnership, or limited liability
12 partnership organized under the laws of any other State and
13 lawfully doing business in this State, nor shall this Act be
14 deemed or construed to prevent the lawful use of a
15 partnership name or designation, provided that such
16 partnership shall include the true, real name of such person
17 or persons transacting said business or partnership nor shall
18 it be construed as in any way affecting Sections 220 and 220a
19 of Division I of "An Act to revise the law in relation to
20 criminal jurisprudence", approved March 27, 1874, as amended.
21 This Act shall in no way affect or apply to testamentary or
22 other express trusts where the business is carried on in the
23 name of the trust and such trust is created by will or other
24 instrument in writing under which title to the trust property
25 is vested in a designated trustee or trustees for the use and
26 benefit of the cestuis que trustent.
27 (Source: Laws 1941, vol. 1, p. 550.)
28 Section 99. Effective date. This Act takes effect
29 January 1, 1998.