[ Search ] [ Legislation ] [ Bill Summary ]
[ Home ] [ Back ] [ Bottom ]
[ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
[ House Amendment 002 ] | [ Senate Amendment 001 ] | [ Senate Amendment 002 ] |
90_SB1020enr New Act 35 ILCS 5/1501 from Ch. 120, par. 15-1501 805 ILCS 180 Art. 57 heading new 805 ILCS 180/57-1 new 805 ILCS 180/57-5 new Creates the Uniform Limited Liability Company Act (1995). Provides for the organization and operation of limited liability companies. Applies, with certain exceptions, to all limited liability companies formed after December 31, 1997. Provides that existing limited liability companies may elect to be subject to this Act. Provides for the repeal of the Limited Liability Company Act on January 1, 2003. Effective January 1, 1998. LRB9003480JSgc SB1020 Enrolled LRB9003480JSgc 1 AN ACT concerning limited liability companies, amending 2 named Acts. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 4. The Corporate Fiduciary Act is amended by 6 changing Sections 1-5.09, 1-5.11, 1-6, and 3-2 as follows: 7 (205 ILCS 620/1-5.09) (from Ch. 17, par. 1551-5.09) 8 Sec. 1-5.09. "Person" means an individual, corporation, 9 partnership, joint venture, trust estate, limited liability 10 company, or unincorporated association. 11 (Source: P.A. 85-858.) 12 (205 ILCS 620/1-5.11) (from Ch. 17, par. 1551-5.11) 13 Sec. 1-5.11. Trust company. "Trust company" means a 14 corporation incorporated or a limited liability company 15 organized in this State that holds a certificate of authority 16 issued pursuant to this Act. 17 (Source: P.A. 89-364, eff. 8-18-95.) 18 (205 ILCS 620/1-6) (from Ch. 17, par. 1551-6) 19 Sec. 1-6. General Corporate Powers. A corporate 20 fiduciary shall have the powers: 21 (a) if it is a State bank, those powers granted under 22 Sections 3 and 5 of the Illinois Banking Act, as now or 23 hereafter amended; and 24 (b) if it is a State savings and loan association, those 25 powers granted under Sections 1-6 through 1-8 of the Illinois 26 Savings and Loan Act of 1985, as now or hereafter amended; 27 and 28 (c) if it is a corporation organized under the Business 29 Corporation Act of 1983, as now or hereafter amended, or a SB1020 Enrolled -2- LRB9003480JSgc 1 limited liability company organized under the Limited 2 Liability Company Act, those powers granted in Sections 4.01 3 through 4.24 of the Trusts and Trustees Act, as now or 4 hereafter amended, to the extent the exercise of such powers 5 by the corporate fiduciary are not contrary to the instrument 6 containing the appointment of the corporate fiduciary, the 7 court order appointing the corporate fiduciary or any other 8 statute specifically limiting the power of the corporate 9 fiduciary under the circumstances. 10 The Commissioner may specify powers of corporate 11 fiduciaries generally or of a particular corporate fiduciary 12 and by rule or order limit or restrict such powers of 13 corporate fiduciaries or a particular corporate fiduciary if 14 he finds the exercise of such power by corporate fiduciaries 15 generally or of the corporate fiduciary in particular may 16 tend to be an unsafe or unsound practice, or if such power is 17 otherwise not in the interest of beneficiaries of any 18 fiduciary appointment. 19 (Source: P.A. 86-754.) 20 (205 ILCS 620/3-2) (from Ch. 17, par. 1553-2) 21 Sec. 3-2. Change in control. 22 (a) Before a change may occur in the ownership of 23 outstanding stock or membership interests of any trust 24 company whether by sale and purchase, gift, bequest or 25 inheritance, or any other means, which will result in control 26 or a change in the control of the trust company or before a 27 change in the control of a holding company having control of 28 the outstanding stock or membership interests of a trust 29 company whether by sale and purchase, gift, bequest or 30 inheritance, or any other means, which will result in control 31 or a change in control of the trust company or holding 32 company, the Commissioner shall be of the opinion and find: 33 (1) that the general character of its proposed SB1020 Enrolled -3- LRB9003480JSgc 1 management, after the change in control, is such as to 2 assure reasonable promise of competent, successful, safe 3 and sound operation; 4 (2) that the future earnings prospects, after the 5 proposed change in control, are favorable; and 6 (3) that the prior business affairs of the persons 7 proposing to obtain control or by the proposed management 8 personnel, whether as stockholder, director, member, 9 officer, or customer, were conducted in a safe, sound, 10 and lawful manner. 11 (b) Persons desiring to purchase control of an existing 12 trust company and persons obtaining control by gift, bequest 13 or inheritance, or any other means shall submit to the 14 Commissioner: 15 (1) A statement of financial worth; and 16 (2) Satisfactory evidence that the prior business 17 affairs of the persons and the proposed management 18 personnel, whether as stockholder, director, officer, or 19 customer, were conducted in a safe, sound, and lawful 20 manner. 21 As used in this Section, the term "control" means the 22 ownership of such amount of stock or membership interests or 23 ability to direct the voting of such stock or membership 24 interests as to give power to, directly or indirectly, direct 25 or cause the direction of the management or policies of the 26 trust company. A change in ownership of stock which would 27 result in direct or indirect ownership by a stockholder or 28 member, an affiliated group of stockholders or members or a 29 holding company of less than 10% of the outstanding stock or 30 membership interests shall not be considered a change of 31 control. A change in ownership of stock or membership 32 interests which would result in direct or indirect ownership 33 by a stockholder or member, an affiliated group of 34 stockholders or members or a holding company of 20% or such SB1020 Enrolled -4- LRB9003480JSgc 1 lesser amount which would entitle the holder by applying 2 cumulative voting to elect one director shall be presumed to 3 constitute a change of control for purposes of this Section. 4 If there is any doubt as to whether a change in the ownership 5 or control of the outstanding stock or membership interests 6 is sufficient to result in obtaining control thereof or to 7 effect a change in the control thereof, such doubt shall be 8 resolved in favor of reporting the facts to the Commissioner. 9 (c) Whenever a bank makes a loan or loans, secured, or 10 to be secured, by 25% or more of the outstanding stock of a 11 trust company, the president or other chief executive officer 12 of the lending bank shall promptly report such fact to the 13 Commissioner upon obtaining knowledge of such loan or loans, 14 except that no report need be made in those cases where the 15 borrower has been the owner of record of the stock for a 16 period of one year or more, or the stock is that of a 17 newly-organized trust company prior to its opening. 18 (d) (1) Before a purchase of substantially all the 19 assets and an assumption of substantially all the liabilities 20 of a trust company or before a purchase of substantially all 21 the trust assets and an assumption of substantially all the 22 trust liabilities of a trust company, the Commissioner shall 23 be of the opinion and find: 24 (i) that the general character of the acquirer's 25 proposed management, after the transfer, is such as to 26 assure reasonable promise of competent, successful, safe, 27 and sound operation; 28 (ii) that the acquirer's future earnings prospects, 29 after the proposed transfer, are favorable; 30 (iii) that any prior involvement by the acquirer or 31 by the proposed management personnel, whether as 32 stockholder, director, officer, agent, or customer, was 33 conducted in a safe, sound, and lawful manner; 34 (iv) that customers' interests will not be SB1020 Enrolled -5- LRB9003480JSgc 1 jeopardized by the purchase and assumption; and 2 (v) that adequate provision has been made for all 3 obligations and trusts as required under Section 7-1 of 4 this Act. 5 (2) Persons desiring to purchase substantially all the 6 assets and assume substantially all the liabilities of a 7 trust company or to purchase substantially all the trust 8 assets and assume substantially all the trust liabilities of 9 a trust company shall submit to the Commissioner: 10 (i) a statement of financial worth; and 11 (ii) satisfactory evidence that the prior business 12 affairs of the persons and the proposed management 13 personnel, whether as stockholder, director, officer, or 14 customer, were conducted in a safe, sound, and lawful 15 manner. 16 As used in this Section, "substantially all" the assets 17 or liabilities or the trust assets or trust liabilities of a 18 trust company means that portion such that their transfer 19 will materially impair the ability of the trust company to 20 continue successful, safe, and sound operations or to 21 continue as a going concern. 22 (e) The reports required by subsections (a),(b), (c), 23 and (d) of this Section 3-2 shall contain the following 24 information to the extent that it is known by the person 25 making the report: (1) the number of shares involved; (2) the 26 names of the sellers (or transferors); (3) the names of the 27 purchasers (or transferees); (4) the names of the beneficial 28 owners if the shares are registered in another name; (5) the 29 purchase price; (6) the total number of shares owned by the 30 sellers (or transferors), the purchasers (or transferees) and 31 the beneficial owners both immediately before and after the 32 transaction; and, (7) in the case of a loan, the name of the 33 borrower, the amount of the loan, and the name of the trust 34 company issuing the stock securing the loan and the number of SB1020 Enrolled -6- LRB9003480JSgc 1 shares securing the loan. In addition to the foregoing, such 2 reports shall contain such other information as may be 3 available and which is requested by the Commissioner to 4 inform the Commissioner of the effect of the transaction upon 5 the trust company or trust companies whose stock or assets 6 and liabilities are involved. 7 (f) Whenever such a change as described in subsection 8 (a) of this Section 3-2 occurs, each trust company shall 9 report promptly to the Commissioner any changes or 10 replacement of its chief executive officer or of any director 11 occurring in the next 12 month period, including in its 12 report a statement of the past and current business and 13 professional affiliations of the new chief executive officer 14 or directors. 15 (Source: P.A. 88-408; 89-364, eff. 8-18-95.) 16 Section 5. The Business Corporation Act of 1983 is 17 amended by changing Section 13.05 and adding Section 11.39 as 18 follows: 19 (805 ILCS 5/11.39 new) 20 Sec. 11.39. Merger of domestic corporation and limited 21 liability company. 22 (a) Any one or more domestic corporations may merge with 23 or into one or more limited liability companies of this 24 State, any other state or states of the United States, or the 25 District of Columbia, if the laws of the other state or 26 states or the District of Columbia permit the merger. The 27 domestic corporation or corporations and the limited 28 liability company or companies may merge with or into a 29 corporation, which may be any one of these corporations, or 30 they may merge with or into a limited liability company, 31 which may be any one of these limited liability companies, 32 which shall be a domestic corporation or limited liability SB1020 Enrolled -7- LRB9003480JSgc 1 company of this State, any other state of the United States, 2 or the District of Columbia, which permits the merger 3 pursuant to a plan of merger complying with and approved in 4 accordance with this Section. 5 (b) The plan of merger must set forth the following: 6 (1) The names of the domestic corporation or 7 corporations and limited liability company or companies 8 proposing to merge and the name of the domestic 9 corporation or limited liability company into which they 10 propose to merge, which is designated as the surviving 11 entity. 12 (2) The terms and conditions of the proposed merger 13 and the mode of carrying the same into effect. 14 (3) The manner and basis of converting the shares 15 of each domestic corporation and the interests of each 16 limited liability company into shares, interests, 17 obligations, other securities of the surviving entity or 18 into cash or other property or any combination of the 19 foregoing. 20 (4) In the case of a merger in which a domestic 21 corporation is the surviving entity, a statement of any 22 changes in the articles of incorporation of the surviving 23 corporation to be effected by the merger. 24 (5) Any other provisions with respect to the 25 proposed merger that are deemed necessary or desirable, 26 including provisions, if any, under which the proposed 27 merger may be abandoned prior to the filing of the 28 articles of merger by the Secretary of State of this 29 State. 30 (c) The plan required by subsection (b) of this Section 31 shall be adopted and approved by the constituent corporation 32 or corporations in the same manner as is provided in Sections 33 11.05, 11.15, and 11.20 of this Act and, in the case of a 34 limited liability company, in accordance with the terms of SB1020 Enrolled -8- LRB9003480JSgc 1 its operating agreement, if any, and in accordance with the 2 laws under which it was formed. 3 (d) Upon this approval, articles of merger shall be 4 executed by each constituent corporation and limited 5 liability company and filed as provided in Section 11.25 of 6 this Act and shall be recorded with respect to each 7 constituent corporation as provided in Section 11.45 of this 8 Act. The merger shall become effective for all purposes of 9 the laws of this State when and as provided in Section 11.40 10 of this Act with respect to the merger of corporations of 11 this State. 12 (e) If the surviving entity is to be governed by the 13 laws of the District of Columbia or any state other than this 14 State, it shall file with the Secretary of State of this 15 State an agreement that it may be served with process in this 16 State in any proceeding for enforcement of any obligation of 17 any constituent corporation or limited liability company of 18 this State, as well as for enforcement of any obligation of 19 the surviving corporation or limited liability company 20 arising from the merger, including any suit or other 21 proceeding to enforce the shareholders right to dissent as 22 provided in Section 11.70 of this Act, and shall irrevocably 23 appoint the Secretary of State of this State as its agent to 24 accept service of process in any such suit or other 25 proceedings. 26 (f) Section 11.50 of this Act shall, insofar as it is 27 applicable, apply to mergers between domestic corporations 28 and limited liability companies. 29 (g) In any merger under this Section, the surviving 30 entity shall not engage in any business or exercise any power 31 that a domestic corporation or domestic limited liability 32 company may not otherwise engage in or exercise in this 33 State. Furthermore, the surviving entity shall be governed 34 by the ownership and control restrictions in Illinois law SB1020 Enrolled -9- LRB9003480JSgc 1 applicable to that type of entity. 2 (805 ILCS 5/13.05) (from Ch. 32, par. 13.05) 3 Sec. 13.05. Admission of foreign corporation. A foreign 4 corporation organized for profit, before it transacts 5 business in this State, shall procure a certificate of 6 authority so to do from the Secretary of State. A foreign 7 corporation organized for profit, upon complying with the 8 provisions of this Act, may secure from the Secretary of 9 State a certificate of authority to transact business in this 10 State, but no foreign corporation shall be entitled to 11 procure a certificate of authority under this Act to act as 12 trustee, executor, administrator, administrator to collect, 13 or guardian, or in any other like fiduciary capacity in this 14 State or to transact in this State the business of banking, 15 insurance, suretyship, or a business of the character of a 16 building and loan corporation; provided, however, that a 17 foreign corporation may obtain a certificate of authority 18 under this Act for the purpose of carrying on the business of 19 a syndicate or limited syndicate under Article V-1/2 of the 20 Illinois Insurance Code or for the purpose of carrying on 21 business as a member of a group including incorporated and 22 individual unincorporated underwriters under Article V of the 23 Illinois Insurance Code. A foreign professional service 24 corporation may secure a certificate of authority to transact 25 business in this State from the Secretary of State upon 26 complying with this Act and demonstrating compliance with the 27 Act regulating the professional service to be rendered by the 28 professional service corporation. However, no foreign 29 professional service corporation shall be granted a 30 certificate of authority unless it complies with the 31 requirements of the Professional Service Corporation Act 32 concerning ownership and control by specified licensed 33 professionals. These professionals must be licensed in the SB1020 Enrolled -10- LRB9003480JSgc 1 state of domicile or this State. A foreign corporation shall 2 not be denied a certificate of authority by reason of the 3 fact that the laws of the state under which such corporation 4 is organized governing its organization and internal affairs 5 differ from the laws of this State, and nothing in this Act 6 contained shall be construed to authorize this State to 7 regulate the organization or the internal affairs of such 8 corporation. 9 (Source: P.A. 88-143; 88-535.) 10 Section 10. The Limited Liability Company Act is amended 11 by changing the heading of Articles 25 and 35 and Sections 12 1-5, 1-10, 1-25, 1-30, 1-35, 1-40, 5-1, 5-5, 5-15, 5-25, 13 5-45, 5-50, 10-1, 10-10, 10-15, 15-1, 15-5, 20-5, 25-1, 14 30-1, 30-5, 30-10, 30-20, 35-1, 35-10, 35-20, 35-30, 40-1, 15 40-5, 45-1, 45-5, 45-35, 50-1, 50-10, 50-15, and 60-1 and 16 adding Articles 13 and 37 and Sections 1-43, 15-3, 15-7, 17 15-20, 25-30, 25-35, 25-45, 25-50, 35-3, 35-4, 35-7, 35-45, 18 35-50, 35-55, 35-60, 35-65, 35-70, 45-65, 50-50, and 55-15 19 as follows: 20 (805 ILCS 180/1-5) 21 Sec. 1-5. Definitions. As used in this Act, unless the 22 context otherwise requires: 23 "Anniversary" means that day every year exactly one or 24 more years after: (i) the date the articles of organization 25 filed under Section 5-5 of this Act were filed by the Office 26 of the Secretary of State, in the case of a limited liability 27 company; or (ii) the date the application for admission to 28 transact business filed under Section 45-5 of this Act was 29 filed by the Office of the Secretary of State, in the case of 30 a foreign limited liability company. 31 "Anniversary month" means the month in which the 32 anniversary of the limited liability company occurs. SB1020 Enrolled -11- LRB9003480JSgc 1 "Articles of organization" means the articles of 2 organization filed by the Secretary of State for the purpose 3 of forming a limited liability company as specified in 4 Article 5. 5 "Assumed limited liability company name" means any 6 limited liability company name other than the true limited 7 liability company name, except that the identification by a 8 limited liability company of its business with a trademark or 9 service mark of which it is the owner or licensed user shall 10 not constitute the use of an assumed name under this Act. 11 "Bankruptcy" means bankruptcy under the Federal 12 Bankruptcy Code of 1978, Title 11, Chapter 7 of the United 13 States Code. 14 "Business" includes every trade, occupation, profession, 15 and other lawful purpose, whether or not carried on for 16 profit."Book value" of a membership interest means the17aggregate value of a member's total contributions to capital18as recorded on the books of the limited liability company at19the time of contribution, other than contribution of services20or an unexecuted obligation to contribute property or perform21services, adjusted for additional contributions and returns22of contributions, but unadjusted by any operating profits or23losses.24 "Contribution" means any cash, property, or services 25 rendered or a promissory note or other binding obligation to 26 contribute cash or property or to perform services, that a 27 person contributes to the limited liability company in that 28 person's capacity as a member. 29 "Court" includes every court and judge having 30 jurisdiction in a case. 31 "Debtor in bankruptcy" means a person who is the subject 32 of an order for relief under Title 11 of the United States 33 Code, a comparable order under a successor statute of general 34 application, or a comparable order under federal, state, or SB1020 Enrolled -12- LRB9003480JSgc 1 foreign law governing insolvency. 2 "Distribution" means a transfer of money, property, or 3 other benefit from"Foreign limited liability company" means4either (1) an unincorporated entity formed under a statute of5a jurisdiction within the United States comparable to this6Act or (2) if formed under a statute of a foreign country, an7entity having characteristics substantially similar to those8ofa limited liability company to a member in the member's 9 capacity as a member or to a transferee of the member's 10 distributional interest.as determined by the Secretary of11State.12 "Distributional interest" means all of a member's 13 interest in distributions by the limited liability company. 14 "Entity" means a person other than an individual. 15 "Federal employer identification number" means either (i) 16 the federal employer identification number assigned by the 17 Internal Revenue Service to the limited liability company or 18 foreign limited liability company or (ii) in the case of a 19 limited liability company or foreign limited liability 20 company not required to have a federal employer 21 identification number, any other number that may be assigned 22 by the Internal Revenue Service for purposes of 23 identification. 24 "Foreign limited liability company" means an 25 unincorporated entity organized under laws other than the 26 laws of this State that afford limited liability to its 27 owners comparable to the liability under Section 10-10 and is 28 not required to register to transact business under any law 29 of this State other than this Act. 30 "Insolvent" means that a limited liability company is 31 unable to pay its debts as they become due in the usual 32 course of its business. 33 "Limited liability company"or "company"means a limited 34 liability company organizedand existingunder this Act. SB1020 Enrolled -13- LRB9003480JSgc 1 "Manager" means a person, whether or not a member of a 2 manager-managed company, who is vested with authority under 3 Section 13-5.person elected by the members of a limited4liability company to manage the company pursuant to Section515-1.6 "Manager-managed company" means a limited liability 7 company which is so designated in its articles of 8 organization. 9 "Member" means a person who becomes a member of the 10 limited liability company upon formation of the company or in 11 the manner and at the time provided in the operating 12 agreement or, if the operating agreement does not so provide, 13 in the manner and at the time provided in this Actwith an14ownership interest in a limited liability company with the15rights and obligations specified under this Article. 16 "Member-managed company" means a limited liability 17 company other than a manager-managed company. 18 "Membership interest" means a member's rights in the 19 limited liability company, including the member'sshare of20the profits and losses of the limited liability company and21theright to receive distributions of the limited liability 22 company's assets. 23 "Operating agreement" means the agreement under Section 24 15-5 concerning the relations among the members, managers, 25 andany valid agreement, written or oral, of the members as26to the affairs of alimited liability company. The term 27 "operating agreement" includes amendments to the agreement. 28and the conduct of its business.29 "Organizer" means one of the signers of the original 30 articles of organization. 31 "Person" means an individual, partnership, domestic or 32 foreign limited partnership, limited liability company or 33 foreign limited liability company, trust, estate, 34 association, corporation, governmental body, or other SB1020 Enrolled -14- LRB9003480JSgc 1 juridical being. 2 "Registered office" means that office maintained by the 3 limited liability company in this State, the address, 4 including street, number, city and county, of which is on 5 file in the office of the Secretary of State, at which, any 6 process, notice, or demand required or permitted by law may 7 be served upon the registered agent of the limited liability 8 company. 9 "Registered agent" means a person who is an agent for 10 service of process on the limited liability company who is 11 appointed by the limited liability company and whose address 12 is the registered office of the limited liability company. 13 "Restated articles of organization" means the articles of 14 organization restated as provided in Section 5-30. 15 "State" means a state, territory, or possession of the 16 United States, the District of Columbia, or the Commonwealth 17 of Puerto Rico. 18 "Transfer" includes an assignment, conveyance, deed, bill 19 of sale, lease, mortgage, security interest, encumbrance, and 20 gift. 21 (Source: P.A. 87-1062.) 22 (805 ILCS 180/1-10) 23 Sec. 1-10. Limited liability company name. 24 (a) The name of each limited liability company as set 25 forth in its articles of organization: 26 (1) shall contain the termswords"limited 27 liability company",or"L.L.C.", or "LLC"; 28 (2) may not contain a word or phrase, or an 29 abbreviation or derivation thereof, the use of which is 30 prohibited or restricted by any other statute of this 31 State unless the restriction has been complied with; 32 (3) shall consist of letters of the English 33 alphabet, Arabic or Roman numerals, or symbols capable of SB1020 Enrolled -15- LRB9003480JSgc 1 being readily reproduced by the Office of the Secretary 2 of State; 3 (4) shall not contain any of the following terms: 4 "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," 5 "Co.," "Limited Partnership" or "L.P.";and6 (5) shall be the name under which the limited 7 liability company transacts business in this State unless 8 the limited liability company also elects to adopt an 9 assumed name or names as provided in this Act; provided, 10 however, that the limited liability company may use any 11 divisional designation or trade name without complying 12 with the requirements of this Act, provided the limited 13 liability company also clearly discloses its name;.14 (6) shall not contain any word or phrase that 15 indicates or implies that the limited liability company 16 is authorized or empowered to be in the business of a 17 corporate fiduciary unless otherwise permitted by the 18 Commissioner of the Office of Banks and Real Estate under 19 Section 1-9 of the Corporate Fiduciary Act. The word 20 "trust", "trustee", or "fiduciary" may be used by a 21 limited liability company only if it has first complied 22 with Section 1-9 of the Corporate Fiduciary Act; and 23 (7) shall contain the word "trust", if it is a 24 limited liability company organized for the purpose of 25 accepting and executing trusts. 26 (b) Nothing in this Section or Section 1-20 shall 27 abrogate or limit the common law or statutory law of unfair 28 competition or unfair trade practices, nor derogate from the 29 common law or principles of equity or the statutes of this 30 State or of the United States of America with respect to the 31 right to acquire and protect copyrights, trade names, 32 trademarks, service marks, service names, or any other right 33 to the exclusive use of names or symbols. 34 (c) The name shall not contain any word or phrase that SB1020 Enrolled -16- LRB9003480JSgc 1 indicates or implies that it is organized for any purposes 2 other than those permitted by this Act as limited by its 3 articles of organization. 4 (d) The name shall be distinguishable upon the records 5 in the Office of the Secretary of State from all of the 6 following: 7 (1) Any limited liability company that has articles 8 of organization filed with the Secretary of State under 9 Section 5-5. 10 (2) Any foreign limited liability company admitted 11 to transact business in this State. 12 (3) Any name for which an exclusive right has been 13 reserved in the Office of the Secretary of State under 14 Section 1-15. 15 (4) Any assumed name that is registered with the 16 Secretary of State under Section 1-20. 17 (e) The provisions of subsection (d) of this Section 18 shall not apply if the organizer files with the Secretary of 19 State a certified copy of a final decree of a court of 20 competent jurisdiction establishing the prior right of the 21 applicant to the use of that name in this State. 22 (f) The Secretary of State shall determine whether a 23 name is "distinguishable" from another name for the purposes 24 of this Act. Without excluding other names that may not 25 constitute distinguishable names in this State, a name is not 26 considered distinguishable, for purposes of this Act, solely 27 because it contains one or more of the following: 28 (1) The word "limited", "liability" or "company" or 29 an abbreviation of one of those words. 30 (2) Articles, conjunctions, contractions, 31 abbreviations, or different tenses or number of the same 32 word. 33 (Source: P.A. 87-1062.) SB1020 Enrolled -17- LRB9003480JSgc 1 (805 ILCS 180/1-25) 2 Sec. 1-25. Nature of business. A limited liability 3 company may be formed forcarry onany lawful purpose or 4 business except: 5 (1) banking, exclusive of fiduciaries organized for 6 the purpose of accepting and executing trusts; 7 (2) insurance unless carried on as a business of a 8 syndicate or limited syndicate under Article V 1/2 of the 9 Illinois Insurance Code; 10 (3) the practice of dentistry unless all the 11 members and managers are licensed as dentists under the 12 Illinois Dental Practice Act; or 13 (4) the practice of medicine unless all the members 14 and managers are licensed to practice medicine under the 15 Medical Practice Act of 1987. 16 (Source: P.A. 88-573, eff. 8-11-94; 89-201, eff. 1-1-96.) 17 (805 ILCS 180/1-30) 18 Sec. 1-30. Powers. Each limited liability company 19 organized and existing under this Act may do all of the 20 following: 21 (1) Sue and be sued, complain and defend, and 22 participate in administrative or other proceedings, in its 23 name. 24 (2) Have a seal, which may be altered at pleasure, and 25 use the same by causing it, or a facsimile thereof, to be 26 impressed or affixed or in any other manner reproduced, 27 provided that the affixing of a seal to an instrument shall 28 not give the instrument additional force or effect, or change 29 the construction thereof, and the use of a seal is not 30 mandatory. 31 (3) Purchase, take, receive, lease as lessee, take by 32 gift, legacy, or otherwise acquire, own, hold, use, and 33 otherwise deal in and with any real or personal property, or SB1020 Enrolled -18- LRB9003480JSgc 1 any interest therein, wherever situated. 2 (4) Sell, convey, mortgage, pledge, lease as lessor, and 3 otherwise dispose of all or any part of its property and 4 assets. 5 (5) Lend money to and otherwise assist its members and 6 employees, except as otherwise provided in the operating7agreement or articles of organization. 8 (6) Purchase, take, receive, subscribe for or otherwise 9 acquire, own, hold, vote, use, employ, sell, mortgage, loan, 10 pledge, or otherwise dispose of, and otherwise use and deal 11 in and with, shares or other interests in or obligations of 12 other limited liability companies, domestic or foreign 13 corporations, associations, general or limited partnerships, 14 or individuals. 15 (7) Incur liabilities, borrow money for its proper 16 purposes at any rate of interest the limited liability 17 company may determine without regard to the restrictions of 18 any usury law of this State, issue notes, bonds, and other 19 obligations, secure any of its obligations by mortgage or 20 pledge or deed of trust of all or any part of its property, 21 franchises, and income, and make contracts, including 22 contracts of guaranty and suretyship. 23 (8) Invest its surplus funds from time to time, lend 24 money for its proper purposes, and take and hold real and 25 personal property as security for the payment of funds so 26 loaned or invested. 27 (9) Conduct its business, carry on its operations, have 28 offices within and without this State, and exercise in any 29 other state, territory, district, or possession of the United 30 States or in any foreign country the powers granted by this 31 Act. 32 (10) Elect managers and appoint agents of the limited 33 liability company, define their duties, and fix their 34 compensation. SB1020 Enrolled -19- LRB9003480JSgc 1 (11) Enter into or amend anMake and alter one or more2 operating agreementagreements, not inconsistentwith its3articles of organization orwith the laws of this State, for 4 the administration and regulation of the affairs of the 5 limited liability company. 6 (12) Make donations for the public welfare or for 7 charitable, scientific, religious, or educational purposes, 8 lend money to the government, and transact any lawful 9 business in aid of the United States. 10 (13) Establish deferred compensation plans, pension 11 plans, profit-sharing plans, bonus plans, option plans, and 12 other incentive plans for its managers and employees and make 13 the payments provided for therein. 14 (14) Become a promoter, partner, member, associate, or 15 manager of any general partnership, limited partnership, 16 joint venture or similar association, any other limited 17 liability company, or other enterprise. 18 (15) Have and exercise all powers necessary or 19 convenient to effect any or all of the purposes for which the 20 limited liability company is organized. 21 (Source: P.A. 87-1062.) 22 (805 ILCS 180/1-35) 23 Sec. 1-35. Registered office and registered agent. 24 (a) Each limited liability company and foreign limited 25 liability company shall continuously maintain in this State a 26 registered agent and registered office, which agent must be 27 an individual resident of this State, a domestic corporation, 28 or a foreign corporation having a place of business in, and 29 authorized to do business in, this State. If the agent is a 30 corporation, the corporation must be authorized by its 31 articles of incorporation to act as an agent. 32 (b) A limited liability company or foreign limited 33 liability company may change its registered agent or the SB1020 Enrolled -20- LRB9003480JSgc 1 address of its registered office pursuant to Section 5-15or25-20. 3 (c) The registered agent may at any time resign by 4 filing in the Office of the Secretary of State written notice 5 thereof and by mailing a copy thereof to the limited 6 liability company or foreign limited liability company at its 7 principal office as it is known to the resigning registered 8 agent. The notice must be mailed at least 10 days before the 9 date of filing thereof with the Secretary of State. The 10 notice shall be executed by the registered agent, if an 11 individual, or by a principal officer, if the registered 12 agent is a corporation. The notice shall set forth all of 13 the following: 14 (1) The name of the limited liability company for 15 which the registered agent is acting. 16 (2) The name of the registered agent. 17 (3) The address, including street, number, city and 18 county of the limited liability company's then registered 19 office in this State. 20 (4) That the registered agent resigns. 21 (5) The effective date of the resignation, which 22 shall not be sooner than 30 days after the date of 23 filing. 24 (6) The address of the principal office of the 25 limited liability company as it is known to the 26 registered agent. 27 (7) A statement that a copy of the notice has been 28 sent by registered or certified mail to the principal 29 office of the limited liability company within the time 30 and in the manner prescribed by this Section. 31 (Source: P.A. 87-1062.) 32 (805 ILCS 180/1-40) 33 Sec. 1-40. Records to be kept. SB1020 Enrolled -21- LRB9003480JSgc 1 (a) Each limited liability company shall keep atthe2registered office orthe principal place of business of the 3 company named in the articles of organization or other 4 reasonable locations specified in the operating agreement all 5 of the following: 6 (1) A list of the full name and last known address 7 of each member setting forth the amount of cash each 8 member has contributed, a description and statement of 9 the agreed value of the other property or services each 10 member has contributed or has agreed to contribute in the 11 future, and the date on which each became a member. 12 (2) A copy of the articles of organization, as 13 amended or restated, together with executed copies of any 14 powers of attorney under which any articles, application, 15 or certificate has been executed. 16 (3) Copies of the limited liability company's 17 federal, State, and local income tax returns and reports, 18 if any, for the 3 most recent years. 19 (4) Copies of any then effective written operating 20 agreement and any amendments thereto and of any financial 21 statements of the limited liability company for the 3 22 most recent years. 23(5) Unless contained in the articles of24organization or an operating agreement, a writing25prepared by a manager or managers as specifically26authorized by the members or, if there are no managers,27all of the members or the member or members that may be28designated by the members pursuant to limited liability29company action properly taken under Section 10-5, setting30out all of the following:31(A) The times at which or events on the32happening of which any additional contributions33agreed to be made by each member are to be made.34(B) Any right of a member to receiveSB1020 Enrolled -22- LRB9003480JSgc 1distributions that include a return of all or any2part of the member's contribution.3(C) Any power of a member to grant the right4to become a member to an assignee of any part of the5member's limited liability company interest, and the6terms and conditions of the power.7 (b) Records kept under this Section may be inspected and 8 copied at the request and expense of any member or legal 9 representative of a deceased member or member under legal 10 disability during ordinary business hours. 11 (Source: P.A. 87-1062.) 12 (805 ILCS 180/1-43 new) 13 Sec. 1-43. Supplemental principles of law. Unless 14 displaced by particular provisions of this Act, the 15 principles of law and equity supplement this Act. 16 (805 ILCS 180/5-1) 17 Sec. 5-1. Organization. 18 (a) One or more persons, other than natural persons 19 under 18 years of age, may organize a limited liability 20 company by executing and delivering articles of organization 21 to the Secretary of State as specified in Sections 5-5 and 22 5-45. The organizers need not be members of the limited 23 liability company. Each organizer of a limited liability 24 company organized to engage in the practice of medicine shall 25 be a licensed physician of this State. The execution of the 26 articles of organization constitutes an affirmation by the 27 person, under penalty of perjury, that the facts stated 28 therein are true. 29 (b) A limited liability company shall have one2or more 30 members. 31 (c) A limited liability company is a legal entity 32 distinct from its members. SB1020 Enrolled -23- LRB9003480JSgc 1 (Source: P.A. 89-201, eff. 1-1-96.) 2 (805 ILCS 180/5-5) 3 Sec. 5-5. Articles of organization. 4 (a) The articles of organization shall set forth all of 5 the following: 6 (1) The name of the limited liability company and 7 the address of its principal place of business which may, 8 but need not be a place of business in this State. 9 (2) The purposes for which the limited liability 10 company is organized, which may be stated to be, or to 11 include, the transaction of any or all lawful businesses 12 for which limited liability companies may be organized 13 under this Act. 14 (3) The name of its registered agent and the 15 address of its registered office. 16 (4) If the limited liability company is to be 17 managed by a manager or managers, the names and business 18 addresses of the initial manager or managers. 19 (5) If management of the limited liability company 20 is to be vested inretained, in whole or in part, bythe 21 members under Section 15-1, then the names and addresses 22 of the initial member or members. 23 (6) The latest date, if any, upon which the limited 24 liability company is to dissolve and other events of 25 dissolution, if any, that may be agreed upon by the 26 members under Section 35-1 hereof. 27 (7) The name and address of each organizer. 28 (8) Any other provision, not inconsistent with law, 29 that the members elect to set out in the articles of 30 organization for the regulation of the internal affairs 31 of the limited liability company, including any 32 provisions that, under this Act, are required or 33 permitted to be set out in the operating agreement of the SB1020 Enrolled -24- LRB9003480JSgc 1 limited liability company. 2 (b) A limited liability company is organized at the time 3 articles of organization are filed by the Secretary of State 4 or at any later time, not more than 60 days after the filing 5 of the articles of organization, specified in the articles of 6 organization. 7 (c) Articles of organization for the organization of a 8 limited liability company for the purpose of accepting and 9 executing trusts shall not be filed by the Secretary of State 10 until there is delivered to him or her a statement executed 11 by the Commissioner of the Office of Banks and Real Estate 12 that the organizers of the limited liability company have 13 made arrangements with the Commissioner of the Office of 14 Banks and Real Estate to comply with the Corporate Fiduciary 15 Act. 16 (Source: P.A. 87-1062.) 17 (805 ILCS 180/5-15) 18 Sec. 5-15. Amendment by managers. A majority of the 19 managers of a limited liability company may adopt one or more 20 amendments to its articles of organization without member 21 action to do any of the following: 22 (1) To remove the name and address of any manager named 23 in the articles of organization who is no longer a manager. 24 (2) To remove the name and address of the initial 25 registered agent or the address of the initial registered 26 office, if a statement of change is on file with the 27 Secretary of State. 28 (3) To change the company name by substituting the words 29 "limited liability company" for the abbreviation "L.L.C." or 30 "LLC" or vice versa, or by adding a geographical attribution 31 to the name. 32 (4) To restate its articles of organization as currently 33 amended; such articles supersede the original articles and SB1020 Enrolled -25- LRB9003480JSgc 1 all amendments thereto. 2 (Source: P.A. 87-1062.) 3 (805 ILCS 180/5-25) 4 Sec. 5-25. Articles of amendment. The articles of 5 amendment shall be executed and filed in duplicate and shall 6 set forth the following: 7 (1) The name of the limited liability company. 8 (2) The text of each amendment adopted. 9 (3) When the amendment was adopted by the managers: 10 (A) a statement that the amendment was approved by 11 not less than the minimum number of managers necessary to 12 approve the amendmentadopted by a majority of the13managers; and 14 (B) a statement that member action was not 15 required. 16 (4) When the amendment was adopted by the members,:a 17 statement that the amendment was approved by not less than 18 the minimum number of members necessary to approve the 19 amendment. 20(A) a statement that the amendment was adopted at a21meeting of members by the affirmative vote of not less22than the minimum number of votes necessary to adopt the23amendment, as provided by the articles of organization;24or25(B) a statement that the amendment was adopted by26written consent signed by the members having not less27than the minimum number of votes necessary to adopt the28amendment, as provided by the articles of organization.29 (5) The date on which the amendment is to become 30 effective, if the amendment is to become effective after the 31 date on which the articles of amendment are filed. 32 (Source: P.A. 87-1062.) SB1020 Enrolled -26- LRB9003480JSgc 1 (805 ILCS 180/5-45) 2 Sec. 5-45. Forms, execution, acknowledgement and filing. 3 (a) All reports required by this Act to be filed in the 4 Office of the Secretary of State shall be made on forms 5 prescribed and furnished by the Secretary of State. Forms 6 for all other documents to be filed in the Office of the 7 Secretary of State shall be furnished by the Secretary of 8 State upon request therefor, but the use thereof, unless 9 otherwise specifically prescribed in this Act, shall not be 10 mandatory. 11 (b) Whenever any provision of this Act specifically 12 requires any document to be executed by the limited liability 13 company in accordance with this Section, unless otherwise 14 specifically stated in this Act and subject to any additional 15 provisions of this Act, the document shall be executed, in 16 ink, as follows: 17 (1) The articles of organization shall be signed by 18 the organizer or organizers. 19 (2) All other documents shall be signed: 20 (A) by a manager and verified by him or her; 21 or 22 (B) if there are no managers, then by the 23 members or those of them that may be designated by a 24 majority vote of the members. 25 (c) The name of a person signing the document and the 26 capacity in which the person signs shall be stated beneath or 27 opposite the person's signature. 28 (d) The execution of any document required by this Act 29 by a member or manager constitutes an affirmation under the 30 penalties of perjury that the facts stated therein are true 31 and that the person has authority to execute the document. 32 (e) When filed in the Office of the Secretary of State, 33 an authorization, including a power of attorney, to sign a 34 record must be in writing, then sworn to, verified, or SB1020 Enrolled -27- LRB9003480JSgc 1 acknowledged. 2 (Source: P.A. 87-1062.) 3 (805 ILCS 180/5-50) 4 Sec. 5-50. Amendment or dissolution by judicial act. If 5 a person required by Section 5-45 to execute an amendment or 6 articles of dissolution fails or refuses to do so, any other 7 member and any transfereeassigneeof a limited liability 8 company interest, who is adversely affected by the failure or 9 refusal, may petition a court to direct the amendment or 10 dissolution. If the court finds that the amendment or 11 dissolution is proper and that any person so designated has 12 failed or refused to execute the amendment or articles of 13 dissolution, it shall order the Secretary of State to record 14 an appropriate amendment or dissolution. 15 (Source: P.A. 87-1062.) 16 (805 ILCS 180/10-1) 17 Sec. 10-1. Admission of members. After the filing of 18 the articles of organization, a person who acquires a 19 membership interest directly from the limited liability 20 company or is a transfereean assigneeof a membership 21 interest may be admitted as a memberas provided in the22operating agreement or in the articles of organization or, if23the operating agreement or articles of organization do not24provide for the admission of those persons, thenwith 25 unanimous consent of the members. 26 (Source: P.A. 87-1062.) 27 (805 ILCS 180/10-10) 28 Sec. 10-10. Liability of members and managers. 29 (a) Except as otherwise provided in subsection (d) of 30 this Section, the debts, obligations, and liabilitiesA31memberof a limited liability company, whether arising in SB1020 Enrolled -28- LRB9003480JSgc 1 contract, tort, or otherwise, are solely the debts, 2 obligations, and liabilities of the company. A member or 3 manager is notshall bepersonally liable for aany act,4 debt, obligation, or liability of the company solely by 5 reason of being or acting as a member or managerlimited6liability company or another member or manager to the extent7that a shareholder of an Illinois business corporation is8liable in analogous circumstances under Illinois law. 9 (b) (Blank).A manager of a limited liability company10shall be personally liable for any act, debt, obligation, or11liability of the limited liability company or another manager12or member to the extent that a director of an Illinois13business corporation is liable in analogous circumstances14under Illinois law.15 (c) The failure of a limited liability company to 16 observe the usual company formalities or requirements 17 relating to the exercise of its company powers or management 18 of its business is not a ground for imposing personal 19 liability on the members or managers for liabilities of the 20 company. 21 (d) All or specified members of a limited liability 22 company are liable in their capacity as members for all or 23 specified debts, obligations, or liabilities of the company 24 if: 25 (1) a provision to that effect is contained in the 26 articles of organization; and 27 (2) a member so liable has consented in writing to 28 the adoption of the provision or to be bound by the 29 provision. 30 (Source: P.A. 87-1062.) 31 (805 ILCS 180/10-15) 32 Sec. 10-15. Member's right to informationInformation and33accounting. SB1020 Enrolled -29- LRB9003480JSgc 1 (a) A limited liability company shall provide members 2 and their agents and attorneys access to its records, 3 including the records required to be kept under Section 1-40, 4 at the company's principal place of business or other 5 reasonable locations specified in the operating agreement. 6 The company shall provide former members and their agents and 7 attorneys access for proper purposes to records pertaining to 8 the period during which they were members. The right of 9 access provides the opportunity to inspect and copy records 10 during ordinary business hours. The company may impose a 11 reasonable charge, limited to the costs of labor and 12 material, for copies of records furnished. 13 (b) A member has the right upon written demand given to 14 the limited liability company to obtain at the company's 15 expense a copy of any written operating agreement.A member16of a limited liability company shall have the right to do all17of the following:18(1) To inspect and copy limited liability company19records required by Section 1-40 to be kept.20(2) To obtain from the manager or managers from time to21time, subject to reasonable standards which may be set forth22in the articles of organization, the operating agreement, or23otherwise established by the manager or managers, upon24reasonable demand for any purpose reasonably related to the25member's interest as a member:26(A) true and full information regarding the state27of the business and financial condition of the limited28liability company and any other information regarding the29affairs of the limited liability company; and30(B) promptly after becoming available, a copy of31the limited liability company's federal, State, and local32income tax returns for each year.33(3) To have a formal accounting of limited liability34company affairs whenever circumstances render it just andSB1020 Enrolled -30- LRB9003480JSgc 1reasonable.2 (Source: P.A. 87-1062.) 3 (805 ILCS 180/Art. 13 heading new) 4 Article 13. Relations of members and managers to 5 persons dealing with limited liability company 6 (805 ILCS 180/13-5 new) 7 Sec. 13-5. Agency of members and managers. 8 (a) Subject to subsections (b) and (c): 9 (1) Each member is an agent of the limited 10 liability company for the purpose of its business, and an 11 act of a member, including the signing of an instrument 12 in the company's name, for apparently carrying on, in the 13 ordinary course, the company's business or business of 14 the kind carried on by the company binds the company, 15 unless the member had no authority to act for the company 16 in the particular matter and the person with whom the 17 member was dealing knew or had notice that the member 18 lacked authority. 19 (2) An act of a member that is not apparently for 20 carrying on, in the ordinary course, the company's 21 business or business of the kind carried on by the 22 company binds the company only if the act was authorized 23 by the other members. 24 (b) Subject to subsection (c), in a manager-managed 25 company: 26 (1) A member is not an agent of the company for the 27 purpose of its business solely by reason of being a 28 member. Each manager is an agent of the company for the 29 purpose of its business, and an act of a manager, 30 including the signing of an instrument in the company's 31 name, for apparently carrying on, in the ordinary course, 32 the company's business or business of the kind carried on SB1020 Enrolled -31- LRB9003480JSgc 1 by the company binds the company, unless the manager had 2 no authority to act for the company in the particular 3 matter and the person with whom the manager was dealing 4 knew or had notice that the manager lacked authority. 5 (2) An act of a manager which is not apparently for 6 carrying on, in the ordinary course, the company's 7 business or business of the kind carried on by the 8 company binds the company only if the act was authorized 9 under Section 15-1. 10 (c) Unless the articles of organization limit their 11 authority, any member of a member-managed company or manager 12 of a manager-managed company may sign and deliver any 13 instrument transferring or affecting the company's interest 14 in real property. The instrument is conclusive in favor of a 15 person who gives value without knowledge of the lack of the 16 authority of the person signing and delivering the 17 instrument. 18 (805 ILCS 180/13-10 new) 19 Sec. 13-10. Limited liability company liable for member 20 or manager's actionable conduct. A limited liability company 21 is liable for loss or injury caused to a person, or for a 22 penalty incurred, as a result of a wrongful act or omission, 23 or other actionable conduct, of a member or manager acting in 24 the ordinary course of business of the company or with 25 authority of the company. 26 (805 ILCS 180/15-1) 27 Sec. 15-1. Management of limited liability company. 28 (a) In a member-managed company: 29 (1) each member has equal rights in the management 30 and conduct of the company's business; and 31 (2) except as otherwise provided in subsection (c) 32 of this Section, any matter relating to the business of SB1020 Enrolled -32- LRB9003480JSgc 1 the company may be decided by a majority of the members. 2 (b) In a manager-managed company: 3 (1) each manager has equal rights in the management 4 and conduct of the company's business; 5 (2) except as otherwise provided in subsection (c) 6 of this Section, any matter relating to the business of 7 the company may be exclusively decided by the manager or, 8 if there is more than one manager, by a majority of the 9 managers; and 10 (3) a manager: 11 (A) must be designated, appointed, elected, 12 removed, or replaced by a vote, approval, or consent 13 of a majority of the members; and 14 (B) holds office until a successor has been 15 elected and qualified, unless the manager sooner 16 resigns or is removed. 17 (c) The only matters of a member or manager-managed 18 company's business requiring the consent of all of the 19 members are the following: 20 (1) the amendment of the operating agreement under 21 Section 15-5; 22 (2) an amendment to the articles of organization 23 under Article 5; 24 (3) the compromise of an obligation to make a 25 contribution under Section 20-5; 26 (4) the compromise, as among members, of an 27 obligation of a member to make a contribution or return 28 money or other property paid or distributed in violation 29 of this Act; 30 (5) the making of interim distributions under 31 subsection (a) of Section 25-1, including the redemption 32 of an interest; 33 (6) the admission of a new member; 34 (7) the use of the company's property to redeem an SB1020 Enrolled -33- LRB9003480JSgc 1 interest subject to a charging order; 2 (8) the consent to dissolve the company under 3 subdivision (2) of subsection (a) of Section 35-1; 4 (9) a waiver of the right to have the company's 5 business wound up and the company terminated under 6 Section 35-3; 7 (10) the consent of members to merge with another 8 entity under Section 37-20; and 9 (11) the sale, lease, exchange, or other disposal 10 of all, or substantially all, of the company's property 11 with or without goodwill. 12 (d) Action requiring the consent of members or managers 13 under this Act may be taken without a meeting. 14 (e) A member or manager may appoint a proxy to vote or 15 otherwise act for the member or manager by signing an 16 appointment instrument, either personally or by the member or 17 manager's attorney-in-fact.Management of the limited18liability company shall be vested in its members; however, if19the articles of organization so provide, the management of20the limited liability company may be vested, in whole or in21part, in a manager or managers who shall be elected by the22members in the manner prescribed by the operating agreement23or articles of organization of the limited liability company.24A manager or managers shall have the authority and25responsibility accorded to them by the operating agreement or26articles of organization, and the members shall not have the27authority and responsibility accorded to the managers, unless28specifically retained by them in the operating agreement or29the articles of organization. If the articles of30organization do not provide for the management of the limited31liability company by a manager or managers, instruments and32documents shall be valid and binding upon the limited33liability company if executed by any one or more of the34members unless otherwise provided in the articles ofSB1020 Enrolled -34- LRB9003480JSgc 1organization.2 (Source: P.A. 87-1062.) 3 (805 ILCS 180/15-3 new) 4 Sec. 15-3. General standards of member and manager's 5 conduct. 6 (a) The fiduciary duties a member owes to a 7 member-managed company and its other members include the duty 8 of loyalty and the duty of care referred to in subsections 9 (b) and (c) of this Section. 10 (b) A member's duty of loyalty to a member-managed 11 company and its other members includes the following: 12 (1) to account to the company and to hold as 13 trustee for it any property, profit, or benefit derived 14 by the member in the conduct or winding up of the 15 company's business or derived from a use by the member of 16 the company's property, including the appropriation of a 17 company's opportunity; 18 (2) to act fairly when a member deals with the 19 company in the conduct or winding up of the company's 20 business as or on behalf of a party having an interest 21 adverse to the company; and 22 (3) to refrain from competing with the company in 23 the conduct of the company's business before the 24 dissolution of the company. 25 (c) A member's duty of care to a member-managed company 26 and its other members in the conduct of a winding up of the 27 company's business is limited to refraining from engaging in 28 grossly negligent or reckless conduct, intentional 29 misconduct, or a knowing violation of law. 30 (d) A member shall discharge his or her duties to a 31 member-managed company and its other members under this Act 32 or under the operating agreement and exercise any rights 33 consistent with the obligation of good faith and fair SB1020 Enrolled -35- LRB9003480JSgc 1 dealing. 2 (e) A member of a member-managed company does not 3 violate a duty or obligation under this Act or under the 4 operating agreement merely because the member's conduct 5 furthers the member's own interest. 6 (f) This Section applies to a person winding up the 7 limited liability company's business as the personal or legal 8 representative of the last surviving member as if the person 9 were a member. 10 (g) In a manager-managed company: 11 (1) a member who is not also a manager owes no 12 duties to the company or to the other members solely by 13 reason of being a member; 14 (2) a manager is held to the same standards of 15 conduct prescribed for members in subsections (b), (c), 16 (d), and (e) of this Section; 17 (3) a member who pursuant to the operating 18 agreement exercises some or all of the authority of a 19 manager in the management and conduct of the company's 20 business is held to the standards of conduct in 21 subsections (b), (c), (d), and (e) of this Section to the 22 extent that the member exercises the managerial authority 23 vested in a manager by this Act; and 24 (4) a manager is relieved of liability imposed by 25 law for violations of the standards prescribed by 26 subsections (b), (c), (d), and (e) to the extent of the 27 managerial authority delegated to the members by the 28 operating agreement. 29 (805 ILCS 180/15-5) 30 Sec. 15-5. Operating agreement. 31 (a) Except as otherwise provided in subsection (b) of 32 this Section, all members of a limited liability company may 33 enter into an operating agreement to regulate the affairs of SB1020 Enrolled -36- LRB9003480JSgc 1 the company and the conduct of its business and to govern 2 relations among the members, managers, and company. To the 3 extent the operating agreement does not otherwise provide, 4 this Act governs relations among the members, managers, and 5 company. 6 (b) The operating agreement may not: 7 (1) unreasonably restrict a right to information or 8 access to records under Section 10-15; 9 (2) vary the right to expel a member in an event 10 specified in subdivision (6) of Section 35-45; 11 (3) vary the requirement to wind up the limited 12 liability company's business in a case specified in 13 subdivisions (3) or (4) of Section 35-1; 14 (4) restrict rights of a person, other than a 15 manager, member, and transferee of a member's 16 distributional interest, under this Act; 17 (5) restrict the power of a member to dissociate 18 under Section 35-50, although an operating agreement may 19 determine whether a dissociation is wrongful under 20 Section 35-50, and it may eliminate or vary the 21 obligation of the limited liability company to purchase 22 the dissociated member's distributional interest under 23 Section 35-60; 24 (6) eliminate or reduce a member's fiduciary 25 duties, but may; 26 (A) identify specific types or categories of 27 activities that do not violate these duties, if not 28 manifestly unreasonable; and 29 (B) specify the number or percentage of 30 members or disinterested managers that may authorize 31 or ratify, after full disclosure of all materials 32 facts, a specific act or transaction that otherwise 33 would violate these duties; or 34 (7) eliminate or reduce the obligation of good SB1020 Enrolled -37- LRB9003480JSgc 1 faith and fair dealing under subsection (d) of Section 2 15-3, but the operating agreement may determine the 3 standards by which the performance of the obligation is 4 to be measured, if the standards are not manifestly 5 unreasonable. 6 (c) In a limited liability company with only one member, 7 the operating agreement includes any of the following: 8 (1) Any writing, without regard to whether the 9 writing otherwise constitutes an agreement, as to the 10 company's affairs signed by the sole member. 11 (2) Any written agreement between the member and 12 the company as to the company's affairs. 13 (3) Any agreement, which need not be in writing, 14 between the member and the company as to a company's 15 affairs, provided that the company is managed by a 16 manager who is a person other than the member.The power17to adopt, alter, amend, or repeal the operating agreement18of a limited liability company shall be vested in the19members of the company unless vested in the manager or20managers of the company by the articles of organization.21A new operating agreement may be adopted by the members22unless prohibited by the articles of organization. The23operating agreement may contain any provisions for the24regulation and management of the affairs of the limited25liability company not inconsistent with law or the26articles of organization.27 (Source: P.A. 87-1062.) 28 (805 ILCS 180/15-7 new) 29 Sec. 15-7. Member and manager's right to payments and 30 reimbursement. 31 (a) A limited liability company shall reimburse a member 32 or manager for payments made and indemnify a member or 33 manager for liabilities incurred by the member or manager in SB1020 Enrolled -38- LRB9003480JSgc 1 the ordinary course of the business of the company or for the 2 preservation of its business or property. 3 (b) A limited liability company shall reimburse a member 4 for an advance to the company beyond the amount of 5 contribution the member agreed to make. 6 (c) A payment or advance made by a member that gives 7 rise to an obligation of a limited liability company under 8 subsection (a) or (b) of this Section constitutes a loan to 9 the company upon which interest accrues from the date of the 10 payment or advance. 11 (d) A member is not entitled to remuneration for 12 services performed for a limited liability company, except 13 for reasonable compensation for services rendered in winding 14 up the business of the company. 15 (805 ILCS 180/15-20 new) 16 Sec. 15-20. Actions by members. 17 (a) A member may maintain an action against a limited 18 liability company or another member for legal or equitable 19 relief, with or without an accounting as to the company's 20 business, to enforce all of the following: 21 (1) The member's rights under the operating 22 agreement. 23 (2) The member's rights under this Act. 24 (3) The rights and otherwise protect the interests 25 of the member, including rights and interests arising 26 independently of the member's relationship to the 27 company. 28 (b) The accrual, and any time limited for the assertion, 29 of a right of action for a remedy under this Section is 30 governed by other law. A right to an accounting upon a 31 dissolution and winding up does not revive a claim barred by 32 law. SB1020 Enrolled -39- LRB9003480JSgc 1 (805 ILCS 180/20-5) 2 Sec. 20-5. Member's liability for contributions. 3 (a) (Blank).A promise by a member to contribute to the4limited liability company is not enforceable unless set out5in a writing signed by the member.6 (b) (Blank).Except as provided in the operating7agreement or in the articles of organization, a member is8obligated to the limited liability company to perform any9enforceable promise to contribute cash or property or to10perform services, even if the member is unable to perform11because of death, disability, or any other reason. If a12member does not make the member's required contribution of13property or services, the member is obligated, at the option14of the limited liability company, to contribute cash equal to15that portion of the value, as stated in the limited liability16company records required to be kept by Section 1-40, of the17contribution that has not been made.18 (c) A member's obligation to contribute money, property, 19 or other benefit to, or to perform services for, a limited 20 liability company is not excused by the member's death, 21 disability, or other inability to perform personally. If a 22 member does not make the required contribution of property or 23 services, the member is obligated at the option of the 24 company to contribute money equal to the value of that 25 portion of the stated contribution which has not been made. 26 (d) A creditor of a limited liability company who 27 extends credit or otherwise acts in reliance on an obligation 28 described in subsection (c), and without notice of any 29 compromise under subdivision (4) of subsection (c) of Section 30 15-1, may enforce the original obligation. 31 (Source: P.A. 87-1062.) 32 (805 ILCS 180/Art. 25 heading) 33 ARTICLE 25. Distributionsand ResignationSB1020 Enrolled -40- LRB9003480JSgc 1 (805 ILCS 180/25-1) 2 Sec. 25-1. Interim distributions. 3 (a) Any distributions made by a limited liability 4 company before its dissolution and winding up must be in 5 equal shares. 6 (b) A member has no right to receive, and may not be 7 required to accept, a distribution in kind.Except as8provided in this Article or Article 35, a member is entitled9to receive distributions from a limited liability company at10the times or upon the happening of the events specified in11the articles of organization or operating agreement or as the12manager or managers shall specify or, if there are no13managers, as the members shall specify pursuant to action14properly taken pursuant to Section 10-5.15 (Source: P.A. 87-1062.) 16 (805 ILCS 180/25-30 new) 17 Sec. 25-30. Limitations on distributions. 18 (a) A distribution may not be made if: 19 (1) the limited liability company would not be able 20 to pay its debts as they become due in the ordinary 21 course of business; or 22 (2) the company's total assets would be less than 23 the sum of its total liabilities plus the amount that 24 would be needed, if the company were to be dissolved, 25 wound up, and terminated at the time of the distribution, 26 to satisfy the preferential rights upon dissolution, 27 winding up, and termination of members whose preferential 28 rights are superior to those receiving the distribution. 29 (b) A limited liability company may base a determination 30 that a distribution is not prohibited under subsection (a) of 31 this Section on financial statements prepared on the basis of 32 accounting practices and principles that are reasonable in 33 the circumstances or on a fair valuation or other method that SB1020 Enrolled -41- LRB9003480JSgc 1 is reasonable in the circumstances. 2 (c) Except as otherwise provided in subsection (e) of 3 this Section, the effect of a distribution under subsection 4 (a) of this Section is measured: 5 (1) in the case of distribution by purchase, 6 redemption, or other acquisition of a distributional 7 interest in a limited liability company, as of the date 8 money or other property is transferred or debt incurred 9 by the company; and 10 (2) in all other cases, as of the date the: 11 (A) distribution is authorized if the payment 12 occurs within 120 days after the date of 13 authorization; or 14 (B) payment is made if it occurs more than 120 15 days after the date of authorization. 16 (d) A limited liability company's indebtedness to a 17 member incurred by reason of a distribution made in 18 accordance with this Section is at parity with the company's 19 indebtedness to its general, unsecured creditors. 20 (e) Indebtedness of a limited liability company, 21 including indebtedness issued in connection with or as part 22 of a distribution, is not considered a liability for purposes 23 of determinations under subsection (a) of this Section if its 24 terms provide that payment of principal and interest are made 25 only if and to the extent that payment of a distribution to 26 members could then be made under this Section. If the 27 indebtedness is issued as a distribution, each payment of 28 principal or interest on the indebtedness is treated as a 29 distribution, the effect of which is measured on the date the 30 payment is made. 31 (805 ILCS 180/25-35 new) 32 Sec. 25-35. Liability for unlawful distributions. 33 (a) A member of a member-managed company or a member or SB1020 Enrolled -42- LRB9003480JSgc 1 manager of a manager-managed company who votes for or assents 2 to a distribution made in violation of Section 25-30, the 3 articles of organization, or the operating agreement is 4 personally liable to the company for the amount of the 5 distribution that exceeds the amount that could have been 6 distributed without violating Section 25-30, the articles of 7 organization, or the operating agreement if it is established 8 that the member or manager did not perform the member or 9 manager's duties in compliance with Section 15-3. 10 (b) A member of a manager-managed company who knew a 11 distribution was made in violation of Section 25-30, the 12 articles of organization, or the operating agreement is 13 personally liable to the company, but only to the extent that 14 the distribution received by the member exceeded the amount 15 that could have been properly paid under Section 25-30. 16 (c) A member or manager against whom an action is 17 brought under this Section may implead in the action: 18 (1) all other members or managers who voted for or 19 assented to the distribution in violation of subsection 20 (a) of this Section and may compel contribution from 21 them; and 22 (2) all members who received a distribution in 23 violation of subsection (b) of this Section and may 24 compel contribution from the member in the amount 25 received in violation of subsection (b) of this Section. 26 (d) A proceeding under this Section is barred unless it 27 is commenced within 2 years after the distribution. 28 (805 ILCS 180/25-45 new) 29 Sec. 25-45. Known claims against dissolved limited 30 liability company. 31 (a) A dissolved limited liability company may dispose of 32 the known claims against it by following the procedure 33 described in this Section. SB1020 Enrolled -43- LRB9003480JSgc 1 (b) A dissolved limited liability company shall notify 2 its known claimants in writing of the dissolution. The 3 notice must: 4 (1) specify the information required to be included 5 in a claim; 6 (2) provide a mailing address where the claim is to 7 be sent; 8 (3) state the deadline for receipt of the claim, 9 which may not be less than 120 days after the date the 10 written notice is received by the claimant; and 11 (4) state that the claim will be barred if not 12 received by the deadline. 13 (c) A claim against a dissolved limited liability 14 company is barred if the requirements of subsection (b) of 15 this Section are met, and: 16 (1) the claim is not received by the specified 17 deadline; or 18 (2) in the case of a claim that is timely received 19 but rejected by the dissolved company, the claimant does 20 not commence a proceeding to enforce the claim within 90 21 days after the receipt of the notice of the rejection. 22 (d) For purposes of this Section, the term "claim" does 23 not include a contingent liability or a claim based on an 24 event occurring after the effective date of dissolution. 25 (805 ILCS 180/25-50 new) 26 Sec. 25-50. Other claims against dissolved limited 27 liability company. 28 (a) A dissolved limited liability company may publish 29 notice of its dissolution and request persons having claims 30 against the company to present them in accordance with the 31 notice. 32 (b) The notice must: 33 (1) be published at least once in a newspaper of SB1020 Enrolled -44- LRB9003480JSgc 1 general circulation in the county in which the dissolved 2 limited liability company's principal office is located 3 or, if none in this State, in which its designated office 4 is or was last located; 5 (2) describe the information required to be 6 contained in a claim and provide a mailing address where 7 the claim is to be sent; and 8 (3) state that a claim against the limited 9 liability company is barred unless a proceeding to 10 enforce the claim is commenced within 5 years after 11 publication of the notice. 12 (c) If a dissolved limited liability company publishes a 13 notice in accordance with subsection (b) of this Section, the 14 claim of each of the following claimants is barred unless the 15 claimant commences a proceeding to enforce the claim against 16 the dissolved company within 5 years after the publication 17 date of the notice: 18 (1) a claimant who did not receive written notice 19 under Section 25-45; 20 (2) a claimant whose claim was timely sent to the 21 dissolved company but not acted on; and 22 (3) a claimant whose claim is contingent or based 23 on an event occurring after the effective date of 24 dissolution. 25 (d) A claim not barred under this Section may be 26 enforced: 27 (1) against the dissolved limited liability 28 company, to the extent of its undistributed assets; or 29 (2) if the assets have been distributed in 30 liquidation, against a member of the dissolved company to 31 the extent of the member's proportionate share of the 32 claim or the company's assets distributed to the member 33 in liquidation, whichever is less, but a member's total 34 liability for all claims under this Section may not SB1020 Enrolled -45- LRB9003480JSgc 1 exceed the total amount of assets distributed to the 2 member. 3 (805 ILCS 180/30-1) 4 Sec. 30-1. Member's distributionalNature of membership5 interest. 6 (a) A member is not a co-owner of, and has no 7 transferable interest in, property of a limited liability 8 company. 9 (b) A distributional interest in a limited liability 10 company is personal property and, subject to Sections 30-5 11 and 30-10, may be transferred in whole or in part. 12 (c) An operating agreement may provide that a 13 distributional interest may be evidenced by a certificate of 14 the interest issued by the limited liability company and, 15 subject to Section 30-10, may also provide for the transfer 16 of any interest represented by the certificate.The interest17of each member in a limited liability company is personal18property.19 (Source: P.A. 87-1062.) 20 (805 ILCS 180/30-5) 21 Sec. 30-5. Transfer of a distributionalAssignment of22membershipinterest. A transfer of a distributional interest 23 does not entitle the transferee to become or to exercise any 24 rights of a member. A transfer entitles the transferee to 25 receive, to the extent transferred, only the distributions to 26 which the transferor would be entitled.Unless provided27otherwise in the articles of organization or the operating28agreement, if the members of the limited liability company,29other than the member proposing to dispose of the interest,30do not approve of the proposed transfer or assignment by31unanimous consent, the transferee or assignee of the interest32shall have no right to participate in the management of theSB1020 Enrolled -46- LRB9003480JSgc 1business and affairs of the limited liability company or to2become a member.3 (Source: P.A. 87-1062.) 4 (805 ILCS 180/30-10) 5 Sec. 30-10. Rights of a transfereeassignee. 6 (a) A transferee of a distributional interest may become 7 a member of a limited liability company if and to the extent 8 that the transferor gives the transferee the right in 9 accordance with authority described in the operating 10 agreement or all other members consent. 11 (b) A transferee who has become a member, to the extent 12 transferred, has the rights and powers, and is subject to the 13 restrictions and liabilities, of a member under the operating 14 agreement of a limited liability company and this Act. A 15 transferee who becomes a member also is liable for the 16 transferor member's obligations to make contributions under 17 Section 20-5 and for obligations under Section 25-35 to 18 return unlawful distributions, but the transferee is not 19 obligated for the transferor member's liabilities unknown to 20 the transferee at the time the transferee becomes a member. 21 (c) Whether or not a transferee of a distributional 22 interest becomes a member under subsection (a) of this 23 Section, the transferor is not released from liability to the 24 limited liability company under the operating agreement or 25 this Act. 26 (d) A transferee who does not become a member is not 27 entitled to participate in the management or conduct of the 28 limited liability company's business, require access to 29 information concerning the company's transactions, or inspect 30 or copy any of the company's records. 31 (e) A transferee who does not become a member is 32 entitled to: 33 (1) receive, in accordance with the transfer, SB1020 Enrolled -47- LRB9003480JSgc 1 distributions to which the transferor would otherwise be 2 entitled; 3 (2) receive, upon dissolution and winding up of the 4 limited liability company's business: 5 (A) in accordance with the transfer, the net 6 amount otherwise distributable to the transferor; 7 and 8 (B) a statement of account only from the date 9 of the latest statement of account agreed to by all 10 the members; and 11 (3) seek under subdivision (6) of Section 35-1 a 12 judicial determination that it is equitable to dissolve 13 and wind up the company's business. 14 (f) A limited liability company need not give effect to 15 a transfer until it has notice of the transfer.A transferee16or assignee of a membership interest who does not become a17substituted member shall be entitled to receive only the18share of profits or other compensation by way of income and19the return of contributions to which that member otherwise20would be entitled.21 (Source: P.A. 87-1062.) 22 (805 ILCS 180/30-20) 23 Sec. 30-20. Rights of creditorof a member. 24 (a) On application by a judgment creditor of a member of 25 a limited liability company or of a member's transferee, a 26 court having jurisdiction may charge the distributional 27 interest of the judgment debtor to satisfy the judgment. The 28 court may appoint a receiver of the share of the 29 distributions due or to become due to the judgment debtor and 30 make all other orders, directions, accounts, and inquiries 31 the judgment debtor might have made or which the 32 circumstances may require to give effect to the charging 33 order. SB1020 Enrolled -48- LRB9003480JSgc 1 (b) A charging order constitutes a lien on the judgment 2 debtor's distributional interest. The court may order a 3 foreclosure of a lien on a distributional interest subject to 4 the charging order at any time. A purchaser at the 5 foreclosure sale has the rights of a transferee. 6 (c) at any time before foreclosure, a distributional 7 interest in a limited liability company that is charged may 8 be redeemed: 9 (1) by the judgment debtor; 10 (2) with property other than the company's 11 property, by one or more of the other members; or 12 (3) with the company's property, but only if 13 permitted by the operating agreement. 14 (d) This Act does not affect a member's right under 15 exemption laws with respect to the member's distributional 16 interest in a limited liability company. 17 (e) This Section provides the exclusive remedy by which 18 a judgment creditor of a member or a transferee may satisfy a 19 judgment out of the judgment debtor's distributional interest 20 in a limited liability company.On application to a court of21competent jurisdiction by any judgment creditor of a member,22the court may charge the member's share of profits and right23to distributions with payment of the unsatisfied amount of24the judgment with interest. To the extent so charged, the25judgment creditor has only the rights of an assignee. This26Article shall not deprive any member of the benefit of any27exemption laws applicable to his interest in the limited28liability company.29 (Source: P.A. 87-1062.) 30 (805 ILCS 180/Art. 35 heading) 31 Article 35. Dissolution and Dissociation 32 (805 ILCS 180/35-1) SB1020 Enrolled -49- LRB9003480JSgc 1 Sec. 35-1. Events causing dissolution and winding up of 2 company's business. A limited liability company is dissolved, 3 and, unless continued pursuant to subsection (b) of Section 4 35-3, its business must be wound up, upon the occurrence of 5 any of the following events: 6 (1) An event specified in the operating agreement. 7 (2) Consent of the number or percentage of members 8 specified in the operating agreement. 9 (3) An event that makes it unlawful for all or 10 substantially all of the business of the company to be 11 continued, but any cure of illegality within 90 days after 12 notice to the company of the event is effective retroactively 13 to the date of the event for purposes of this Section. 14 (4) On application by a member or a dissociated member, 15 upon entry of a judicial decree that: 16 (A) the economic purpose of the company is likely 17 to be unreasonably frustrated; 18 (B) another member has engaged in conduct relating 19 to the company's business that makes it not reasonably 20 practicable to carry on the company's business with that 21 member; 22 (C) it is not otherwise reasonably practicable to 23 carry on the company's business in conformity with the 24 articles of organization and the operating agreement; 25 (D) the company failed to purchase the petitioner's 26 distributional interest as required by Section 35-60; or 27 (E) the managers or members in control of the 28 company have acted, are acting, or will act in a manner 29 that is illegal, oppressive, or fraudulent with respect 30 to the petitioner. 31 (5) On application by a transferee of a member's 32 interest, a judicial determination that it is equitable to 33 wind up the company's business. 34 (6) Administrative dissolution under Section 35-25.ASB1020 Enrolled -50- LRB9003480JSgc 1limited liability company organized under this Act shall be2dissolved and its affairs shall be wound up upon the3happening of the first to occur of any of the following4events:5(1) At the time or upon the happening of events6specified in the articles of organization.7(2) Upon the agreement of the members, which shall be in8writing and, unless otherwise provided in the articles of9organization, unanimous.10(3) Unless provided otherwise in the articles of11organization or the operating agreement, upon the death,12retirement, resignation, bankruptcy, court declaration of13incompetence with respect to, or dissolution of, a member or14upon the occurrence of any other event that terminates the15continued membership of a member in the limited liability16company, unless within 90 days after the event there are at17least 2 remaining members and all the remaining members agree18to continue the business of the limited liability company.19(4) Entry of a decree of judicial dissolution under20Section 35-5.21(5) Administrative dissolution under Section 35-25.22 (Source: P.A. 87-1062.) 23 (805 ILCS 180/35-3 new) 24 Sec. 35-3. Limited liability company continues after 25 dissolution. 26 (a) Subject to subsection (b) of this Section, a limited 27 liability company continues after dissolution only for the 28 purpose of winding up its business. 29 (b) At any time after the dissolution of a limited 30 liability company and before the winding up of its business 31 is completed, the members, including a dissociated member 32 whose dissociation caused the dissolution, may unanimously 33 waive the right to have the company's business wound up and SB1020 Enrolled -51- LRB9003480JSgc 1 the company terminated. In that case: 2 (1) the limited liability company resumes carrying 3 on its business as if dissolution had never occurred and 4 any liability incurred by the company or a member after 5 the dissolution and before the waiver is determined as if 6 the dissolution had never occurred; and 7 (2) the rights of a third party accruing under 8 subsection (a) of Section 35-7 or arising out of conduct 9 in reliance on the dissolution before the third party 10 knew or received a notification of the waiver are not 11 adversely affected. 12 (805 ILCS 180/35-4 new) 13 Sec. 35-4. Right to wind up limited liability company's 14 business. 15 (a) After dissolution, a member who has not wrongfully 16 dissociated may participate in winding up a limited liability 17 company's business, but on application of any member, 18 member's legal representative, or transferee, the Circuit 19 Court, for good cause shown, may order judicial supervision 20 of the winding up. 21 (b) A legal representative of the last surviving member 22 may wind up a limited liability company's business. 23 (c) A person winding up a limited liability company's 24 business may preserve the company's business or property as a 25 going concern for a reasonable time, prosecute and defend 26 actions and proceedings, whether civil, criminal, or 27 administrative, settle and close the company's business, 28 dispose of and transfer the company's property, discharge the 29 company's liabilities, distribute the assets of the company 30 pursuant to Section 35-10, settle disputes by mediation or 31 arbitration, and perform other necessary acts. 32 (805 ILCS 180/35-7 new) SB1020 Enrolled -52- LRB9003480JSgc 1 Sec. 35-7. Member or manager's power and liability as 2 agent after dissolution. 3 (a) A limited liability company is bound by a member or 4 manager's act after dissolution that: 5 (1) is appropriate for winding up the company's 6 business; or 7 (2) would have bound the company under Section 13-5 8 before dissolution, if the other party to the transaction 9 did not have notice of the dissolution. 10 (b) A member or manager who, with knowledge of the 11 dissolution, subjects a limited liability company to 12 liability by an act that is not appropriate for winding up 13 the company's business is liable to the company for any 14 damage caused to the company arising from the liability. 15 (805 ILCS 180/35-10) 16 Sec. 35-10. Distribution of assets in winding up limited 17 liability company's businessupon dissolution. 18 (a) In winding up a limited liability company's 19 business, the assets of the company must be applied to 20 discharge its obligations to creditors, including members who 21 are creditors. Any surplus must be applied to pay in money 22 the net amount distributable to members in accordance with 23 their right to distributions under subsection (b) of this 24 Section. 25 (b) Each member is entitled to a distribution upon the 26 winding up of the limited liability company's business, 27 consisting of a return of all contributions that have not 28 previously been returned and a distribution of any remainder 29 in equal shares.Upon the winding up of a limited liability30company, the assets shall be distributed in the following31order:32(1) to creditors, including members who are creditors,33to the extent permitted by law, in satisfaction ofSB1020 Enrolled -53- LRB9003480JSgc 1liabilities of the limited liability company other than2liabilities for distributions to members under Section 25-13or 25-10;4(2) except as provided in the operating agreement or in5the articles of organization, to members and former members6of the limited liability company in satisfaction of the7limited liability company's obligations for distributions due8and owing under Section 25-1 or 25-10;9(3) except as provided in the operating agreement or in10the articles of organization, to members of the limited11liability company for the return of their contributions; and12(4) except as provided in the operating agreement or in13the articles of organization, to the members of the limited14liability company in the proportions in which the members15share in distributions under Section 20-15.16 (Source: P.A. 87-1062.) 17 (805 ILCS 180/35-20) 18 Sec. 35-20. Filing of articles of dissolution. 19 (a) Duplicate originals of the articles of dissolution 20 shall be delivered to the Secretary of State. If the 21 Secretary of State finds that the articles of dissolution 22 conform to law, he or she shall, when all required fees have 23 been paid: 24 (1) endorse on each duplicate original the word 25 "Filed" and the date of the filing thereof; and 26 (2) file one duplicate original in his or her 27 office. 28 (b) A duplicate original of the articles of dissolution 29 shall be returned to the representative of the dissolved 30 limited liability company. Upon the filing of the articles 31 of dissolution, the existence of the company shall terminate 32cease, and its articles of organization shall be deemed 33 cancelled, except for the purpose of suits, other SB1020 Enrolled -54- LRB9003480JSgc 1 proceedings, and appropriate action as provided in this 2 Article. The manager or managers or member or members at the 3 time of terminationdissolution, or those that remain, shall 4 thereafter be trusteetrusteesfor the members and creditors 5 of the terminateddissolved limited liabilitycompany and, in 6 that capacity, shall have authority to convey or distribute 7 any company property discovered after terminationdissolution8 and take any other action that may be necessary on behalf of 9 and in the name of the terminateddissolved limited liability10 company. 11 (Source: P.A. 87-1062.) 12 (805 ILCS 180/35-30) 13 Sec. 35-30. Procedure for administrative dissolution. 14 (a) After the Secretary of State determines that one or 15 more grounds exist under Section 35-25 for the administrative 16 dissolution of a limited liability company, the Secretary of 17 State shall send a notice of delinquency by regular mail to 18 each delinquent limited liability company at its registered 19 office, or if the limited liability company has failed to20maintain a registered office,to the member or manager at the 21 last known office of the member or manager. 22 (b) If the limited liability company does not correct 23 the default within 90 days following the date of the notice 24 of delinquency, the Secretary of State shall thereupon 25 dissolve the limited liability company by issuing a notice of 26 dissolution that recites the grounds for dissolution and its 27 effective date. The Secretary of State shall file the 28 original of the notice in his or her office and mail one copy 29 to the limited liability company at its registered office. 30 (c) Upon the administrative dissolution of a limited 31 liability company,terminates its business existence, anda 32 dissolved limited liability company shall continue for only 33 the purpose of winding up its business.not thereafter carrySB1020 Enrolled -55- LRB9003480JSgc 1on any business. However,A dissolved limited liability 2 company may take all action authorized under Section 1-30 or 3 necessary to wind upand liquidateits business and affairs 4 and terminate. 5 (Source: P.A. 87-1062.) 6 (805 ILCS 180/35-45 new) 7 Sec. 35-45. Events causing member's dissociation. A 8 member is dissociated from a limited liability company upon 9 the occurrence of any of the following events: 10 (1) The company's having notice of the member's express 11 will to withdraw upon the date of notice or on a later date 12 specified by the member. 13 (2) An event agreed to in the operating agreement as 14 causing the member's dissociation. 15 (3) Upon transfer of all of a member's distributional 16 interest, other than a transfer for security purposes or a 17 court order charging the member's distributional interest 18 that has not been foreclosed. 19 (4) The member's expulsion pursuant to the operating 20 agreement. 21 (5) The member's expulsion by unanimous vote of the 22 other members if: 23 (A) it is unlawful to carry on the company's 24 business with the member; 25 (B) there has been a transfer of substantially all 26 of the member's distributional interest, other than a 27 transfer for security purposes or a court order charging 28 the member's distributional interest that has not been 29 foreclosed; 30 (C) within 90 days after the company notifies a 31 corporate member that it will be expelled because it has 32 filed a certificate of dissolution or the equivalent, its 33 charter has been revoked, or its right to conduct SB1020 Enrolled -56- LRB9003480JSgc 1 business has been suspended by the jurisdiction of its 2 incorporation, the member fails to obtain a revocation of 3 the certificate of dissolution or a reinstatement of its 4 charter or its right to conduct business; or 5 (D) a partnership or a limited liability company 6 that is a member has been dissolved and its business is 7 being wound up. 8 (6) On application by the company or another member, the 9 member's expulsion by judicial determination because the 10 member: 11 (A) engaged in wrongful conduct that adversely and 12 materially affected the company's business; 13 (B) willfully or persistently committed a material 14 breach of the operating agreement or of a duty owed to the 15 company or the other members under Section 15-3; or 16 (C) engaged in conduct relating to the company's 17 business that makes it not reasonably practicable to carry on 18 the business with the member. 19 (7) The member's: 20 (A) becoming a debtor in bankruptcy; 21 (B) executing an assignment for the benefit of 22 creditors; 23 (C) seeking, consenting to, or acquiescing in the 24 appointment of a trustee, receiver, or liquidator of the 25 member or of all or substantially all of the member's 26 property; or 27 (D) failing, within 90 days after the appointment, 28 to have vacated or stayed the appointment of a trustee, 29 receiver, or liquidator of the member or of all or 30 substantially all of the member's property obtained 31 without the member's consent or acquiescence, or failing 32 within 90 days after the expiration of a stay to have the 33 appointment vacated. 34 (8) In the case of a member who is an individual: SB1020 Enrolled -57- LRB9003480JSgc 1 (A) the member's death; 2 (B) the appointment of a guardian or general 3 conservator for the member; or 4 (C) a judicial determination that the member has 5 otherwise become incapable of performing the member's 6 duties under the operating agreement. 7 (9) In the case of a member that is a trust or is acting 8 as a member by virtue of being a trustee of a trust, 9 distribution of the trust's entire rights to receive 10 distributions from the company, but not merely by reason of 11 the substitution of a successor trustee. 12 (10) In the case of a member that is an estate or is 13 acting as a member by virtue of being a personal 14 representative of an estate, distribution of the estate's 15 entire rights to receive distributions from the company, but 16 not merely the substitution of a successor personal 17 representative. 18 (11) Termination of the existence of a member if the 19 member is not an individual, estate, or trust other than a 20 business trust. 21 (805 ILCS 180/35-50 new) 22 Sec. 35-50. Member's power to dissociate; wrongful 23 dissociation. 24 (a) A member has the power to dissociate from a limited 25 liability company at any time, rightfully or wrongfully, by 26 express will under subdivision (1) of Section 35-45. 27 (b) The member's dissociation from a limited liability 28 company is wrongful only if it is in breach of an express 29 provision of the agreement. 30 (c) A member who wrongfully dissociates from a limited 31 liability company is liable to the company and to the other 32 members for damages caused by the dissociation. The 33 liability is in addition to any other obligation of the SB1020 Enrolled -58- LRB9003480JSgc 1 member to the company or to the other members. 2 (d) If a limited liability company does not dissolve and 3 wind up its business as a result of a member's wrongful 4 dissociation under subsection (b) of this Section, damages 5 sustained by the company for the wrongful dissociation must 6 be offset against distributions otherwise due the member 7 after the dissociation. 8 (805 ILCS 180/35-55 new) 9 Sec. 35-55. Effect of member's dissociation. 10 (a) Upon a member's dissociation the company must cause 11 the dissociated member's distributional interest to be 12 purchased under Section 35-60. 13 (b) Upon a member's dissociation from a limited 14 liability company: 15 (1) the member's right to participate in the 16 management and conduct of the company's business 17 terminates, except as otherwise provided in Section 35-4, 18 and the member ceases to be a member and is treated the 19 same as a transferee of a member; 20 (2) the member's fiduciary duties terminate, except 21 as provided in subdivision (3) of this subsection (b); 22 and 23 (3) the member's duty of loyalty under subdivisions 24 (1) and (2) of subsection (b) of Section 15-3 and duty of 25 care under subsection (c) of Section 15-3 continue only 26 with regard to matters arising and events occurring 27 before the member's dissociation, unless the member 28 participates in winding up the company's business 29 pursuant to Section 35-4. 30 (805 ILCS 180/35-60 new) 31 Sec. 35-60. Company purchase of distributional interest. 32 (a) A limited liability company shall purchase a SB1020 Enrolled -59- LRB9003480JSgc 1 distributional interest of a member for its fair value 2 determined as of the date of the member's dissociation if the 3 member's dissociation does not result in a dissolution and 4 winding up of the company's business under Section 35-1. 5 (b) A limited liability company must deliver a purchase 6 offer to the dissociated member whose distributional interest 7 is entitled to be purchased not later than 30 days after the 8 date determined under subsection (a) of this Section. The 9 purchase offer must be accompanied by: 10 (1) a statement of the company's assets and 11 liabilities as of the date determined under subsection 12 (a) of this Section; 13 (2) the latest available balance sheet and income 14 statement, if any; and 15 (3) an explanation of how the estimated amount of 16 the payment was calculated. 17 (c) If the price and other terms of a purchase of a 18 distributional interest are fixed or are to be determined by 19 the operating agreement, the price and terms so fixed or 20 determined govern the purchase unless the purchaser defaults. 21 If a default occurs, the dissociated member is entitled to 22 commence a proceeding to have the company dissolved under 23 Section 35-1. 24 (d) If an agreement to purchase the distributional 25 interest is not made within 120 days after the date 26 determined under subsection (a) of this Section, the 27 dissociated member, within another 120 days, may commence a 28 proceeding against the limited liability company to enforce 29 the purchase. The company at its expense shall notify in 30 writing all of the remaining members, and any other person 31 the court directs, of the commencement of the proceeding. 32 The jurisdiction of the court in which the proceeding is 33 commenced under this subsection (d) is plenary and exclusive. 34 (e) The court shall determine the fair value of the SB1020 Enrolled -60- LRB9003480JSgc 1 distributional interest in accordance with the standards set 2 forth in Section 35-65 together with the terms for the 3 purchase. Upon making these determinations, the court shall 4 order the limited liability company to purchase or cause the 5 purchase of the interest. 6 (f) Damages for wrongful dissociation under Section 7 35-50, and all other amounts owing, whether or not currently 8 due, from the dissociated member to a limited liability 9 company, must be offset against the purchase price. 10 (805 ILCS 180/35-65 new) 11 Sec. 35-65. Court action to determine fair value of 12 distributional interest. 13 (a) In an action brought to determine the fair value of 14 a distributional interest in a limited liability company, the 15 court shall: 16 (1) determine the fair value of the interest, 17 considering among other relevant evidence the going 18 concern value of the company, any agreement among some or 19 all of the members fixing the price or specifying a 20 formula for determining value of distributional interests 21 for any other purpose, the recommendations of any 22 appraiser appointed by the court, and any legal 23 constraints on the company's ability to purchase the 24 interest; 25 (2) specify the terms of the purchase, including, 26 if appropriate, terms for installment payments, 27 subordination of the purchase obligation to the rights of 28 the company's other creditors, security for a deferred 29 purchase price, and a covenant not to compete or other 30 restriction on a dissociated member; and 31 (3) require the dissociated member to deliver an 32 assignment of the interest to the purchaser upon receipt 33 of the purchase price or the first installment of the SB1020 Enrolled -61- LRB9003480JSgc 1 purchase price. 2 (b) After the dissociated member delivers the 3 assignment, the dissociated member has no further claim 4 against the company, its members, officers, or managers, if 5 any, other than a claim to any unpaid balance of the purchase 6 price and a claim under any agreement with the company or the 7 remaining members that is not terminated by the court. 8 (c) If the purchase is not completed in accordance with 9 the specified terms, the company shall be dissolved upon 10 application under item (D) of subdivision (4) of Section 11 35-1. If a limited liability company is so dissolved, the 12 dissociated member has the same rights and priorities in the 13 company's assets as if the sale had not been ordered. 14 (d) If the court finds that a party to the proceeding 15 acted arbitrarily, vexatiously, or not in good faith, it may 16 award one or more other parties their reasonable expenses, 17 including attorney's fees and the expenses of appraisers or 18 other experts, incurred in the proceeding. The finding may 19 be based on the company's failure to make an offer to pay or 20 to comply with Section 35-60. 21 (e) Interest must be paid on the amount awarded from the 22 date determined under subsection (a) of Section 35-60 to the 23 date of payment. 24 (805 ILCS 180/35-70 new) 25 Sec. 35-70. Dissociated member's power to bind limited 26 liability company. For 2 years after a member dissociates 27 without the dissociation resulting in a dissolution and 28 winding up of a limited liability company's business, the 29 company, including a surviving company under Article 37, is 30 bound by an act of the dissociated member that would have 31 bound the company under Section 13-5 before dissociation only 32 if at the time of entering into the transaction the other 33 party: SB1020 Enrolled -62- LRB9003480JSgc 1 (1) reasonably believed that the dissociated member was 2 then a member; 3 (2) did not have notice of the member's dissociation; 4 and 5 (3) is not deemed to have had notice under Section 6 35-15. 7 (805 ILCS 180/Art. 37 heading new) 8 Article 37. Conversions and mergers 9 (805 ILCS 180/37-5 new) 10 Sec. 37-5. Definitions. In this Article: 11 "Corporation" means a corporation under the Business 12 Corporation Act of 1983, a predecessor law, or comparable law 13 of another jurisdiction. 14 "General partner" means a partner in a partnership and a 15 general partner in a limited partnership. 16 "Limited partner" means a limited partner in a limited 17 partnership. 18 "Limited partnership" means a limited partnership created 19 under the Revised Uniform Limited Partnership Act, a 20 predecessor law, or comparable law of another jurisdiction. 21 "Partner" includes a general partner and a limited 22 partner. 23 "Partnership" means a general partnership under the 24 Uniform Partnership Act, a predecessor law, or comparable law 25 of another jurisdiction. 26 "Partnership agreement" means an agreement among the 27 partners concerning the partnership or limited partnership. 28 "Shareholder" means a shareholder in a corporation. 29 (805 ILCS 180/37-10 new) 30 Sec. 37-10. Conversion of partnership or limited 31 partnership to limited liability company. SB1020 Enrolled -63- LRB9003480JSgc 1 (a) A partnership or limited partnership may be 2 converted to a limited liability company pursuant to this 3 Section if conversion to a limited liability company is 4 permitted under the law governing the partnership or limited 5 partnership. 6 (b) The terms and conditions of a conversion of a 7 partnership or limited partnership to a limited liability 8 company must be approved by all of the partners or by a 9 number or percentage of the partners required for conversion 10 in the partnership agreement. 11 (c) An agreement of conversion must set forth the terms 12 and conditions of the conversion of the interests of partners 13 of a partnership or of a limited partnership, as the case may 14 be, into interests in the converted limited liability company 15 or the cash or other consideration to be paid or delivered as 16 a result of the conversion of the interests of the partners, 17 or a combination thereof. 18 (d) After a conversion is approved under subsection (b) 19 of this Section, the partnership or limited partnership shall 20 file articles of organization in the office of the Secretary 21 of State that satisfy the requirements of Section 5-5 and 22 contain all of the following: 23 (1) A statement that the partnership or limited 24 partnership was converted to a limited liability company 25 from a partnership or limited partnership, as the case 26 may be. 27 (2) Its former name. 28 (3) A statement of the number of votes cast by the 29 partners entitled to vote for and against the conversion 30 and, if the vote is less than unanimous, the number or 31 percentage required to approve the conversion under 32 subsection (b) of this Section. 33 (4) In the case of a limited partnership, a 34 statement that the certificate of limited partnership SB1020 Enrolled -64- LRB9003480JSgc 1 shall be canceled as of the date the conversion took 2 effect. 3 (e) In the case of a limited partnership, the filing of 4 articles of organization under subsection (d) of this Section 5 cancels its certificate of limited partnership as of the date 6 the conversion took effect. 7 (f) A conversion takes effect when the articles of 8 organization are filed in the office of the Secretary of 9 State or on a date specified in the articles of organization 10 not later than 30 days subsequent to the filing of the 11 articles of organization. 12 (g) A general partner who becomes a member of a limited 13 liability company as a result of a conversion remains liable 14 as a partner for an obligation incurred by the partnership or 15 limited partnership before the conversion takes effect. 16 (h) A general partner's liability for all obligations of 17 the limited liability company incurred after the conversion 18 takes effect is that of a member of the company. A limited 19 partner who becomes a member as a result of a conversion 20 remains liable only to the extent the limited partner was 21 liable for an obligation incurred by the limited partnership 22 before the conversion takes effect. 23 (805 ILCS 180/37-15 new) 24 Sec. 37-15. Effect of conversion; entity unchanged. 25 (a) A partnership or limited partnership that has been 26 converted under this Article is for all purposes the same 27 entity that existed before the conversion. 28 (b) When a conversion takes effect: 29 (1) all property owned by the converting 30 partnership or limited partnership vests in the limited 31 liability company; 32 (2) all debts, liabilities, and other obligations 33 of the converting partnership or limited partnership SB1020 Enrolled -65- LRB9003480JSgc 1 continue as obligations of the limited liability company; 2 (3) an action or proceeding pending by or against 3 the converting partnership or limited partnership may be 4 continued as if the conversion had not occurred; 5 (4) except as prohibited by other law, all of the 6 rights, privileges, immunities, powers, and purposes of 7 the converting partnership or limited partnership vest in 8 the limited liability company; and 9 (5) except as otherwise provided in the agreement 10 of conversion under Section 37-10, all of the partners of 11 the converting partnership continue as members of the 12 limited liability company. 13 (805 ILCS 180/37-20 new) 14 Sec. 37-20. Merger of entities. 15 (a) Pursuant to a plan of merger approved under 16 subsection (c) of this Section, a limited liability company 17 may be merged with or into one or more limited liability 18 companies, foreign limited liability companies, corporations, 19 foreign corporations, partnerships, foreign partnerships, 20 limited partnerships, foreign limited partnerships, or other 21 domestic or foreign entities if merger with or into a limited 22 liability company is permitted under the law governing the 23 domestic or foreign entity. 24 (b) A plan of merger must set forth all of the 25 following: 26 (1) The name of each entity that is a party to the 27 merger. 28 (2) The name of the surviving entity into which the 29 other entities will merge. 30 (3) The type of organization of the surviving 31 entity. 32 (4) The terms and conditions of the merger. 33 (5) The manner and basis for converting the SB1020 Enrolled -66- LRB9003480JSgc 1 interests, shares, obligations, or other securities of 2 each party to the merger into interests, shares, 3 obligations, or other securities of the surviving entity, 4 or into money or other property in whole or in part. 5 (6) The street address of the surviving entity's 6 principal place of business. 7 (c) A plan of merger must be approved: 8 (1) in the case of a limited liability company that 9 is a party to the merger, by all of the members or by a 10 number or percentage of members specified in the 11 operating agreement; 12 (2) in the case of a foreign limited liability 13 company that is a party to the merger, by the vote 14 required for approval of a merger by the law of the state 15 or foreign jurisdiction in which the foreign limited 16 liability company is organized; 17 (3) in the case of a partnership or domestic 18 limited partnership that is a party to the merger, by the 19 vote required for approval of a conversion under Section 20 37-5(b); and 21 (4) in the case of any other entities that are 22 parties to the merger, by the vote required for approval 23 of a merger by the law of this State or of the state or 24 foreign jurisdiction in which the entity is organized 25 and, in the absence of such a requirement, by all the 26 owners of interests in the entity. 27 (d) After a plan of merger is approved and before the 28 merger takes effect, the plan may be amended or abandoned as 29 provided in the plan. 30 (e) The merger is effective upon the filing of the 31 articles of merger with the Secretary of State, or a later 32 date as specified in the articles of merger not later than 30 33 days subsequent to the filing of the plan of merger under 34 Section 37-25. SB1020 Enrolled -67- LRB9003480JSgc 1 (805 ILCS 180/37-25 new) 2 Sec. 37-25. Articles of merger. 3 (a) After approval of the plan of merger under Section 4 37-20, unless the merger is abandoned under subsection (d) of 5 Section 37-20, articles of merger must be signed on behalf of 6 each limited liability company and other entity that is a 7 party to the merger and delivered to the Secretary of State 8 for filing. The articles must set forth all of the 9 following: 10 (1) The name and jurisdiction of formation or 11 organization of each of the limited liability companies 12 and other entities that are parties to the merger. 13 (2) For each limited liability company that is to 14 merge, the date its articles of organization were filed 15 with the Secretary of State. 16 (3) That a plan of merger has been approved and 17 signed by each limited liability company and other entity 18 that is to merge and, if a corporation is a party to the 19 merger, a copy of the plan as approved by the corporation 20 shall be attached to the articles. 21 (4) The name and address of the surviving limited 22 liability company or other surviving entity. 23 (5) The effective date of the merger. 24 (6) If a limited liability company is the surviving 25 entity, any changes in its articles of organization that 26 are necessary by reason of the merger. 27 (7) If a party to a merger is a foreign limited 28 liability company, the jurisdiction and date of filing of 29 its initial articles of organization and the date when 30 its application for authority was filed by the Secretary 31 of State or, if an application has not been filed, a 32 statement to that effect. 33 (8) If the surviving entity is not a limited 34 liability company, an agreement that the surviving entity SB1020 Enrolled -68- LRB9003480JSgc 1 may be served with process in this State and is subject 2 to liability in any action or proceeding for the 3 enforcement of any liability or obligation of any limited 4 liability company previously subject to suit in this 5 State which is to merge, and for the enforcement, as 6 provided in this Act, of the right of members of any 7 limited liability company to receive payment for their 8 interest against the surviving entity. 9 (b) If a foreign limited liability company is the 10 surviving entity of a merger, it may not do business in this 11 State until an application for that authority is filed with 12 the Secretary of State. 13 (c) The surviving limited liability company or other 14 entity shall furnish a copy of the plan of merger, on request 15 and without cost, to any member of any limited liability 16 company or any person holding an interest in any other entity 17 that is to merge. 18 (d) To the extent the articles of merger are 19 inconsistent with the limited liability company's articles of 20 organization, the articles of merger shall operate as an 21 amendment to the company's articles of organization. 22 (805 ILCS 180/37-30 new) 23 Sec. 37-30. Effect of merger. 24 (a) When a merger takes effect: 25 (1) the separate existence of each limited 26 liability company and other entity that is a party to the 27 merger, other than the surviving entity, terminates; 28 (2) all property owned by each of the limited 29 liability companies and other entities that are party to 30 the merger vests in the surviving entity; 31 (3) all debts, liabilities, and other obligations 32 of each limited liability company and other entity that 33 is party to the merger become the obligations of the SB1020 Enrolled -69- LRB9003480JSgc 1 surviving entity; 2 (4) an action or proceeding pending by or against a 3 limited liability company or other party to a merger may 4 be continued as if the merger had not occurred or the 5 surviving entity may be substituted as a party to the 6 action or proceeding; and 7 (5) except as prohibited by other law, all the 8 rights, privileges, immunities, powers, and purposes of 9 every limited liability company and other entity that is 10 a party to a merger vest in the surviving entity. 11 (b) The Secretary of State is an agent for service of 12 process in an action or proceeding against the surviving 13 foreign entity to enforce an obligation of any party to a 14 merger if the surviving foreign entity fails to appoint or 15 maintain an agent designated for service of process in this 16 State or the agent for service of process cannot with 17 reasonable diligence be found at the designated office. 18 Service is effected under this subsection (b) at the earliest 19 of: 20 (1) the date the company receives the process, 21 notice, or demand; 22 (2) the date shown on the return receipt, if signed 23 on behalf of the company; or 24 (3) 5 days after its deposit in the mail, if mailed 25 postpaid and correctly addressed. 26 (c) Service under subsection (b) of this Section shall 27 be made by the person instituting the action by doing all of 28 the following: 29 (1) Serving on the Secretary of State, or on any 30 employee having responsibility for administering this 31 Act, a copy of the process, notice, or demand, together 32 with any papers required by law to be delivered in 33 connection with service and paying the fee prescribed by 34 Article 50 of this Act. SB1020 Enrolled -70- LRB9003480JSgc 1 (2) Transmitting notice of the service on the 2 Secretary of State and a copy of the process, notice, or 3 demand and accompanying papers to the surviving entity 4 being served, by registered or certified mail at the 5 address set forth in the articles of merger. 6 (3) Attaching an affidavit of compliance with this 7 Section, in substantially the form that the Secretary of 8 State may by rule prescribe, to the process, notice, or 9 demand. 10 (d) Nothing contained in this Section shall limit or 11 affect the right to serve any process, notice, or demand 12 required or permitted by law to be served upon a limited 13 liability company in any other manner now or hereafter 14 permitted by law. 15 (e) A member of the surviving limited liability company 16 is liable for all obligations of a party to the merger for 17 which the member was personally liable before the merger. 18 (f) Unless otherwise agreed, a merger of a limited 19 liability company that is not the surviving entity in the 20 merger does not require the limited liability company to wind 21 up its business under this Act or pay its liabilities and 22 distribute its assets under this Act. 23 (805 ILCS 180/37-35 new) 24 Sec. 37-35. Article not exclusive. This Article does not 25 preclude an entity from being converted or merged under other 26 law. 27 (805 ILCS 180/40-1) 28 Sec. 40-1. Right of action. No action shall be brought 29 by a member, or transfereeassigneewho is entitled to 30 exercise the rights of a member to bring an action, in the 31 right of a limited liability company to recover a judgment in 32 its favor unless members or managers with authority to do so SB1020 Enrolled -71- LRB9003480JSgc 1 have refused to bring the action or unless an effort to cause 2 those members or managers to bring the action is not likely 3 to succeed. 4 (Source: P.A. 87-1062.) 5 (805 ILCS 180/40-5) 6 Sec. 40-5. Proper plaintiff. No action shall be brought 7 in the right of a limited liability company by a member or 8 transfereeassigneewho is a substituted member, unless (i) 9 the plaintiff was a member or is a transfereean assigneewho 10 was a substituted member at the time of the transaction of 11 which the person complains or (ii) the person's status as a 12 member or a transfereean assigneewho is a substituted 13 member had devolved upon him or her by operation of law or 14 under the terms of the operating agreement from a person who 15 was a member or a transfereean assigneewho was a 16 substituted member at the time of the transaction. 17 (Source: P.A. 87-1062.) 18 (805 ILCS 180/45-1) 19 Sec. 45-1. Law governing foreign limited liability 20 companies. 21 (a)Subject to the Constitution of this State,The laws 22 of the State or other jurisdiction under which a foreign 23 limited liability company is organizedshallgovern its 24 organization and,internal affairs,and the liability of its 25 managers, members, and their transferees. 26 (b) A foreign limited liability company may not be 27 denied admission by reason of any difference between the 28thoselaws of another jurisdiction under which the foreign 29 company is organized and the laws of this State. 30 (c) A certificate of authority does not authorize a 31 foreign limited liability company to engage in any business 32 or exercise any power that a limited liability company may SB1020 Enrolled -72- LRB9003480JSgc 1 not engage in or exercise in this State. 2 (Source: P.A. 87-1062.) 3 (805 ILCS 180/45-5) 4 Sec. 45-5. Admission to transact business. 5 (a) Before transacting business in this State, a foreign 6 limited liability company shall be admitted to do so by the 7 Secretary of State. In order to be admitted, a foreign 8 limited liability company shall submit to the Office of the 9 Secretary of State an application for admission to transact 10 business as a foreign limited liability company setting forth 11 all of the following: 12 (1) The name of the foreign limited liability 13 company and, if different, the name under which it 14 proposes to transact business in this State. 15 (2) The jurisdiction, date of its formation, and 16 period of duration. 17 (3) A certificate stating that the company is in 18 existence under the laws of the jurisdiction wherein it 19 is organized executed by the Secretary of State of that 20 jurisdiction or by some other official that may have 21 custody of the records pertaining to limited liability 22 companies (or affidavit from an appropriate official of 23 the jurisdiction that good standing certificates are not 24 issued or other evidence of existence which the Secretary 25 of State shall deem appropriate). 26 (4) The name and business address of the proposed 27 registered agent in this State, which registered agent 28 shall be an individual resident of this State, a domestic 29 corporation, or a foreign corporation having a place of 30 business in, and authorized to do business in, this 31 State; if the registered agent is a corporation, the 32 corporation must be authorized by its articles of 33 incorporation to act as a registered agent. SB1020 Enrolled -73- LRB9003480JSgc 1 (5) The address of the office required to be 2 maintained in the jurisdiction of its organization by the 3 laws of that jurisdiction or, if not so required, of the 4 principal place of business of the foreign limited 5 liability company. 6 (6) The purpose or purposes for which it was 7 organized and the purpose or purposes which it proposes 8 to conduct in the transaction of business in this State. 9 (7) A statement whether the limited liability 10 company is managed by a manager or managers or whether 11 management of the limited liability company is vested in 12 the members. 13 (8)(6)A statement that the Secretary of State is 14 appointed the agent of the foreign limited liability 15 company for service of process under the circumstances 16 set forth in subsection (b) of Section 1-50. 17 (9)(7)All additional information that may be 18 necessary or appropriate in order to enable the Secretary 19 of State to determine whether the limited liability 20 company is entitled to transact business in this State. 21 (b) No foreign limited liability company shall transact 22 in this State any business that a limited liability company 23 formed under the laws of this State is not permitted to 24 transact. A foreign limited liability company admitted to 25 transact business in this State shall, until admission is 26 revoked as provided in this Act, enjoy the same, but no 27 greater, rights and privileges as a limited liability company 28 formed under the laws of this State. 29 (c) The acceptance and filing by the Office of the 30 Secretary of State of a foreign limited liability company's 31 application shall admit the foreign limited liability company 32 to transact business in the State. 33 (Source: P.A. 87-1062.) SB1020 Enrolled -74- LRB9003480JSgc 1 (805 ILCS 180/45-35) 2 Sec. 45-35. Revocation of admission. 3 (a) The admission of a foreign limited liability company 4 to transact business in this State may be revoked by the 5 Secretary of State upon the occurrence of any of the 6 following events: 7 (1) The foreign limited company has failed to: 8 (A) file its limited liability company annual 9 report within the time required by Section 50-1 or 10 has failed to pay any fees or penalties prescribed 11 by this Article; 12 (B) appoint and maintain a registered agent as 13 required by this Article; 14 (C) file a report upon any change in the name 15 or business address of the registered agent;or16 (D) file in the Office of the Secretary of 17 State any amendment to its application for admission 18 as specified in Section 45-25; or 19 (E) renew its assumed name, or to apply to 20 change its assumed name under this Act, when the 21 limited liability company may only transact business 22 within this State under its assumed name. 23 (2) A misrepresentation has been made of any 24 material matter in any application, report, affidavit, or 25 other document submitted by the foreign limited liability 26 company under this Article. 27 (b) The admission of a foreign limited liability company 28 shall not be revoked by the Secretary of State unless all of 29 the following occur: 30 (1) The Secretary of State has given the foreign 31 limited liability company not less than 60 days' notice 32 thereof by mail addressed to its registered office in 33 this State or, if the foreign limited liability company 34 fails to appoint and maintain a registered agent in this SB1020 Enrolled -75- LRB9003480JSgc 1 State, addressed to the office required to be maintained 2 under paragraph (5) of subsection (a) of Section 45-5. 3 (2) During that 60 day period, the foreign limited 4 liability company has failed to file the limited 5 liability company report, to pay fees or penalties, to 6 file a report of change regarding the registered agent, 7 to file any amendment, or to correct any 8 misrepresentation. 9 (c) Upon the expiration of 60 days after the mailing of 10 the notice, the admission of the foreign limited liability 11 company to transact business in this State shall cease. 12 (Source: P.A. 87-1062.) 13 (805 ILCS 180/45-65 new) 14 Sec. 45-65. Reinstatement following revocation. 15 (a) A limited liability company whose admission has been 16 revoked under Section 45-35 may be reinstated by the 17 Secretary of State within 5 years following the date of 18 issuance of the certificate of revocation upon the occurrence 19 of all of the following: 20 (1) The filing of the application for 21 reinstatement. 22 (2) The filing with the Secretary of State by the 23 limited liability company of all reports then due and 24 becoming due. 25 (3) The payment to the Secretary of State by the 26 limited liability company of all fees and penalties then 27 due and becoming due. 28 (b) The application for reinstatement shall be executed 29 and filed in duplicate in accordance with Section 5-45 and 30 shall set forth all of the following: 31 (1) The name of the limited liability company at 32 the time of the issuance of the notice of revocation. 33 (2) If the name is not available for use as SB1020 Enrolled -76- LRB9003480JSgc 1 determined by the Secretary of State at the time of 2 filing the application for reinstatement, the name of the 3 limited liability company as changed, provided that any 4 change is properly effected under Sections 1-10 and 5 45-25. 6 (3) The date of the issuance of the notice of 7 revocation. 8 (4) The address, including street and number or 9 rural route number of the registered office of the 10 limited liability company upon reinstatement and the name 11 of its registered agent at that address upon the 12 reinstatement of the limited liability company, provided 13 that any change from either the registered office or the 14 registered agent at the time of revocation is properly 15 reported under Section 1-35. 16 (c) When a limited liability company whose admission has 17 been revoked has complied with the provisions of this 18 Section, the Secretary of State shall issue a certificate of 19 reinstatement. 20 (d) Upon the issuance of the certificate of 21 reinstatement: (i) the admission of the limited liability 22 company to transact business in this State shall be deemed to 23 have continued without interruption from the date of the 24 issuance of the notice of revocation, (ii) the limited 25 liability company shall stand revived with the powers, 26 duties, and obligations as if its admission had not been 27 revoked, and (iii) all acts and proceedings of its members or 28 managers, acting or purporting to act in that capacity, that 29 would have been legal and valid but for the revocation, shall 30 stand ratified and confirmed. 31 (805 ILCS 180/50-1) 32 Sec. 50-1. Annual reports. 33 (a) Each limited liability company organized under the SB1020 Enrolled -77- LRB9003480JSgc 1 laws of this State and each foreign limited liability company 2 admitted to transact business in this State shall file, 3 within the time prescribed by this Act, an annual report 4 setting forth all of the following: 5 (1) The name of the limited liability company. 6 (2) The address, including street and number or 7 rural route number, of its registered office in this 8 State and the name of its registered agent at that 9 address and a statement of change of its registered 10 office or registered agent, or both, if any. 11 (3) The address, including street and number or 12 rural route number of its principal place of business. 13 (4) The names and addresses of its managers or, if 14 none, the members. 15 (5) Additional information that may be necessary or 16 appropriate in order to enable the Secretary of State to 17 administer this Act and to verify the proper amount of 18 fees payable by the limited liability company. 19 (6) The annual report shall be made on forms 20 prescribed and furnished by the Secretary of State, and 21 the information therein, required by paragraphs (1) 22 through (4) of subsection (a), both inclusive, shall be 23 given as of the date of execution of the annual report. 24 The annual report shall be executed by a manager or, if 25 none, a member designated by the members pursuant to 26 limited liability company action properly taken under 27 Section 15-110-5. 28 (b) The annual report, together with all fees and 29 charges prescribed by this Act, shall be delivered to the 30 Secretary of State within 60 days immediately preceding the 31 first day of the anniversary month. The annual report, 32 together with all fees and charges as prescribed by this Act, 33 shall be deemed to be received by the Secretary of State upon 34 the date of actual receipt thereof by the Secretary of State. SB1020 Enrolled -78- LRB9003480JSgc 1 If the Secretary of State finds that the report conforms to 2 the requirements of this Act, he or she shall file it. If 3 the Secretary of State finds that it does not so conform, he 4 or she shall promptly return it to the limited liability 5 company for any necessary corrections, in which event the 6 penalties prescribed for failure to file the report within 7 the time provided shall not apply if the report is corrected 8 to conform to the requirements of this Act and returned to 9 the Secretary of State within 30 days of the date the report 10 was returned for corrections. 11 (Source: P.A. 87-1062.) 12 (805 ILCS 180/50-10) 13 Sec. 50-10. Fees. 14 (a) The Secretary of State shall charge and collect in 15 accordance with the provisions of this Act and rules 16 promulgated under its authority all of the following: 17 (1) Fees for filing documents. 18 (2) Miscellaneous charges. 19 (3) Fees for the sale of lists of filings, copies 20 of any documents, and for the sale or release of any 21 information. 22 (b) The Secretary of State shall charge and collect for 23 all of the following: 24 (1) Filing articles of organization of limited 25 liability companies (domestic), application for admission 26 (foreign), and restated articles of organization 27 (domestic), $400$500. 28 (2) Filing amendments:, $100.29 (A) For other than change of registered agent 30 name or registered office, or both, $100. 31 (B) For the purpose of changing the registered 32 agent name or registered office, or both, $25. 33 (3) Filing articles of dissolution or application SB1020 Enrolled -79- LRB9003480JSgc 1 for withdrawal, $100. 2 (4) Filing an application to reserve a name, $300. 3 (5) Renewal fee for reserved name, $100. 4 (6) Filing a notice of a transfer of a reserved 5 name, $100. 6 (7) Registration of a name, $300. 7 (8) Renewal of registration of a name, $100. 8 (9) Filing an application for use of an assumed 9 name under Section 1-20 of this Act, $20 plus $5 for each 10 month or part thereof between the date of filing the 11 application and the date of the renewal of the assumed 12 name; and a renewal for each assumed name, $300. 13 (10) Filing an application for change of an assumed 14 name, $100. 15 (11) Filing an annual report of a limited liability 16 company or foreign limited liability company, $200$300, 17 if filed as required by this Act, plus a penalty if 18 delinquent. 19 (12) Filing an application for reinstatement of a 20 limited liability company or foreign limited liability 21 company and for issuing a certificate of reinstatement, 22 $500. 23 (13) Filing Articles of Merger, $100 plus $50 for 24 each party to the merger in excess of the first 2 25 parties. 26 (14) Filing an Agreement of Conversion or Statement 27 of Conversion, $100. 28 (15)(13)Filing any other document, $100. 29 (c) The Secretary of State shall charge and collect all 30 of the following: 31 (1) For furnishing a copy or certified copy of any 32 document, instrument, or paper relating to a limited 33 liability company or foreign limited liability company, 34 $1 per page, but not less than $25, and $25 for the SB1020 Enrolled -80- LRB9003480JSgc 1 certificate and for affixing the seal thereto. 2 (2) For the transfer of information by computer 3 process media to any purchaser, fees established by rule. 4 (Source: P.A. 87-1062.) 5 (805 ILCS 180/50-15) 6 Sec. 50-15. Penalty. 7 (a) The Secretary of State shall declare any limited 8 liability company or foreign limited liability company to be 9 delinquent and not in good standing if any of the following 10 occur: 11 (1) It has failed to file its annual report and pay 12 the requisite fee as required by this Act before the 13 first day of the anniversary month in the year in which 14 it is due. 15 (2) It has failed to appoint and maintain a 16 registered agent in Illinois within 60 days of 17 notification of the Secretary of State by the resigning 18 registered agent. 19 (3) It has failed to report its federal employer 20 identification number to the Secretary of State within 90 21 days as specified in Section 50-30. 22 (b) If the limited liability company or foreign limited 23 liability company has not corrected the default within the 24 time periods prescribed by this Act, the Secretary of State 25 shall be empowered to invoke any of the following penalties: 26 (1) For failure or refusal to comply with 27 subsection (a) of this Section within 60 days after the 28 due date, a penalty of $100 plusincreasing by$50 for 29 eachadditionalmonth or fraction thereof until returned 30 to good standing or until administratively dissolved by 31 the Secretary of State. 32 (2) The Secretary of State shall not file any 33 additional documents, amendments, reports, or other SB1020 Enrolled -81- LRB9003480JSgc 1 papers relating to any limited liability company or 2 foreign limited liability company organized under or 3 subject to the provisions of this Act until any 4 delinquency under subsection (a) is satisfied. 5 (3) In response to inquiries received in the Office 6 of the Secretary of State from any party regarding a 7 limited liability company that is delinquent, the 8 Secretary of State may show the limited liability company 9 as not in good standing. 10 (Source: P.A. 87-1062.) 11 (805 ILCS 180/55-15 new) 12 Sec. 55-15. Transitional provisions. 13 (a) Before January 1, 2000, this amendatory Act of 1997 14 governs only a limited liability company: 15 (1) organized on or after the effective date of 16 this amendatory Act of 1997, unless the company is 17 continuing the business of a dissolved limited liability 18 company under this Act; and 19 (2) organized before the effective date of this 20 amendatory Act of 1997, that elects, as provided under 21 subsection (c) of this Section, to be governed by this 22 amendatory Act of 1997. 23 (b) On and after January 1, 2000, this amendatory Act of 24 1997 governs all limited liability companies. 25 (c) Before January 1, 2000, a limited liability company 26 voluntarily may elect, in the manner provided in its 27 operating agreement or by law for amending the operating 28 agreement, to be governed by this amendatory Act of 1997. 29 (805 ILCS 180/60-1) 30 Sec. 60-1. Effective date. This Act takes effect on 31 January 1, 1994. 32 (Source: P.A. 87-1062.) SB1020 Enrolled -82- LRB9003480JSgc 1 (805 ILCS 180/1-45 rep.) 2 (805 ILCS 180/5-20 rep.) 3 (805 ILCS 180/10-5 rep.) 4 (805 ILCS 180/15-10 rep.) 5 (805 ILCS 180/20-10 rep.) 6 (805 ILCS 180/20-15 rep.) 7 (805 ILCS 180/25-5 rep.) 8 (805 ILCS 180/25-10 rep.) 9 (805 ILCS 180/25-15 rep.) 10 (805 ILCS 180/25-25 rep.) 11 (805 ILCS 180/30-15 rep.) 12 (805 ILCS 180/35-5 rep.) 13 (805 ILCS 180/35-35 rep.) 14 Section 13. The Limited Liability Company Act is amended 15 by repealing Sections 1-45, 5-20, 10-5, 15-10, 20-10, 20-15, 16 25-5, 25-10, 25-15, 25-25, 30-15, 35-5, and 35-35. 17 Section 15. The Uniform Partnership Act is amended by 18 adding Sections 7.1 and 7.2 as follows: 19 (805 ILCS 205/7.1 new) 20 Sec. 7.1. Merger of partnership and limited liability 21 company. 22 (a) Under a plan of merger approved under subsection (c) 23 of this Section, any one or more partnerships of this State 24 may merge with or into one or more limited liability 25 companies of this State, any other state or states of the 26 United States, or the District of Columbia, if the laws of 27 the other state or states or the District of Columbia permit 28 the merger. The partnership or partnerships and the limited 29 liability company or companies may merge with or into a 30 partnership, which may be any one of these partnerships, or 31 they may merge with or into a limited liability company, 32 which may be any one of these limited liability companies, SB1020 Enrolled -83- LRB9003480JSgc 1 which shall be a partnership or limited liability company of 2 this State, any other state of the United States, or the 3 District of Columbia, which permits the merger. 4 (b) A plan of merger must set forth all of the 5 following: 6 (1) The name of each entity that is a party to the 7 merger. 8 (2) The name of the surviving entity into which the 9 other entities will merge. 10 (3) The type of organization of the surviving 11 entity. 12 (4) The terms and conditions of the merger. 13 (5) The manner and basis for converting the 14 interests of each party to the merger into interests, 15 obligations, or other securities of the surviving entity, 16 or into money or other property in whole or in part. 17 (6) The street address of the surviving entity's 18 principal place of business. 19 (c) The plan of merger required by subsection (b) of 20 this Section must be approved by each party to the merger in 21 accordance with all of the following: 22 (1) In the case of a partnership, by all of the 23 partners or by the number or percentage of the partners 24 required to approve a merger in the partnership 25 agreement. 26 (2) In the case of a limited liability company, in 27 accordance with the terms of the limited liability 28 company operating agreement, if any, and in accordance 29 with the laws under which it was formed. 30 (d) After a plan of merger is approved and before the 31 merger takes effect, the plan may be amended or abandoned as 32 provided in the plan of merger. 33 (e) If a partnership or partnerships are merging under 34 this Section, the partnership or partnerships and the limited SB1020 Enrolled -84- LRB9003480JSgc 1 liability company or companies that are parties to the merger 2 must sign the articles of merger. The articles of merger 3 shall be delivered to the Secretary of State of this State 4 for filing. The articles must set forth all of the 5 following: 6 (1) The name of each partnership and the name and 7 jurisdiction of organization of each limited liability 8 company that is a party to the merger. 9 (2) That a plan of merger has been approved and 10 signed by each partnership and each limited liability 11 company that is a party to the merger. 12 (3) The name and address of the surviving 13 partnership or other surviving entity. 14 (4) The effective date of the merger. 15 (5) If a party to the merger is a foreign limited 16 liability company, the jurisdiction and date of the 17 filing of its articles of organization and the date when 18 its application for authority was filed with the 19 Secretary of State of this State or, if an application 20 has not been filed, a statement to that effect. 21 (6) If the surviving entity is not a partnership or 22 limited liability company organized under the laws of 23 this State, an agreement that the surviving entity may be 24 served with process in this State and is subject to 25 liability in any action or proceeding for the enforcement 26 of any liability or obligation of any partnership 27 previously subject to suit in this State that is to 28 merge, and for the enforcement, as provided in this Act, 29 of the right of partners of any partnership to receive 30 payment for their interest against the surviving entity. 31 (f) The merger is effective upon the filing of the 32 articles of merger with the Secretary of State of this State, 33 or on a later date as specified in the articles of merger not 34 later than 30 days subsequent to the filing of the plan of SB1020 Enrolled -85- LRB9003480JSgc 1 merger under subsection (e) of this Section. 2 (g) When any merger becomes effective under this 3 Section: 4 (1) the separate existence of each partnership and 5 each limited liability company that is a party to the 6 merger, other than the surviving entity, terminates; 7 (2) all property owned by each partnership and each 8 limited liability company that is a party to the merger 9 vests in the surviving entity; 10 (3) all debts, liabilities, and other obligations 11 of each partnership and each limited liability company 12 that is a party to the merger become the obligations of 13 the surviving entity; 14 (4) an action or proceeding by or against a 15 partnership or limited liability company that is a party 16 to the merger may be continued as if the merger had not 17 occurred or the surviving entity may be substituted as a 18 party to the action or proceeding; and 19 (5) except as prohibited by other law, all the 20 rights, privileges, immunities, powers, and purposes of 21 each partnership and limited liability company that is a 22 party to the merger vest in the surviving entity. 23 (h) The Secretary of State of this State is an agent for 24 service of process in an action or proceeding against the 25 surviving foreign entity to enforce an obligation of any 26 party to a merger if the surviving foreign entity fails to 27 appoint or maintain an agent designated for service of 28 process in this State or the agent for service of process 29 cannot with reasonable diligence be found at the designated 30 office. Service is effected under this subsection (h) at the 31 earliest of: 32 (1) the date the surviving entity receives the 33 process notice or demand; 34 (2) the date shown on the return receipt, if signed SB1020 Enrolled -86- LRB9003480JSgc 1 on behalf of the surviving entity; or 2 (3) 5 days after its deposit in the mail, if mailed 3 postpaid and correctly addressed. 4 (i) Service under subsection (h) of this Section shall 5 be made by the person instituting the action by doing all of 6 the following: 7 (1) Serving on the Secretary of State of this 8 State, or on any employee having responsibility for 9 administering this Act in his or her office, a copy of 10 the process, notice, or demand, together with any papers 11 required by law to be delivered in connection with 12 service and paying the fee prescribed by Section 8.4 of 13 this Act. 14 (2) Transmitting notice of the service on the 15 Secretary of State of this State and a copy of the 16 process, notice, or demand and accompanying papers to the 17 surviving entity being served, by registered or certified 18 mail at the address set forth in the articles of merger. 19 (3) Attaching an affidavit of compliance with this 20 Section, in substantially the form that the Secretary of 21 State of this State may by rule prescribe, to the 22 process, notice, or demand. 23 (j) Nothing contained in this Section shall limit or 24 affect the right to serve any process, notice, or demand 25 required or permitted by law to be served upon a partnership 26 in any other manner now or hereafter permitted by law. 27 (k) The Secretary of State of this State shall keep, for 28 a period of 5 years from the date of service, a record of all 29 processes, notices, and demands served upon him or her under 30 this Section and shall record the time of the service and the 31 person's action with reference to the service. 32 (l) Except as provided by agreement with a person to 33 whom a general partner of a partnership is obligated, a 34 merger of a partnership that has become effective shall not SB1020 Enrolled -87- LRB9003480JSgc 1 affect any obligation or liability existing at the time of 2 the merger of a general partner of a partnership that is 3 merging. 4 (805 ILCS 205/7.2 new) 5 Sec. 7.2. Approval of conversion into a limited liability 6 company. A partnership may convert into a limited liability 7 company organized, formed, or created under the laws of this 8 State, upon approval of the conversion in accordance with 9 this Section. If the partnership agreement specifies the 10 manner of approving a conversion of a partnership, the 11 conversion shall be approved as specified in the partnership 12 agreement. If the partnership agreement does not specify the 13 manner of approving a conversion of a partnership and does 14 not prohibit a conversion of the partnership, the conversion 15 shall be approved in the same manner as is specified in the 16 partnership agreement for approving a merger that involves a 17 partnership as a constituent party to the merger. If the 18 partnership agreement does not specify the manner of 19 approving a merger that involves the partnership as a 20 constituent party or a conversion of a partnership and does 21 not prohibit a conversion of the partnership, the conversion 22 must be approved by all of the partners. 23 After a conversion is approved, the partnership shall 24 file articles of organization in the Office of the Secretary 25 of State in accordance with subsection (d) of Section 37-10 26 of the Limited Liability Company Act. 27 Section 20. The Revised Uniform Limited Partnership Act 28 is amended by adding Sections 210 and 211 as follows: 29 (805 ILCS 210/210 new) 30 Sec. 210. Merger of limited partnership and limited 31 liability company. SB1020 Enrolled -88- LRB9003480JSgc 1 (a) Under a plan of merger approved under subsection (c) 2 of this Section, any one or more limited partnerships may 3 merge with or into one or more limited liability companies of 4 this State, any other state or states of the United States, 5 or the District of Columbia, if the laws of the other state 6 or states or the District of Columbia permit the merger. The 7 limited partnership or partnerships and the limited liability 8 company or companies may merge with or into a limited 9 partnership, which may be any one of these limited 10 partnerships, or they may merge with or into a limited 11 liability company, which may be any one of these limited 12 liability companies, which shall be a limited partnership or 13 limited liability company of this State, any other state of 14 the United States, or the District of Columbia, which permits 15 the merger. 16 (b) A plan of merger must set forth all of the 17 following: 18 (1) The name of each entity that is a party to the 19 merger. 20 (2) The name of the surviving entity into which the 21 other entities will merge. 22 (3) The type of organization of the surviving 23 entity. 24 (4) The terms and conditions of the merger. 25 (5) The manner and basis for converting the 26 interests, obligations, or other securities of each party 27 to the merger into interests, obligations, or securities 28 of the surviving entity, or into money or other property 29 in whole or in part. 30 (6) The street address of the surviving entity's 31 principal place of business. 32 (c) The plan of merger required by subsection (b) of 33 this Section must be approved by each party to the merger in 34 accordance with all of the following: SB1020 Enrolled -89- LRB9003480JSgc 1 (1) In the case of a domestic limited partnership, 2 by all of the partners or by the number or percentage of 3 the partners required to approve a merger in the 4 partnership agreement. 5 (2) In the case of a limited liability company, in 6 accordance with the terms of the limited liability 7 company operating agreement, if any, and in accordance 8 with the laws under which it was formed. 9 (d) After a plan of merger is approved and before the 10 merger takes effect, the plan may be amended or abandoned as 11 provided in the plan of merger. 12 (e) If a limited partnership or partnerships are merging 13 under this Section, the limited partnership or partnerships 14 and the limited liability company or companies that are 15 parties to the merger must sign the articles of merger. The 16 articles of merger shall be delivered to the Secretary of 17 State of this State for filing. The articles must set forth 18 all of the following: 19 (1) The name of each limited partnership and the 20 name and jurisdiction of organization of each limited 21 liability company that is a party to the merger. 22 (2) For each limited partnership that is to merge, 23 the date its certificate of limited partnership was filed 24 with the Secretary of State. 25 (3) That a plan of merger has been approved and 26 signed by each limited partnership and each limited 27 liability company that is a party to the merger. 28 (4) The name and address of the surviving limited 29 partnership or surviving limited liability company. 30 (5) The effective date of the merger. 31 (6) If a limited partnership is the surviving 32 entity, any changes in its certificate of limited 33 partnership that are necessary by reason of the merger. 34 (7) If a party to the merger is a foreign limited SB1020 Enrolled -90- LRB9003480JSgc 1 liability company, the jurisdiction and date of the 2 filing of its articles of organization and the date when 3 its application for authority was filed with the 4 Secretary of State of this State or, if an application 5 has not been filed, a statement to that effect. 6 (8) If the surviving entity is not a domestic 7 limited partnership or limited liability company 8 organized under the laws of this State, an agreement that 9 the surviving entity may be served with process in this 10 State and is subject to liability in any action or 11 proceeding for the enforcement of any liability or 12 obligation of any limited partnership previously subject 13 to suit in this State that is to merge, and for the 14 enforcement, as provided in this Act, of the right of 15 partners of any limited partnership to receive payment 16 for their interest against the surviving entity. 17 (f) The merger is effective upon the filing of the 18 articles of merger with the Secretary of State of this State, 19 or on a later date as specified in the articles of merger not 20 later than 30 days subsequent to the filing of the plan of 21 merger under subsection (e) of this Section. 22 (g) Upon the merger becoming effective, articles of 23 merger shall act as a certificate of cancellation for a 24 domestic limited partnership which is not the surviving 25 entity of the merger. 26 (h) Upon the merger becoming effective, articles of 27 merger may operate as an amendment to the certificate of 28 limited partnership of the limited partnership which is the 29 surviving entity of the merger. 30 (i) When any merger becomes effective under this 31 Section: 32 (1) the separate existence of each limited 33 partnership and each limited liability company that is a 34 party to the merger, other than the surviving entity, SB1020 Enrolled -91- LRB9003480JSgc 1 terminates; 2 (2) all property owned by each limited partnership 3 and each limited liability company that is a party to the 4 merger vests in the surviving entity; 5 (3) all debts, liabilities, and other obligations 6 of each limited partnership and each limited liability 7 company that is a party to the merger become the 8 obligations of the surviving entity; 9 (4) an action or proceeding by or against a limited 10 partnership or limited liability company that is a party 11 to the merger may be continued as if the merger had not 12 occurred or the surviving entity may be substituted as a 13 party to the action or proceeding; and 14 (5) except as prohibited by other law, all the 15 rights, privileges, immunities, powers, and purposes of 16 each limited partnership and each limited liability 17 company that is a party to the merger vest in the 18 surviving entity. 19 (j) The Secretary of State of this State is an agent for 20 service of process in an action or proceeding against the 21 surviving foreign entity to enforce an obligation of any 22 party to a merger if the surviving foreign entity fails to 23 appoint or maintain an agent designated for service of 24 process in this State or the agent for service of process 25 cannot with reasonable diligence be found at the designated 26 office. Service is effected under this subsection (j) at the 27 earliest of: 28 (1) the date the surviving entity receives the 29 process, notice, or demand; 30 (2) the date shown on the return receipt, if signed 31 on behalf of the surviving entity; or 32 (3) 5 days after its deposit in the mail, if mailed 33 postpaid and correctly addressed. 34 (k) Service under subsection (j) of this Section shall SB1020 Enrolled -92- LRB9003480JSgc 1 be made by the person instituting the action by doing all of 2 the following: 3 (1) Serving on the Secretary of State of this 4 State, or on any employee having responsibility for 5 administering this Act in his or her office, a copy of 6 the process, notice, or demand, together with any papers 7 required by law to be delivered in connection with 8 service and paying the fee prescribed by subsection (b) 9 of Section 1102 of this Act. 10 (2) Transmitting notice of the service on the 11 Secretary of State of this State and a copy of the 12 process, notice, or demand and accompanying papers to the 13 surviving entity being served, by registered or certified 14 mail at the address set forth in the articles of merger. 15 (3) Attaching an affidavit of compliance with this 16 Section, in substantially the form that the Secretary of 17 State of this State may by rule prescribe, to the 18 process, notice, or demand. 19 (l) Nothing contained in this Section shall limit or 20 affect the right to serve any process, notice, or demand 21 required or permitted by law to be served upon a limited 22 partnership in any other manner now or hereafter permitted by 23 law. 24 (m) The Secretary of State of this State shall keep, for 25 a period of 5 years from the date of service, a record of all 26 processes, notices, and demands served upon him or her under 27 this Section and shall record the time of the service and the 28 person's action with reference to the service. 29 (n) Except as provided by agreement with a person to 30 whom a general partner of a limited partnership is obligated, 31 a merger of a limited partnership that has become effective 32 shall not affect any obligation or liability existing at the 33 time of the merger of a general partner of a limited 34 partnership that is merging. SB1020 Enrolled -93- LRB9003480JSgc 1 (o) If a limited partnership is a constituent party to a 2 merger that has become effective, but the limited partnership 3 is not the surviving entity of the merger, then a judgment 4 creditor of a general partner of the limited partnership may 5 not levy execution against the assets of the general partner 6 to satisfy a judgment based on a claim against the surviving 7 entity of the merger unless: 8 (1) a judgment based on the same claim has been 9 obtained against the surviving entity of the merger and a 10 writ of execution on the judgment has been returned 11 unsatisfied in whole or in part; 12 (2) the surviving entity of the merger is a debtor 13 in bankruptcy; 14 (3) the general partner has agreed that the 15 creditor need not exhaust the assets of the limited 16 partnership that was not the surviving entity of the 17 merger; 18 (4) the general partner has agreed that the 19 creditor need not exhaust the assets of the surviving 20 entity of the merger; 21 (5) a court grants permission to the judgment 22 creditor to levy execution against the assets of the 23 general partner based on a finding that the assets of the 24 surviving entity of the merger that are subject to 25 execution are insufficient to satisfy the judgment, that 26 exhaustion of the assets of the surviving entity of the 27 merger is excessively burdensome, or that grant of 28 permission is an appropriate exercise of the court's 29 equitable powers; or 30 (6) liability is imposed on the general partner by 31 law or contract independent of the existence of the 32 surviving entity of the merger. 33 (805 ILCS 210/211 new) SB1020 Enrolled -94- LRB9003480JSgc 1 Sec. 211. Approval of conversion into a limited 2 liability company. A limited partnership may convert into a 3 limited liability company organized, formed, or created under 4 the laws of this State, upon approval of the conversion in 5 accordance with this Section. If the partnership agreement 6 specifies the manner of approving a conversion of a limited 7 partnership, the conversion shall be approved as specified in 8 the partnership agreement. If the partnership agreement does 9 not specify the manner of approving a conversion of a limited 10 partnership and does not prohibit a conversion of the limited 11 partnership, the conversion shall be approved in the same 12 manner as is specified in the partnership agreement for 13 approving a merger that involves a limited partnership as a 14 constituent party to the merger. If the partnership 15 agreement does not specify the manner of approving a merger 16 that involves the limited partnership as a constituent party 17 or a conversion of a limited partnership and does not 18 prohibit a conversion of the limited partnership, the 19 conversion must be approved by all of the partners. 20 After a conversion is approved, the limited partnership 21 shall file articles of organization in the Office of the 22 Secretary of State in accordance with subsection (d) of 23 Section 37-10 of the Limited Liability Company Act. 24 Section 99. Effective date. This Act takes effect on 25 January 1, 1998.