Public Act 90-0421 of the 90th General Assembly
Public Act 90-0421
SB952 Enrolled LRB9002543DJgcB
AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
ARTICLE 5
Section 5-1. Short title. This Article may be cited as
the Choice of Law and Forum Act.
Section 5-5. Choice of law. The parties to any
contract, agreement, or undertaking, contingent or otherwise,
in consideration of or relating to any obligation arising out
of a transaction covering in the aggregate not less than
$250,000, including a transaction otherwise covered by
subsection (1) of Section 1-105 of the Uniform Commercial
Code, may agree that the law of this State shall govern
their rights and duties in whole or in part, whether or not
the contract, agreement, or undertaking bears a reasonable
relation to this State. This Section shall not apply to any
contract, agreement, or undertaking (i) for labor or personal
services, (ii) relating to any transaction for personal,
family, or household services, or (iii) to the extent
provided to the contrary in subsection (2) of Section 1-105
of the Uniform Commercial Code. Nothing contained in this
Section shall be construed to limit or deny the enforcement
of any provision respecting choice of law in any other
contract, agreement, or undertaking.
Section 5-10. Choice of forum. Any person may maintain
an action or proceeding against a foreign corporation,
non-resident, or foreign state if the action or proceeding
arises out of or relates to any contract, agreement, or
undertaking for which a choice of Illinois law has been made
in whole or in part pursuant to Section 5-5 and that (i) is a
contract, agreement, or undertaking, contingent or otherwise,
in consideration of or relating to any obligation arising out
of a transaction covering in the aggregate not less than
$500,000 and (ii) contains a provision or provisions under
which the foreign corporation or non-resident agrees to
submit to the jurisdiction of the courts of this State.
Nothing contained in this Section shall be construed to
affect the enforcement of any provision respecting choice of
forum in any contract, agreement, or undertaking.
ARTICLE 10
Section 10-5. The Business Corporation Act of 1983 is
amended by changing Sections 1.80, 8.60, 14.30, and 15.90 and
adding Sections 9.20 and 13.75 as follows:
(805 ILCS 5/1.80) (from Ch. 32, par. 1.80)
Sec. 1.80. Definitions. As used in this Act, unless the
context otherwise requires, the words and phrases defined in
this Section shall have the meanings set forth herein.
(a) "Corporation" or "domestic corporation" means a
corporation subject to the provisions of this Act, except a
foreign corporation.
(b) "Foreign corporation" means a corporation for profit
organized under laws other than the laws of this State, but
shall not include a foreign banking corporation organized
under the laws of a country other than the United States and
holding a certificate of authority from the Commissioner of
Banks and Real Estate issued pursuant to the Foreign Banking
Office Act.
(c) "Articles of incorporation" means the original
articles of incorporation, including the articles of
incorporation of a new corporation set forth in the articles
of consolidation, and all amendments thereto, whether
evidenced by articles of amendment, articles of merger,
articles of exchange, statement of correction affecting
articles, resolution establishing series of shares or a
statement of cancellation under Section 9.05. Restated
articles of incorporation shall supersede the original
articles of incorporation and all amendments thereto prior to
the effective date of filing the articles of amendment
incorporating the restated articles of incorporation.
(d) "Subscriber" means one who subscribes for shares in
a corporation, whether before or after incorporation.
(e) "Incorporator" means one of the signers of the
original articles of incorporation.
(f) "Shares" means the units into which the proprietary
interests in a corporation are divided.
(g) "Shareholder" means one who is a holder of record of
shares in a corporation.
(h) "Certificate" representing shares means a written
instrument executed by the proper corporate officers, as
required by Section 6.35 of this Act, evidencing the fact
that the person therein named is the holder of record of the
share or shares therein described. If the corporation is
authorized to issue uncertificated shares in accordance with
Section 6.35 of this Act, any reference in this Act to shares
represented by a certificate shall also refer to
uncertificated shares and any reference to a certificate
representing shares shall also refer to the written notice in
lieu of a certificate provided for in Section 6.35.
(i) "Authorized shares" means the aggregate number of
shares of all classes which the corporation is authorized to
issue.
(j) "Paid-in capital" means the sum of the cash and
other consideration received, less expenses, including
commissions, paid or incurred by the corporation, in
connection with the issuance of shares, plus any cash and
other consideration contributed to the corporation by or on
behalf of its shareholders, plus amounts added or transferred
to paid-in capital by action of the board of directors or
shareholders pursuant to a share dividend, share split, or
otherwise, minus reductions as provided elsewhere in this Act
from that sum effected by an acquisition and cancellation of
its own shares, to the extent of the cost of the reacquired
and cancelled shares or a lesser amount as may be elected by
the corporation. Irrespective of the manner of designation
thereof by the laws under which a foreign corporation is or
may be organized, paid-in capital of a foreign corporation
shall be determined on the same basis and in the same manner
as paid-in capital of a domestic corporation, for the purpose
of computing license fees, franchise taxes and other charges
imposed by this Act.
(k) "Net assets", for the purpose of determining the
right of a corporation to purchase its own shares and of
determining the right of a corporation to declare and pay
dividends and make other distributions to shareholders is
equal to the difference between the assets of the corporation
and the liabilities of the corporation.
(l) "Registered office" means that office maintained by
the corporation in this State, the address of which is on
file in the office of the Secretary of State, at which any
process, notice or demand required or permitted by law may be
served upon the registered agent of the corporation.
(m) "Insolvent" means that a corporation is unable to
pay its debts as they become due in the usual course of its
business.
(n) "Anniversary" means that day each year exactly one
or more years after:
(1) the date on the certificate of incorporation
issued under Section 2.10 of this Act, in the case of a
domestic corporation;
(2) the date on the certificate of authority issued
under Section 13.15 of this Act, in the case of a foreign
corporation; or
(3) the date on the certificate of consolidation
issued under Section 11.25 of this Act in the case of a
consolidation, unless the plan of consolidation provides
for a delayed effective date, pursuant to Section 11.40.
(o) "Anniversary month" means the month in which the
anniversary of the corporation occurs.
(p) "Extended filing month" means the month (if any)
which shall have been established in lieu of the
corporation's anniversary month in accordance with Section
14.01.
(q) "Taxable year" means that 12 month period commencing
with the first day of the anniversary month of a corporation
through the last day of the month immediately preceding the
next occurrence of the anniversary month of the corporation,
except that in the case of a corporation that has established
an extended filing month "taxable year" means that 12 month
period commencing with the first day of the extended filing
month through the last day of the month immediately preceding
the next occurrence of the extended filing month.
(r) "Fiscal year" means the 12 month period with respect
to which a corporation ordinarily files its federal income
tax return.
(s) "Close corporation" means a corporation organized
under or electing to be subject to Article 2A of this Act,
the articles of incorporation of which contain the provisions
required by Section 2.10, and either the corporation's
articles of incorporation or an agreement entered into by all
of its shareholders provide that all of the issued shares of
each class shall be subject to one or more of the
restrictions on transfer set forth in Section 6.55 of this
Act.
(t) "Common shares" means shares which have no
preference over any other shares with respect to distribution
of assets on liquidation or with respect to payment of
dividends.
(u) "Delivered", for the purpose of determining if any
notice required by this Act is effective, means:
(1) transferred or presented to someone in person;
or
(2) deposited in the United States Mail addressed
to the person at his, her or its address as it appears on
the records of the corporation, with sufficient
first-class postage prepaid thereon.
(v) "Property" means gross assets including, without
limitation, all real, personal, tangible, and intangible
property.
(w) "Taxable period" means that 12-month period
commencing with the first day of the second month preceding
the corporation's anniversary month in the preceding year and
prior to the first day of the second month immediately
preceding its anniversary month in the current year, except
that, in the case of a corporation that has established an
extended filing month, "taxable period" means that 12-month
period ending with the last day of its fiscal year
immediately preceding the extended filing month. In the case
of a newly formed domestic corporation or a newly registered
foreign corporation that had not commenced transacting
business in this State prior to obtaining a certificate of
authority, "taxable period" means that period commencing with
the issuance of a certificate of incorporation or, in the
case of a foreign corporation, of a certificate of authority,
and prior to the first day of the second month immediately
preceding its anniversary month in the next succeeding year.
(x) "Treasury shares" mean (1) shares of a corporation
that have been issued, have been subsequently acquired by and
belong to the corporation, and have not been cancelled or
restored to the status of authorized but unissued shares and
(2) shares (i) declared and paid as a share dividend on the
shares referred to in clause (1) or this clause (2), or (ii)
issued in a share split of the shares referred to in clause
(1) or this clause (2). Treasury shares shall be deemed to
be "issued" shares but not "outstanding" shares. Treasury
shares may not be voted, directly or indirectly, at any
meeting or otherwise. Shares converted into or exchanged for
other shares of the corporation shall not be deemed to be
treasury shares.
(Source: P.A. 88-151; 89-508, eff. 7-3-96.)
(805 ILCS 5/8.60) (from Ch. 32, par. 8.60)
Sec. 8.60. Director conflict of interest. (a) If a
transaction is fair to a corporation at the time it is
authorized, approved, or ratified, the fact that a director
of the corporation is directly or indirectly a party to the
transaction is not grounds for invalidating the transaction
or the director's vote regarding the transaction; provided,
however, that. (b) in a proceeding contesting the validity
of such a transaction described in subsection (a), the person
asserting validity has the burden of proving fairness unless:
(1) the material facts of the transaction and the
director's interest or relationship were disclosed or
known to the board of directors or a committee of the
board and the board or committee authorized, approved or
ratified the transaction by the affirmative votes of a
majority of disinterested directors, even though the
disinterested directors be less than a quorum; or
(2) the material facts of the transaction and the
director's interest or relationship were disclosed or
known to the shareholders entitled to vote and they
authorized, approved or ratified the transaction without
counting the vote of any shareholder who is an interested
director.
The presence of the director, who is directly or
indirectly a party to the transaction described in subsection
(a), or a director who is otherwise not disinterested, may be
counted in determining whether a quorum is present but may
not be counted when the board of directors or a committee of
the board takes action on the transaction.
(b) For purposes of this Section, a director is
"indirectly" a party to a transaction if the other party to
the transaction is an entity in which the director has a
material financial interest or of which the director is an
officer, director or general partner.
(Source: P.A. 83-1025.)
(805 ILCS 5/9.20 new)
Sec. 9.20. Reduction of paid-in capital.
(a) A corporation may reduce its paid-in capital:
(1) by resolution of its board of directors by
charging against its paid-in capital (i) the paid-in
capital represented by shares acquired and cancelled by
the corporation as permitted by law, to the extent of the
cost from the paid-in capital of the reacquired and
cancelled shares or a lesser amount as may be elected by
the corporation, (ii) dividends paid on preferred shares,
or (iii) distributions as liquidating dividends; or
(2) pursuant to an approved reorganization in
bankruptcy that specifically directs the reduction to be
effected.
(b) Notwithstanding anything to the contrary contained
in this Act, at no time shall the paid-in capital be reduced
to an amount less than the aggregate par value of all issued
shares having a par value.
(c) Until the report under Section 14.30 has been filed
in the Office of the Secretary of State showing a reduction
in paid-in capital, the basis of the annual franchise tax
payable by the corporation shall not be reduced; provided,
however, that in no event shall the annual franchise tax for
any taxable year be reduced if the report is not filed prior
to the first day of the anniversary month or, in the case of
a corporation that has established an extended filing month,
the extended filing month of the corporation of that taxable
year and before payment of its annual franchise tax.
(d) A corporation that reduced its paid-in capital after
December 31, 1986 by one or more of the methods described in
subsection (a) may report the reduction pursuant to Section
14.30, subject to the restrictions of subsections (b) and
(c) of this Section. A reduction in paid-in capital reported
pursuant to this subsection shall have no effect for any
purpose under this Act with respect to a taxable year ending
before the report is filed.
(e) Nothing in this Section shall be construed to forbid
any reduction in paid-in capital to be effected under Section
9.05 of this Act.
(805 ILCS 5/13.75 new)
Sec. 13.75. Activities that do not constitute
transacting business. Without excluding other activities
that may not constitute doing business in this State, a
foreign corporation shall not be considered to be transacting
business in this State, for purposes of this Article 13, by
reason of carrying on in this State any one or more of the
following activities:
(1) maintaining, defending, or settling any
proceeding;
(2) holding meetings of the board of directors or
shareholders or carrying on other activities concerning
internal corporate affairs;
(3) maintaining bank accounts;
(4) maintaining offices or agencies for the
transfer, exchange, and registration of the corporation's
own securities or maintaining trustees or depositaries
with respect to those securities;
(5) selling through independent contractors;
(6) soliciting or obtaining orders, whether by mail
or through employees or agents or otherwise, if orders
require acceptance outside this State before they become
contracts;
(7) creating or acquiring indebtedness, mortgages,
and security interests in real or personal property;
(8) securing or collecting debts or enforcing
mortgages and security interests in property securing the
debts;
(9) owning, without more, real or personal
property;
(10) conducting an isolated transaction that is
completed within 120 days and that is not one in the
course of repeated transactions of a like nature; or
(11) having a corporate officer or director who is
a resident of this State.
(805 ILCS 5/14.30) (from Ch. 32, par. 14.30)
Sec. 14.30. Cumulative report of changes in issued
shares or paid-in capital.
(a) Each domestic corporation and each foreign
corporation authorized to transact business in this State
that effects any change in the number of issued shares or the
amount of paid-in capital that has not theretofore been
reported in any report other than an annual report, interim
annual report, or final transition annual report, shall
execute and file, in accordance with Section 1.10 of this
Act, a report with respect to the changes in its issued
shares or paid-in capital:
(1) that have occurred subsequent to the last day
of the third month preceding its anniversary month in the
preceding year and prior to the first day of the second
month immediately preceding its anniversary month in the
current year; or
(2) in the case of a corporation that has
established an extended filing month, that have occurred
during its fiscal year; or
(3) in the case of a statutory merger or
consolidation or an amendment to the corporation's
articles of incorporation that affects the number of
issued shares or the amount of paid-in capital, that have
occurred between the last day of the third month
immediately preceding its anniversary month and the date
of the merger, or consolidation, or amendment or, in the
case of a corporation that has established an extended
filing month, that have occurred between the first day of
its fiscal year and the date of the merger, or
consolidation, or amendment; or
(4) in the case of a statutory merger or
consolidation or an amendment to the corporation's
articles of incorporation that affects the number of
issued shares or the amount of paid-in capital, that have
occurred between the date of the merger, consolidation,
or amendment (but not including the merger, or
consolidation, or amendment) and the first day of the
second month immediately preceding its anniversary month
in the current year, or in the case of a corporation that
has established an extended filing month, that have
occurred between the date of the merger, consolidation or
amendment (but not including the merger, consolidation or
amendment) and the last day of its fiscal year.
(b) The corporation shall file the report required under
subsection (a) not later than (i) the time its annual report
is required to be filed in 1992 and in each subsequent year
and (ii) not later than the time of filing the articles of
merger, consolidation, or amendment to the articles of
incorporation that affects the number of issued shares or the
amount of paid-in capital of a domestic corporation or the
certified copy of merger of a foreign corporation.
(c) The report shall net decreases against increases
that occur during the same taxable period. The report shall
set forth:
(1) The name of the corporation and the state or
country under the laws of which it is organized.
(2) A statement of the aggregate number of shares
which the corporation has authority to issue, itemized by
classes and series, if any, within a class.
(3) A statement of the aggregate number of issued
shares as last reported to the Secretary of State in any
document required or permitted by this Act to be filed,
other than an annual report, interim annual report or
final transition annual report, itemized by classes and
series, if any, within a class.
(4) A statement, expressed in dollars, of the
amount of paid-in capital of the corporation as last
reported to the Secretary of State in any document
required or permitted by this Act to be filed, other than
an annual report, interim annual report or final
transition annual report.
(5) A statement, if applicable, of the aggregate
number of shares issued by the corporation not
theretofore reported to the Secretary of State as having
been issued, and a statement, expressed in dollars, of
the value of the entire consideration received, less
expenses, including commissions, paid or incurred in
connection with the issuance, for, or on account of, the
issuance of the shares, itemized by classes, and series,
if any, within a class; and in the case of shares issued
as a share dividend, the amount added or transferred to
the paid-in capital of the corporation for, or on account
of, the issuance of the shares; provided, however, that
the report shall also include the date of each issuance
made prior to the current reporting period, and the
number of issued shares and consideration received in
each case.
(6) A statement, if applicable, expressed in
dollars, of the amount added or transferred to paid-in
capital of the corporation without the issuance of
shares; provided, however, that the report shall also
include the date of each increase made prior to the
current reporting period, and the consideration received
in each case.
(7) In case of an exchange or reclassification of
issued shares resulting in an increase in the amount of
paid-in capital, a statement of the manner in which it
was effected, and a statement, expressed in dollars, of
the amount added or transferred to the paid-in capital of
the corporation as a result thereof, except any portion
thereof reported under any other subsection of this
Section as a part of the consideration received by the
corporation for, or on account of, its issued shares;
provided, however, that the report shall also include the
date of each exchange or reclassification made prior to
the current reporting period and the consideration
received in each case.
(8) If the consideration received for the issuance
of any shares not theretofore reported as having been
issued consists of labor or services performed or of
property, other than cash, then a statement, expressed in
dollars, of the value of that consideration as fixed by
the board of directors.
(9) In the case of a cancellation of shares or a
reduction in paid-in capital made pursuant to Section
9.20 in connection with the cancellation of shares, the
aggregate reduction in paid-in capital resulting from the
acquisition of the shares; provided, however, that the
report shall also include the date of each reduction made
prior to the current reporting period.
(10) A statement of the aggregate number of issued
shares itemized by classes and series, if any, within a
class, after giving effect to the changes reported.
(11) A statement, expressed in dollars, of the
amount of paid-in capital of the corporation after giving
effect to the changes reported.
(d) No additional license fees or franchise taxes shall
be payable upon the filing of the report to the extent that
license fees or franchise taxes shall have been previously
paid by the corporation in respect of shares previously
issued which are being exchanged for the shares the issuance
of which is being reported, provided those facts are shown in
the report.
(e) The report shall be made on forms prescribed and
furnished by the Secretary of State.
(f) Until the report under this Section or a report
under Section 14.25 shall have been filed in the Office of
the Secretary of State showing a reduction in paid-in
capital, the basis of the annual franchise tax payable by the
corporation shall not be reduced, provided, however, in no
event shall the annual franchise tax for any taxable year be
reduced if the report is not filed prior to the first day of
the anniversary month or, in the case of a corporation which
has established an extended filing month, the extended filing
month of the corporation of that taxable year and before
payment of its annual franchise tax.
(Source: P.A. 86-985; 86-1217; 87-516.)
(805 ILCS 5/15.90) (from Ch. 32, par. 15.90)
Sec. 15.90. Statute of limitations.
(a) Except as otherwise provided in this Section and
notwithstanding anything to the contrary contained in any
other Section of this Act, no domestic corporation or foreign
corporation shall be obligated to pay any annual franchise
tax, fee, or penalty or interest thereon imposed under this
Act, nor shall any administrative or judicial sanction
(including dissolution) be imposed or enforced nor access to
the courts of this State be denied based upon nonpayment
thereof more than 7 years after the date of filing the annual
report with respect to the period during which the obligation
for the tax, fee, penalty or interest arose, unless (1)
within that 7 year period the Secretary of State sends a
written notice to the corporation to the effect that (A)
administrative or judicial action to dissolve the corporation
or revoke its certificate of authority for nonpayment of a
tax, fee, penalty or interest has been commenced; or (B) the
corporation has submitted filed a report but has failed to
pay a tax, fee, penalty or interest required to be paid
therewith; or (C) a report with respect to an event or action
giving rise to an obligation to pay a tax, fee, penalty or
interest is required but has not been filed, or has been
filed and is in error or incomplete; or (2) the annual report
by the corporation was filed with fraudulent intent to evade
taxes payable under this Act. A corporation nonetheless
shall be required to pay all the annual franchise taxes that
would have been payable during the most recent 7 year period
due to a previously unreported increase in paid-in capital
that occurred prior to that 7 year period and interest and
penalties thereon for that period.
(b) If within 2 years following a change in control of a
corporation the corporation voluntarily pays in good faith
all known obligations of the corporation imposed by this
Article 15 with respect to reports that were required to have
been filed since the beginning of the 7 year period ending on
the effective date of the change in control, no action shall
be taken to enforce or collect obligations of that
corporation imposed by this Article 15 with respect to
reports that were required to have been filed prior to that 7
year period regardless of whether the limitation period set
forth in subsection (a) is otherwise applicable. For
purposes of this subsection (b), a change in control means a
transaction, or a series of transactions consummated within a
period of 180 consecutive days, as a result of which a person
which owned less than 10% of the shares having the power to
elect directors of the corporation acquires shares such that
the person becomes the holder of 80% or more of the shares
having such power. For purposes of this subsection (b) a
person means any natural person, corporation, partnership,
trust or other entity together with all other persons
controlled by, controlling or under common control with such
person.
(c) Except as otherwise provided in this Section and
notwithstanding anything to the contrary contained in any
other Section of this Act, no foreign corporation that has
not previously obtained a certificate of authority under this
Act shall, upon voluntary application for a certificate of
authority filed with the Secretary of State prior to January
1, 2001, be obligated to pay any tax, fee, penalty, or
interest imposed under this Act, nor shall any administrative
or judicial sanction be imposed or enforced based upon
nonpayment thereof with respect to a period during which the
obligation arose that is prior to January 1, 1993 unless (1)
prior to receipt of the application for a certificate of
authority the Secretary of State had sent written notice to
the corporation regarding its failure to obtain a certificate
of authority, (2) the corporation had submitted an
application for a certificate of authority previously but had
failed to pay any tax, fee, penalty or interest to be paid
therewith, or (3) the application for a certificate of
authority was submitted by the corporation with fraudulent
intent to evade taxes payable under this Act. A corporation
nonetheless shall be required to pay all taxes and fees due
under this Act that would have been payable since January 1,
1993 as a result of commencing the transaction of its
business in this State and interest thereon for that period.
(Source: P.A. 86-985; 86-1217.)
Section 10-10. The Assumed Business Name Act is amended
by changing Section 4 as follows:
(805 ILCS 405/4) (from Ch. 96, par. 7)
Sec. 4. This Act shall in no way affect or apply to any
corporation, limited liability company, limited partnership,
or limited liability partnership duly organized under the
laws of this State, or any corporation, limited liability
company, limited partnership, or limited liability
partnership organized under the laws of any other State and
lawfully doing business in this State, nor shall this Act be
deemed or construed to prevent the lawful use of a
partnership name or designation, provided that such
partnership shall include the true, real name of such person
or persons transacting said business or partnership nor shall
it be construed as in any way affecting Sections 220 and 220a
of Division I of "An Act to revise the law in relation to
criminal jurisprudence", approved March 27, 1874, as amended.
This Act shall in no way affect or apply to testamentary or
other express trusts where the business is carried on in the
name of the trust and such trust is created by will or other
instrument in writing under which title to the trust property
is vested in a designated trustee or trustees for the use and
benefit of the cestuis que trustent.
(Source: Laws 1941, vol. 1, p. 550.)
ARTICLE 99
Section 99-5. Effective date. This Act takes effect
January 1, 1998.