Illinois General Assembly

  Bills & Resolutions  
  Compiled Statutes  
  Public Acts  
  Legislative Reports  
  IL Constitution  
  Legislative Guide  
  Legislative Glossary  

 Search By Number
 (example: HB0001)
Search Tips

Search By Keyword

Illinois Compiled Statutes

Information maintained by the Legislative Reference Bureau
Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide.

Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.

BUSINESS ORGANIZATIONS
(805 ILCS 180/) Limited Liability Company Act.

805 ILCS 180/Art. 15

 
    (805 ILCS 180/Art. 15 heading)
Article 15. Management

805 ILCS 180/15-1

    (805 ILCS 180/15-1)
    Sec. 15-1. Management of limited liability company.
    (a) A limited liability company is a member-managed limited liability company unless the operating agreement:
        (1) expressly provides that:
            (A) the company is or will be manager-managed;
            (B) the company is or will be managed by
        
managers; or
            (C) management of the company is or will be
        
vested in managers; or
        (2) includes words of similar import.
    (b) In a member-managed company:
        (1) each member has equal rights in the management
    
and conduct of the company's business; and
        (2) except as otherwise provided in subsection (d) of
    
this Section, any matter relating to the business of the company may be decided by a majority of the members.
    (c) In a manager-managed company:
        (1) each manager has equal rights in the management
    
and conduct of the company's business;
        (2) except as otherwise provided in subsection (d) of
    
this Section, any matter relating to the business of the company may be exclusively decided by the manager or, if there is more than one manager, by a majority of the managers; and
        (3) a manager:
            (A) must be designated, appointed, elected,
        
removed, or replaced by a vote, approval, or consent of a majority of the members; and
            (B) holds office until a successor has been
        
elected and qualified, unless the manager sooner resigns or is removed.
    (d) The only matters of a member or manager-managed company's business requiring the consent of all of the members are the following:
        (1) the amendment of the operating agreement under
    
Section 15-5;
        (2) an amendment to the articles of organization
    
under Article 5;
        (3) the compromise of an obligation to make a
    
contribution under Section 20-5;
        (4) the compromise, as among members, of an
    
obligation of a member to make a contribution or return money or other property paid or distributed in violation of this Act;
        (5) the redemption of an interest;
        (6) the admission of a new member;
        (7) the use of the company's property to redeem an
    
interest subject to a charging order;
        (8) the consent to dissolve the company under
    
subdivision (2) of subsection (a) of Section 35-1;
        (9) the consent of members to convert, merge with
    
another entity or domesticate under Article 37 or the Entity Omnibus Act; and
        (10) the sale, lease, exchange, or other disposal of
    
all, or substantially all, of the company's property with or without goodwill.
    (e) Action requiring the consent of members or managers under this Act may be taken without a meeting.
    (f) A member or manager may appoint a proxy to vote or otherwise act for the member or manager by signing an appointment instrument, either personally or by the member or manager's attorney-in-fact.
(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)

805 ILCS 180/15-3

    (805 ILCS 180/15-3)
    Sec. 15-3. General standards of member and manager's conduct.
    (a) The fiduciary duties a member owes to a member-managed company and its other members include the duty of loyalty and the duty of care referred to in subsections (b) and (c) of this Section.
    (b) A member's duty of loyalty to a member-managed company and its other members includes the following:
        (1) to account to the company and to hold as trustee
    
for it any property, profit, or benefit derived by the member in the conduct or winding up of the company's business or derived from a use by the member of the company's property, including the appropriation of a company's opportunity;
        (2) to act fairly when a member deals with the
    
company in the conduct or winding up of the company's business as or on behalf of a party having an interest adverse to the company; and
        (3) to refrain from competing with the company in the
    
conduct of the company's business before the dissolution of the company.
    (c) A member's duty of care to a member-managed company and its other members in the conduct of and winding up of the company's business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
    (d) A member shall discharge his or her duties to a member-managed company and its other members under this Act or under the operating agreement and exercise any rights consistent with the obligation of good faith and fair dealing.
    (e) A member of a member-managed company does not violate a duty or obligation under this Act or under the operating agreement merely because the member's conduct furthers the member's own interest.
    (f) This Section applies to a person winding up the limited liability company's business as the personal or legal representative of the last surviving member as if the person were a member.
    (g) In a manager-managed company:
        (1) a member who is not also a manager owes no duties
    
to the company or to the other members solely by reason of being a member;
        (2) a manager is held to the same standards of
    
conduct prescribed for members in subsections (b), (c), (d), and (e) of this Section;
        (3) a member who exercises some or all of the
    
authority of a manager and conduct of the company's business is held to the standards of conduct in subsections (b), (c), (d), and (e) of this Section; and
        (4) a manager is relieved of liability imposed by law
    
for violations of the standards prescribed by subsections (b), (c), (d), and (e) to the extent of the managerial authority delegated to the members by the operating agreement.
(Source: P.A. 99-637, eff. 7-1-17.)

805 ILCS 180/15-5

    (805 ILCS 180/15-5)
    Sec. 15-5. Operating agreement.
    (a) All members of a limited liability company may enter into an operating agreement to regulate the affairs of the company and the conduct of its business and to govern relations among the members, managers, and company. The operating agreement may establish that a limited liability company is a manager-managed limited liability company and the rights and duties under this Act of a person in the capacity of a manager. To the extent the operating agreement does not otherwise provide, this Act governs relations among the members, managers, and company. Except as provided in subsections (b), (c), (d), and (e) of this Section, an operating agreement may modify any provision or provisions of this Act governing relations among the members, managers, and company.
    (b) The operating agreement may not:
        (1) unreasonably restrict a right to information or
    
access to records under Section 1-40 or Section 10-15;
        (2) vary the right to expel a member in an event
    
specified in subdivision (6) of Section 35-45;
        (3) vary the requirement to wind up the limited
    
liability company's business in a case specified in subdivision (4), (5), or (6) of subsection (a) of Section 35-1;
        (4) restrict rights of a person, other than a
    
manager, member, and transferee of a member's distributional interest, under this Act;
        (5) restrict the power of a member to dissociate
    
under Section 35-50, although an operating agreement may determine whether a dissociation is wrongful under Section 35-50;
        (6) (blank);
        (6.5) eliminate or reduce the obligations or purposes
    
a low-profit limited liability company undertakes when organized under Section 1-26;
        (7) eliminate or reduce the obligation of good faith
    
and fair dealing under subsection (d) of Section 15-3, but the operating agreement may determine the standards by which the performance of the member's duties or the exercise of the member's rights is to be measured;
        (8) eliminate, vary, or restrict the priority of a
    
statement of authority over provisions in the articles of organization as provided in subsection (h) of Section 13-15;
        (9) vary the law applicable under Section 1-65;
        (10) vary the power of the court under Section 5-50;
    
or
        (11) restrict the right to approve a merger,
    
conversion, or domestication under Article 37 or the Entity Omnibus Act of a member that will have personal liability with respect to a surviving, converted, or domesticated organization.
    (c) The operating agreement may:
        (1) restrict or eliminate a fiduciary duty, other
    
than the duty of care described in subsection (c) of Section 15-3, but only to the extent the restriction or elimination in the operating agreement is clear and unambiguous;
        (2) identify specific types or categories of
    
activities that do not violate any fiduciary duty; and
        (3) alter the duty of care, except to authorize
    
intentional misconduct or knowing violation of law.
    (d) The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.
    (e) The operating agreement may alter or eliminate the right to payment or reimbursement for a member or manager provided by Section 15-7 and may eliminate or limit a member or manager's liability to the limited liability company and members for money damages, except for:
        (1) subject to subsections (c) and (d) of this
    
Section, breach of the duties as required in subdivisions (1), (2), and (3) of subsection (b) of Section 15-3 and subsection (g) of Section 15-3;
        (2) a financial benefit received by the member or
    
manager to which the member or manager is not entitled;
        (3) a breach of a duty under Section 25-35;
        (4) intentional infliction of harm on the company or
    
a member; or
        (5) an intentional violation of criminal law.
    (f) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.
    (g) A person that becomes a member of a limited liability company is deemed to assent to the operating agreement.
    (h) An operating agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of the filing, may be made effective as of the time of formation of the limited liability company or as of the time or date provided in the operating agreement.
(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)

805 ILCS 180/15-7

    (805 ILCS 180/15-7)
    Sec. 15-7. Member and manager's right to reimbursement and indemnification.
    (a) A limited liability company shall reimburse a member or manager for payments made and indemnify a member or manager for debts, obligations, or other liabilities incurred by the member or manager in the course of the member's or manager's activities on behalf of the company, if, in making the payment or incurring the debt, obligation, or other liability, the member or manager complied with the duties stated in Sections 15-3 and 25-35.
    (b) A limited liability company shall reimburse a member for an advance to the company beyond the amount of contribution the member agreed to make.
    (c) A payment or advance made by a member that gives rise to an obligation of a limited liability company under subsection (a) or (b) of this Section constitutes a loan to the company upon which interest accrues from the date of the payment or advance.
    (d) A member is not entitled to remuneration for services performed for a limited liability company, except for reasonable compensation for services rendered in winding up the business of the company.
    (e) A limited liability company may purchase and maintain insurance on behalf of a member or manager of the company against liability asserted against or incurred by the member or manager in that capacity or arising from that status even if, under subsection (e) of Section 15-5, the operating agreement could not eliminate or limit the person's liability to the company for the conduct giving rise to the liability.
(Source: P.A. 99-637, eff. 7-1-17.)

805 ILCS 180/15-10

    (805 ILCS 180/15-10)
    Sec. 15-10. (Repealed).
(Source: P.A. 87-1062. Repealed by P.A. 90-424, eff. 1-1-98.)

805 ILCS 180/15-15

    (805 ILCS 180/15-15)
    Sec. 15-15. Discharge of duties; consideration. In discharging the duties of their respective positions, members and individual managers may, in considering the best long term and short term interests of the limited liability company, consider the effects of any action (including without limitation, action that may involve or relate to a change or potential change in control of the limited liability company) upon employees, suppliers, and customers of the limited liability company or its subsidiaries, communities in which offices or other establishments of the limited liability company or its subsidiaries are located, and all other pertinent factors.
(Source: P.A. 87-1062.)

805 ILCS 180/15-20

    (805 ILCS 180/15-20)
    Sec. 15-20. Actions by members.
    (a) A member may maintain an action against a limited liability company or another member for legal or equitable relief, with or without an accounting as to the company's business, to enforce all of the following:
        (1) The member's rights under the operating agreement.
        (2) The member's rights under this Act.
        (3) The rights and otherwise protect the interests of
    
the member, including rights and interests arising independently of the member's relationship to the company.
    (b) The accrual, and any time limited for the assertion, of a right of action for a remedy under this Section is governed by other law. A right to an accounting upon a dissolution and winding up does not revive a claim barred by law.
(Source: P.A. 90-424, eff. 1-1-98.)