Illinois General Assembly - Full Text of SB1495
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Full Text of SB1495  101st General Assembly




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1    AN ACT concerning business.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Limited Liability Company Act is amended by
5changing Sections 1-5, 1-40, 10-1, 10-10, 10-15, 13-15, 15-20,
630-1, 35-1, and 35-45 as follows:
7    (805 ILCS 180/1-5)
8    Sec. 1-5. Definitions. As used in this Act, unless the
9context otherwise requires:
10    "Anniversary" means that day every year exactly one or more
11years after: (i) the date the articles of organization filed
12under Section 5-5 of this Act were filed by the Office of the
13Secretary of State, in the case of a limited liability company;
14or (ii) the date the application for admission to transact
15business filed under Section 45-5 of this Act was filed by the
16Office of the Secretary of State, in the case of a foreign
17limited liability company.
18    "Anniversary month" means the month in which the
19anniversary of the limited liability company occurs.
20    "Articles of organization" means the articles of
21organization filed by the Secretary of State for the purpose of
22forming a limited liability company as specified in Article 5
23and all amendments thereto, whether evidenced by articles of



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1amendment, articles of merger, or a statement of correction
2affecting the articles.
3    "Assumed limited liability company name" means any limited
4liability company name other than the true limited liability
5company name, except that the identification by a limited
6liability company of its business with a trademark or service
7mark of which it is the owner or licensed user shall not
8constitute the use of an assumed name under this Act.
9    "Bankruptcy" means bankruptcy under the Federal Bankruptcy
10Code of 1978, Title 11, Chapter 7 of the United States Code, as
11amended from time to time, or any successor statute.
12    "Business" includes every trade, occupation, profession,
13and other lawful purpose, whether or not carried on for profit.
14    "Company" means a limited liability company.
15    "Contribution" means any cash, property, services
16rendered, or other benefit, or a promissory note or other
17binding obligation to contribute cash or property, perform
18services, or provide any other benefit, that a person
19contributes to the limited liability company in that person's
20capacity as a member or in order to become a member.
21    "Court" includes every court and judge having jurisdiction
22in a case.
23    "Debtor in bankruptcy" means a person who is the subject of
24an order for relief under Title 11 of the United States Code, a
25comparable order under a successor statute of general
26application, or a comparable order under federal, state, or



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1foreign law governing insolvency.
2    "Distribution" means a transfer of money, property, or
3other benefit from a limited liability company to a member in
4the member's capacity as a member or to a transferee of the
5member's distributional interest.
6    "Distributional interest" means a member's right to
7receive distributions of the limited liability company's
8assets, but no other rights or interests of a member.
9    "Entity" means a person other than an individual.
10    "Federal employer identification number" means either (i)
11the federal employer identification number assigned by the
12Internal Revenue Service to the limited liability company or
13foreign limited liability company or (ii) in the case of a
14limited liability company or foreign limited liability company
15not required to have a federal employer identification number,
16any other number that may be assigned by the Internal Revenue
17Service for purposes of identification.
18    "Foreign limited liability company" means an
19unincorporated entity organized under laws other than the laws
20of this State that afford limited liability to its owners
21comparable to the liability under Section 10-10 and is not
22required to register to transact business under any law of this
23State other than this Act.
24    "Insolvent" means that a limited liability company is
25unable to pay its debts as they become due in the usual course
26of its business.



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1    "Legal representative" means, without limitation, an
2executor, administrator, guardian, personal representative and
3agent, including an appointee under a power of attorney.
4    "Limited liability company" means a limited liability
5company organized under this Act.
6    "L3C" or "low-profit limited liability company" means a
7for-profit limited liability company which satisfies the
8requirements of Section 1-26 of this Act and does not have as a
9significant purpose the production of income or the
10appreciation of property.
11    "Manager" means a person, whether or not a member of a
12manager-managed company, who is vested with authority in an
13operating agreement as provided in Section 15-1.
14    "Manager-managed company" means a limited liability
15company that vests authority in a manager or managers in an
16operating agreement as provided in Section 15-1.
17    "Member" means a person who becomes a member of the limited
18liability company upon formation of the company or in the
19manner and at the time provided in the operating agreement or,
20if the operating agreement does not so provide, in the manner
21and at the time provided in this Act.
22    "Member-managed company" means a limited liability company
23other than a manager-managed company.
24    "Membership interest" means all of a member's rights in the
25limited liability company, including the member's right to
26receive distributions of the limited liability company's



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2    "Operating agreement" means the agreement under Section
315-5, whether or not referred to as an operating agreement and
4whether oral, in a record, implied, or in any combination
5thereof, of all of the members of a limited liability company,
6including a sole member, concerning the relations among the
7members, managers, and limited liability company. The term
8"operating agreement" includes amendments to the agreement.
9    "Organizer" means one of the signers of the original
10articles of organization.
11    "Person" means an individual, partnership, domestic or
12foreign limited partnership, limited liability company or
13foreign limited liability company, trust, estate, association,
14corporation, governmental body, or other juridical being.
15    "Professional limited liability company" means a limited
16liability company that provides professional services licensed
17by the Department of Financial and Professional Regulation and
18that is organized under the Professional Limited Liability
19Company Act and this Act.
20    "Record" means information that is inscribed on a tangible
21medium or that is stored in an electronic or other medium and
22is retrievable in perceivable form.
23    "Registered office" means that office maintained by the
24limited liability company in this State, the address, including
25street, number, city and county, of which is on file in the
26office of the Secretary of State, at which, any process,



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1notice, or demand required or permitted by law may be served
2upon the registered agent of the limited liability company.
3    "Registered agent" means a person who is an agent for
4service of process on the limited liability company who is
5appointed by the limited liability company and whose address is
6the registered office of the limited liability company.
7    "Restated articles of organization" means the articles of
8organization restated as provided in Section 5-30.
9    "Sign" means, with the present intent to authenticate or
10adopt a record:
11        (1) to execute or adopt a tangible symbol; or
12        (2) to attach to or logically associate with the record
13    an electronic symbol, sound, or process.
14    "State" means a state, territory, or possession of the
15United States, the District of Columbia, or the Commonwealth of
16Puerto Rico.
17    "Transfer" includes an assignment, conveyance, deed, bill
18of sale, lease, mortgage, security interest, encumbrance, and
20(Source: P.A. 99-637, eff. 7-1-17; 100-894, eff. 8-14-18.)
21    (805 ILCS 180/1-40)
22    Sec. 1-40. Records to be kept.
23    (a) Each limited liability company shall keep at the
24principal place of business of the company named in the
25articles of organization or other reasonable locations



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1specified in the operating agreement all of the following:
2        (1) A list of the full name and last known address of
3    each member setting forth the amount of cash each member
4    has contributed, a description and statement of the agreed
5    value of the other property or services each member has
6    contributed or has agreed to contribute in the future, and
7    the date on which each became a member.
8        (2) A copy of the articles of organization, as amended
9    or restated, together with executed copies of any powers of
10    attorney under which any articles, application, or
11    certificate has been executed.
12        (3) Copies of the limited liability company's federal,
13    State, and local income tax returns and reports, if any,
14    for the 3 most recent years.
15        (4) Copies of any then effective written operating
16    agreement and any amendments thereto and of any financial
17    statements of the limited liability company for the 3 most
18    recent years.
19    (b) Records kept under this Section may be inspected and
20copied at the request and expense of any member or legal
21representative of a deceased member or member under legal
22disability during ordinary business hours.
23    (c) The rights under subsection (b) of this Section also
24extend to a transferee of a distributional interest, but only
25for a proper purpose. In order to exercise this right, a
26transferee must make written demand upon the limited liability



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1company, stating with particularity the records sought to be
2inspected and the purpose of the demand.
3    (d) Within 10 days after receiving a demand pursuant to
4subsection (c):
5        (1) the company shall provide the information demanded
6    or, in a record, a description of the information the
7    company will provide, stating a reasonable time within
8    which it will be provided and the place where it will be
9    provided; and
10        (2) if the company declines to provide any demanded
11    information, the company shall state its reasons for
12    declining to the transferee in a record.
13    A transferee may exercise the rights under this subsection
14through a legal representative.
15    (e) If the company fails to comply with this Section, the
16person making a request or demand may file an action to compel
17the company to permit the inspection and copying and to obtain
18such other legal or equitable relief as may be proper. If the
19court finds that the company failed to comply with the
20requirements of this Section and, in the case of subsection (c)
21or (d), the company acted unreasonably, the court may award the
22plaintiff its reasonable costs and attorney's fees incurred in
23bringing and prosecuting the action.
24(Source: P.A. 99-637, eff. 7-1-17.)
25    (805 ILCS 180/10-1)



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1    Sec. 10-1. Admission of members.
2    (a) A person becomes a member of a limited liability
4        (1) upon formation of the company, as provided in an
5    agreement between the organizer and the initial member if
6    there is only one member, or as provided in an agreement
7    among initial members if there is more than one member;
8        (2) after the formation of the company,
9            (A) as provided in the operating agreement;
10            (B) as the result of a transaction effective under
11        Article 37;
12            (C) with the consent of all the members; or
13            (D) if, within 180 consecutive days after the
14        company ceases to have any members:
15                (i) the last person to have been a member, or
16            the legal representative of that person,
17            designates a person to become a member; and
18                (ii) the designated person consents to become
19            a member.
20            More than one person may be designated to become a
21        member under this clause (D).
22    (b) A person that acquires a distributional interest, but
23that does not become a member, has merely the rights of a
24transferee under Sections 30-5 and 30-10.
25    (c) A person may become a member without acquiring a
26distributional interest and without making or being obligated



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1to make a contribution to the limited liability company.
2(Source: P.A. 99-637, eff. 7-1-17.)
3    (805 ILCS 180/10-10)
4    Sec. 10-10. Liability of members and managers.
5    (a) Except as otherwise provided in subsection (d) of this
6Section, the debts, obligations, and liabilities of a limited
7liability company, whether arising in contract, tort, or
8otherwise, are solely the debts, obligations, and liabilities
9of the company. A member or manager is not personally liable
10for a debt, obligation, or liability of the company solely by
11reason of being or acting as a member or manager.
12    (a-5) Nothing in subsection (a) or subsection (d) limits
13the personal liability of a member or manager imposed under law
14other than this Act, including, but not limited to, agency,
15contract, and tort law. The purpose of this subsection (a-5) is
16to overrule the interpretation of subsections (a) and (d) set
17forth in Dass v. Yale, 2013 IL App (1st) 122520, and Carollo v.
18Irwin, 2011 IL App (1st) 102765, and clarify that under
19existing law a member or manager of a limited liability company
20may be liable under law other than this Act for its own
21wrongful acts or omissions, even when acting or purporting to
22act on behalf of a limited liability company. This subsection
23is therefore intended to be applicable to actions with respect
24to which all timely appeals have not exhausted before the
25effective date of this amendatory Act of the 101st General



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1Assembly as well as to all actions commenced on or after the
2effective date of this amendatory Act of the 101st General
4    (b) (Blank).
5    (c) The failure of a limited liability company to observe
6the usual company formalities or requirements relating to the
7exercise of its company powers or management of its business is
8not a ground for imposing personal liability on the members or
9managers for liabilities of the company.
10    (d) All or specified members of a limited liability company
11are liable in their capacity as members for all or specified
12debts, obligations, or liabilities of the company if:
13        (1) a provision to that effect is contained in the
14    articles of organization; and
15        (2) a member so liable has consented in writing to the
16    adoption of the provision or to be bound by the provision.
17(Source: P.A. 90-424, eff. 1-1-98.)
18    (805 ILCS 180/10-15)
19    Sec. 10-15. Right of members and dissociated members to
21    (a) A company shall furnish information when any member
22demands it in a record concerning the company's activities,
23financial condition, and other circumstances of the company's
24business necessary to the proper exercise of a member's rights
25and duties under the operating agreement or this Act or that is



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1otherwise material to the member's membership interest in the
2company of a member, unless the company knows that the member
3already knows that information.
4    (b) The following rules apply when a member makes a demand
5for information under this Section:
6        (1) During regular business hours and at a reasonable
7    location and time specified by the company, a member may
8    obtain from the company, inspect, and copy information for
9    a purpose consistent with subsection (a).
10        (2) Within 10 days after receiving a demand pursuant to
11    subsection (a):
12            (A) the company shall provide the information
13        demanded or, in a record, a description of the
14        information the company will provide, stating a
15        reasonable time within which it will be provided and
16        the place where it will be provided; and
17            (B) if the company declines to provide any demanded
18        information, the company shall state its reasons for
19        declining to the member in a record.
20    (c) Whenever this Act or an operating agreement provides
21for a member to give or withhold consent to a matter, before
22the consent is given or withheld, the company shall, without
23demand, provide the member with all information that is known
24to the company that is material to the member's decision.
25    (d) Within 10 days after a demand made in a record received
26by the limited liability company, a dissociated member may have



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1access to information to which the person was entitled while a
2member if the information pertains to the period during which
3the person was a member, and the person seeks the information
4in good faith for a purpose consistent with subsection (a). The
5company shall respond to a demand made pursuant to this
6subsection in the manner provided in subdivisions (A) and (B)
7of paragraph (2) of subsection (b).
8    (e) A limited liability company may charge a person that
9makes a demand under this Section the reasonable costs of
10copying, limited to the costs of labor and material.
11    (f) A member or dissociated member may exercise rights
12under this Section through an agent or, in the case of an
13individual under legal disability, a legal representative. Any
14restriction or condition imposed by the operating agreement or
15under subsection (h) applies both to the agent or legal
16representative and the member or dissociated member.
17    (g) The rights under this Section do not extend to a person
18as transferee.
19    (h) In addition to any restriction or condition stated in
20its operating agreement, the limited liability company, as a
21matter within the ordinary course of its activities, may impose
22reasonable restrictions and conditions on access to and use of
23information to be furnished under this Section including, but
24not limited to, the designation of information such as trade
25secrets or information subject to confidentiality agreements
26with third parties as confidential with appropriate



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1nondisclosure and safeguarding obligations. In a dispute
2concerning the reasonableness of a restriction or designation
3under this subsection, the company has the burden of proving
5    (i) This Section does not limit or restrict the right to
6inspect and copy records as provided in subsection (b) of
7Section 1-40.
8    (j) If the company fails to provide any information
9required to be provided by this Section, the person entitled to
10the information may file an action to compel the company to
11provide the information and to obtain such other legal or
12equitable relief as may be proper. If the court finds that the
13company failed to comply with the requirements of this Section,
14the court may award the plaintiff its reasonable costs and
15attorney's fees incurred in bringing and prosecuting the
16action. The court may, in connection with any information
17described in subsection (h), impose such restrictions and
18conditions on access to and use of such information as it deems
19appropriate based on the reasonable needs of the company and
20the member in question.
21(Source: P.A. 99-637, eff. 7-1-17.)
22    (805 ILCS 180/13-15)
23    Sec. 13-15. Statement of authority.
24    (a) A limited liability company may deliver to the
25Secretary of State for filing a statement of authority. The



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1statement shall be executed and filed in accordance with
2Section 5-45 of this Act and:
3        (1) must include the name of the company and the
4    address of its principal place of business; and
5        (2) may state the authority, or limitations on the
6    authority, of any member or manager of the company or any
7    other person to:
8            (A) execute an instrument transferring real
9        property held in the name of the company; or
10            (B) enter into other transactions on behalf of, or
11        otherwise act for or bind, the company.
12    (b) To amend or cancel a statement of authority, a limited
13liability company must deliver to the Secretary of State for
14filing a statement of amendment or cancellation. The statement
15shall be executed and filed in accordance with Section 5-45 of
16this Act and must include:
17        (1) the name of the limited liability company and the
18    address of its principal place of business;
19        (2) the date the statement of authority being amended
20    or cancelled became effective; and
21        (3) the contents of the amendment or a declaration that
22    the statement of authority is canceled.
23    (c) Except as otherwise provided in subsections (e) and
24(f), a limitation on the authority of a member or manager of
25the limited liability company contained in a statement of
26authority is not by itself evidence of knowledge or notice of



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1the limitation by any person.
2    (d) A grant of authority not pertaining to transfers of
3real property and contained in a statement of authority is
4conclusive in favor of a person that is not a member and that
5gives value in reliance on the grant, except to the extent that
6when the person gives value, the person has knowledge to the
8    (e) A certified copy of a statement of authority that
9grants authority to transfer real property held in the name of
10the limited liability company and that is recorded in the
11office for recording transfers of the real property is
12conclusive in favor of a person that is not a member and that
13gives value in reliance on the grant without knowledge to the
15    (f) If a certified copy of a statement of authority
16containing a limitation on the authority to transfer real
17property held in the name of a limited liability company is
18recorded in the office for recording transfers of that real
19property, all persons that are not members are deemed to know
20of the limitation.
21    (g) Unless previously cancelled by a statement of
22cancellation, a statement of authority expires as of the date,
23if any, specified in the statement of authority.
24    (h) If the articles of organization state the authority or
25limitations on the authority of any person on behalf of a
26company, the authority stated or limited shall not bind any



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1person who is not a member or manager until that person
2receives actual notice in a record from the company that agency
3authority is stated or limited in the articles. If the
4authority stated or limited in the articles of organization
5conflicts with authority stated or limited in a statement of
6authority filed with the Secretary of State under this Section
7on behalf of the company, the statement of authority is the
8effective statement and a person who is not a member or manager
9may rely upon the terms of the filed statement of authority
10notwithstanding conflicting terms in the articles of
12(Source: P.A. 99-637, eff. 7-1-17.)
13    (805 ILCS 180/15-20)
14    Sec. 15-20. Actions by members.
15    (a) A member may maintain an action against a limited
16liability company, a manager, or another member for legal or
17equitable relief, with or without an accounting as to the
18company's business, to enforce all of the following:
19        (1) The member's rights under the operating agreement.
20        (2) The member's rights under this Act.
21        (3) The rights and otherwise protect the interests of
22    the member, including rights and interests arising
23    independently of the member's relationship to the company.
24    (b) The accrual, and any time limited for the assertion, of
25a right of action for a remedy under this Section is governed



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1by other law. A right to an accounting upon a dissolution and
2winding up does not revive a claim barred by law.
3(Source: P.A. 90-424, eff. 1-1-98.)
4    (805 ILCS 180/30-1)
5    Sec. 30-1. Member's distributional interest.
6    (a) A member is not a co-owner of, and has no transferable
7interest in, property of a limited liability company.
8    (b) A distributional interest in a limited liability
9company is personal property and, subject to Sections 30-5 and
1030-10, may be transferred in whole or in part.
11    (c) An operating agreement may provide that a
12distributional interest may be evidenced by a certificate of
13the interest issued by the limited liability company and,
14subject to Section 30-10, may also provide for the transfer of
15any interest represented by the certificate.
16    (d) Except as provided in subsection (b), the rights,
17powers, and interest of a member, including a member described
18in subsection (c) of Section 10-1, may not be transferred
19except in accordance with authority described in the operating
20agreement or if all other members consent.
21(Source: P.A. 90-424, eff. 1-1-98.)
22    (805 ILCS 180/35-1)
23    Sec. 35-1. Events causing dissolution and winding up of
24company's business.



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1    (a) A limited liability company is dissolved and its
2business must be wound up upon the occurrence of any of the
3following events:
4        (1) An event or circumstance that causes the
5    dissolution of a company by the express terms of the
6    operating agreement.
7        (2) The consent of all members.
8        (3) The passage of 180 consecutive days during which
9    the company has no members.
10        (4) On application by a member or a dissociated member,
11    upon entry of a judicial decree that:
12            (A) the economic purpose of the company has been or
13        is likely to be unreasonably frustrated;
14            (B) the conduct of all or substantially all of the
15        company's activities is unlawful;
16            (C) it is not otherwise reasonably practicable to
17        carry on the company's business in conformity with the
18        articles of organization and the operating agreement.
19        (5) On application by a member or transferee of a
20    distributional interest, upon entry of a judicial decree
21    that the managers or those members in control of the
22    company:
23            (A) have acted, are acting, or will act in a manner
24        that is illegal or fraudulent; or
25            (B) have acted or are acting in a manner that is
26        oppressive and was, is, or will be directly harmful to



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1        the applicant.
2        (6) Administrative dissolution under Section 35-25.
3    (b) In a proceeding under subdivision (4) or (5) of
4subsection (a), the court may order a remedy other than
5dissolution including, but not limited to, a buyout of the
6applicant's distributional membership interest.
7(Source: P.A. 99-637, eff. 7-1-17.)
8    (805 ILCS 180/35-45)
9    Sec. 35-45. Events causing member's dissociation. A member
10is dissociated from a limited liability company upon the
11occurrence of any of the following events:
12        (1) The company's having notice of the member's express
13    will to dissociate withdraw upon the date of notice or on a
14    later date specified by the member.
15        (2) An event agreed to in the operating agreement as
16    causing the member's dissociation.
17        (3) Upon transfer of all of a member's distributional
18    interest, other than a transfer for security purposes or a
19    court order charging the member's distributional interest
20    that has not been foreclosed.
21        (4) The member's expulsion pursuant to the operating
22    agreement.
23        (5) The member's expulsion by unanimous vote of the
24    other members if:
25            (A) it is unlawful to carry on the company's



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1        business with the member;
2            (B) there has been a transfer of substantially all
3        of the member's distributional interest, other than a
4        transfer for security purposes or a court order
5        charging the member's distributional interest that has
6        not been foreclosed;
7            (C) within 90 days after the company notifies a
8        corporate member that it will be expelled because it
9        has filed a certificate of dissolution or the
10        equivalent, its charter has been revoked, or its right
11        to conduct business has been suspended by the
12        jurisdiction of its incorporation, the member fails to
13        obtain a revocation of the certificate of dissolution
14        or a reinstatement of its charter or its right to
15        conduct business; or
16            (D) a partnership or a limited liability company
17        that is a member has been dissolved and its business is
18        being wound up.
19        (6) On application by the company or another member,
20    the member's expulsion by judicial determination because
21    the member:
22            (A) engaged in wrongful conduct that adversely and
23        materially affected the company's business;
24            (B) willfully or persistently committed a material
25        breach of the operating agreement or of a duty owed to
26        the company or the other members under Section 15-3; or



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1            (C) engaged in conduct relating to the company's
2        business that makes it not reasonably practicable to
3        carry on the business with the member.
4        (7) The member's:
5            (A) becoming a debtor in bankruptcy;
6            (B) executing an assignment for the benefit of
7        creditors;
8            (C) seeking, consenting to, or acquiescing in the
9        appointment of a trustee, receiver, or liquidator of
10        the member or of all or substantially all of the
11        member's property; or
12            (D) failing, within 90 days after the appointment,
13        to have vacated or stayed the appointment of a trustee,
14        receiver, or liquidator of the member or of all or
15        substantially all of the member's property obtained
16        without the member's consent or acquiescence, or
17        failing within 90 days after the expiration of a stay
18        to have the appointment vacated.
19        (8) In the case of a member who is an individual:
20            (A) the member's death;
21            (B) the appointment of a guardian or general
22        conservator for the member; or
23            (C) a judicial determination that the member has
24        otherwise become incapable of performing the member's
25        duties under the operating agreement.
26        (9) In the case of a member that is a trust or is



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1    acting as a member by virtue of being a trustee of a trust,
2    distribution of the trust's entire rights to receive
3    distributions from the company, but not merely by reason of
4    the substitution of a successor trustee.
5        (10) In the case of a member that is an estate or is
6    acting as a member by virtue of being a personal
7    representative of an estate, distribution of the estate's
8    entire rights to receive distributions from the company,
9    but not merely the substitution of a successor personal
10    representative.
11        (11) Termination of the existence of a member if the
12    member is not an individual, estate, or trust other than a
13    business trust.
14        (12) In the case of a company that participates in a
15    merger under Article 37, if:
16            (A) the company is not the surviving entity; or
17            (B) otherwise as a result of the merger, the person
18        ceases to be a member.
19        (13) The company participates in a conversion under the
20    Entity Omnibus Act.
21        (14) The company participates in a domestication under
22    the Entity Omnibus Act, if, as a result, the person ceases
23    to be a member.
24(Source: P.A. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)