Illinois General Assembly - Full Text of HB3577
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Full Text of HB3577  102nd General Assembly

HB3577enr 102ND GENERAL ASSEMBLY

  
  
  

 


 
HB3577 EnrolledLRB102 13245 JLS 18589 b

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 Worker Cooperative Association Act
5is amended by changing Sections 5, 10, 15, 20, 25, 30, 35, 40,
645, 50, 55, 60, 65, and 70 and adding Sections 12, 16, 21, 22,
736, 37, 51, 52, 61, 62, and 63 as follows:
 
8    (805 ILCS 317/5)
9    Sec. 5. Findings. The General Assembly finds and declares
10all of the following:
11        (1) the cooperative form of doing business provides an
12    efficient and effective method for persons to transact
13    business, offer, and obtain goods and services, and it is
14    in the best interests of the people of the State of
15    Illinois to promote, foster, and encourage the utilization
16    of cooperatives in appropriate instances;
17        (2) the Co-operative Act and Agricultural Co-Operative
18    Act have provided for the promotion, fostering, and
19    encouragement of consumer and producer cooperatives; have
20    made distribution of agricultural products between
21    producer and consumer more efficient; have stabilized the
22    marketing of agricultural products; and have provided for
23    the organization and incorporation of cooperative

 

 

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1    corporations, all as contemplated at the time of the
2    original adoption;
3        (3) it is in the best interests of the people of the
4    State of Illinois to preserve the provisions of the
5    Co-operative Act as it has been in force and interpreted
6    in the State and to continue the provisions thereof for
7    agriculture, but also to expand the provisions of Illinois
8    cooperative law to provide greater direction and
9    flexibility in its provisions and to enable all types of
10    industries and enterprises to avail themselves of the
11    benefits of the worker cooperative form of doing business
12    in accordance with the provisions of this Act;
13        (4) a worker cooperative has the purpose of creating
14    and maintaining sustainable jobs and generating wealth in
15    order to improve the quality of life and economic security
16    of its worker-members, dignify human work, allow workers'
17    democratic self-management, and promote community and
18    local development in this State;
19        (5) the purpose of this Act is to create a new business
20    entity better suited for worker cooperatives and
21    multi-stakeholder cooperatives, and to create more
22    visibility and financing options for cooperatives. This
23    Act is intended to provide a definition of worker
24    cooperative for purposes of this Act, and not for purposes
25    of other laws.
26(Source: P.A. 101-292, eff. 1-1-20.)
 

 

 

HB3577 Enrolled- 3 -LRB102 13245 JLS 18589 b

1    (805 ILCS 317/10)
2    Sec. 10. Definitions. In this Act:
3    "Candidate" means a worker who is being considered for
4membership in a worker cooperative, as defined in the
5cooperative association's articles or cooperative agreement
6bylaws.
7    "Collective worker cooperative" means a limited worker
8cooperative association that only has one class of members
9consisting of worker-members who manage all of the affairs of
10the limited cooperative association. If an association's
11articles of organization or cooperative agreement provides
12that it is a collective worker cooperative, then all of the
13members shall be deemed managers.
14    "Community investor" means a person who is not a member
15and who holds a share or other proprietary interest in a
16limited cooperative association.
17    "Distribution" means a transfer of money or other property
18from a limited worker cooperative association to a member
19because of the member's financial rights or to a transferee of
20a member's financial rights.
21    "Investor member" means a person who holds a financial
22interest in a limited worker cooperative association. An
23investor member is either not required or not permitted by the
24articles or cooperative agreement to conduct patronage with
25the association in the member's capacity as an investor member

 

 

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1in order to receive or retain the member's interest.
2    "Limited worker cooperative association" or "association"
3means an association organized under this Act.
4    "Member" means any person who, pursuant to a specific
5provision of a limited worker cooperative association's
6articles or cooperative agreement bylaws, has the right to
7vote for the election of a manager director or managing member
8directors, or possesses any proprietary interests in the
9limited worker cooperative association.
10    "Multi-stakeholder cooperative" means a cooperative
11organized under this Act that has different classes of members
12whose rights and proprietary interests shall be determined by
13the articles or bylaws. At least 51% of the members shall be
14worker-members or candidates. A multi-stakeholder cooperative
15is a worker cooperative for purposes of this Act.
16    "Patron member" means a member of a limited worker
17cooperative association that is required or permitted by the
18association's articles or cooperative agreement to conduct
19patronage with an association in the member's capacity as a
20patron member.
21    "Patronage" means business transactions between a limited
22worker cooperative association and a person that entitles the
23person to receive financial rights based on the value or
24quantity of business done between the association and the
25person. The patronage of worker-members may be measured by
26work performed, including, but not limited to, wages earned,

 

 

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1number of hours worked, number of jobs created, or some
2combination of these measures.
3    "Worker cooperative" means a limited worker cooperative
4association formed under this Act where all patron members of
5an association that includes a class of worker-members who are
6natural persons whose patronage consists of labor contributed
7to or other work performed for the limited worker cooperative
8association. Election to be organized as a worker cooperative
9does not create a presumption that workers are employees of
10the corporation for any purposes. A worker cooperative formed
11under this Act may include additional classes of members whose
12rights and proprietary interests shall be determined by the
13articles or bylaws. At least 51% of the workers shall be
14worker-members or candidates.
15    "Worker" means a natural person contributing labor or
16services to a worker cooperative.
17    "Worker-member" means a member of a worker cooperative who
18is a natural person who is a member of an association formed
19under this Act whose patronage consists of labor contributed
20to or other work performed for the limited and also a patron of
21a worker cooperative association.
22    "Written notice of allocation" is defined as in 26 U.S.C.
231388 or its successor.
24(Source: P.A. 101-292, eff. 1-1-20.)
 
25    (805 ILCS 317/12 new)

 

 

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1    Sec. 12. Powers of Secretary of State and rulemaking.
2    (a) The Secretary of State shall have the power and
3authority reasonably necessary to administer this Act
4efficiently and to perform the duties imposed in this Act. The
5Secretary of State's function under this Act is to be a central
6depository for the articles of organization and applications
7for admission required by this Act and to record the assumed
8names used by limited worker cooperative associations.
9    (b) The Secretary of State shall have the power and
10authority to adopt rules, in accordance with the Illinois
11Administrative Procedure Act, necessary to administer this Act
12efficiently and to perform the duties imposed in this Act.
 
13    (805 ILCS 317/15)
14    Sec. 15. Purpose of limited worker cooperative
15association.
16    (a) A limited worker cooperative association is an entity
17distinct from its members.
18    (b) A limited worker cooperative association may be
19organized for any lawful purpose, whether or not for profit.
20    (c) An association organized as a worker cooperative under
21this Act elects to be a worker cooperative with the State of
22Illinois. Election to be organized as a worker cooperative
23does not create a presumption that workers are employees of
24the association corporation for any purposes.
25(Source: P.A. 101-292, eff. 1-1-20.)
 

 

 

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1    (805 ILCS 317/16 new)
2    Sec. 16. Application of the Limited Liability Company Act.
3The Limited Liability Company Act applies to limited worker
4cooperative associations, and they shall enjoy the powers and
5privileges and be subject to the duties, restrictions, and
6liabilities of limited liability companies, except where
7inconsistent with the letter and purpose of this Act. This Act
8shall take precedence in the event of any conflict with the
9provisions of the Limited Liability Company Act or other laws.
 
10    (805 ILCS 317/20)
11    Sec. 20. Formation of limited worker cooperative
12association.
13    (a) A limited worker cooperative association must be
14organized by one or more organizers. Organizers need not be
15members or worker-members of the worker cooperative
16association.
17    (b) To form a limited worker cooperative association, one
18or more organizers of the association shall deliver or cause
19to be delivered articles of organization to the Secretary of
20State for filing.
21(Source: P.A. 101-292, eff. 1-1-20.)
 
22    (805 ILCS 317/21 new)
23    Sec. 21. Limited worker cooperative association; name.

 

 

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1    (a) The name of each limited worker cooperative
2association organized, existing, or subject to the provisions
3of this Act:
4        (1) shall contain the terms "Limited Worker
5    Cooperative Association", "LWCA", or "L.W.C.A.".
6        (2) may not contain a word or phrase, or an
7    abbreviation or derivation thereof, the use of which is
8    prohibited or restricted by any other statute of this
9    State unless the restriction has been complied with;
10        (3) shall consist of letters of the English alphabet,
11    Arabic or Roman numerals, or symbols capable of being
12    readily reproduced by the Office of the Secretary of
13    State;
14        (4) shall not contain any of the following terms:
15    "Corporation", "Corp.", "Incorporated", "Inc.", "Ltd.",
16    "Co.", "LLC", "Limited Partnership", or "L.P.";
17        (5) shall be the name under which the limited worker
18    cooperative association transacts business in this State
19    unless the limited worker cooperative association also
20    elects to adopt an assumed name or names as provided in
21    this Act; however, the limited worker cooperative
22    association may use any divisional designation or trade
23    name without complying with the requirements of this Act
24    if the limited worker cooperative association also clearly
25    discloses its name;
26        (6) shall not contain any word or phrase that

 

 

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1    indicates or implies that the limited worker cooperative
2    association is authorized or empowered to be in the
3    business of a corporate fiduciary unless otherwise
4    permitted by the Secretary of Financial and Professional
5    Regulation under Section 1-9 of the Corporate Fiduciary
6    Act. The word "trust", "trustee", or "fiduciary" may be
7    used by a limited worker cooperative association only if
8    it has first complied with Section 1-9 of the Corporate
9    Fiduciary Act; and
10        (7) shall contain the word "trust", if it is a limited
11    worker cooperative association organized for the purpose
12    of accepting and executing trusts.
13    (b) Nothing in this Act shall abrogate or limit the common
14law or statutory law of unfair competition or unfair trade
15practices, nor derogate from the common law or principles of
16equity or the statutes of this State or of the United States of
17America with respect to the right to acquire and protect
18copyrights, trade names, trademarks, service marks, service
19names, or any other right to the exclusive use of names or
20symbols.
21    (c) The name shall be distinguishable upon the records in
22the Office of the Secretary of State from the name of all of
23the following:
24        (1) Any limited worker cooperative that has articles
25    of organization filed with the Secretary of State.
26        (2) Any limited liability company that has articles of

 

 

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1    organization filed with the Secretary of State under
2    Section 5-5 of the Limited Liability Company Act.
3        (3) Any foreign limited liability company admitted to
4    transact business in this State.
5        (4) Any name for which an exclusive right has been
6    reserved in the Office of the Secretary of State under
7    Section 1-15 of the Limited Liability Company Act.
8        (5) Any assumed name that is registered with the
9    Secretary of State under Section 1-20 of the Limited
10    Liability Company Act.
11        (6) Any corporate name or assumed corporate name of a
12    domestic or foreign corporation subject to the provisions
13    of Section 4.05 of the Business Corporation Act of 1983 or
14    Section 104.05 of the General Not For Profit Corporation
15    Act of 1986.
16    (d) Subsection (c) of this Section shall not apply if the
17organizer files with the Secretary of State a certified copy
18of a final judgment of a court establishing the prior right of
19the applicant to the use of that name in this State.
20    (e) The Secretary of State shall determine whether a name
21is distinguishable from another name for the purposes of this
22Act. Without excluding other names that may not constitute
23distinguishable names in this State, a name is not considered
24distinguishable, for purposes of this Act, solely because it
25contains one or more of the following:
26        (1) The word "limited", "worker", "cooperative", or

 

 

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1    "association" or an abbreviation of one of those words.
2        (2) Articles, conjunctions, contractions,
3    abbreviations, or different tenses or number of the same
4    word.
 
5    (805 ILCS 317/22 new)
6    Sec. 22. Forms, execution, acknowledgment, and filing.
7    (a) All reports required by this Act to be filed in the
8Office of the Secretary of State shall be made on forms
9prescribed and furnished by the Secretary of State. Forms for
10all other documents to be filed in the Office of the Secretary
11of State shall be furnished by the Secretary of State upon
12request.
13    (b) Whenever any provision of this Act specifically
14requires any document to be executed by the limited worker
15cooperative association in accordance with this Section,
16unless otherwise specifically stated in this Act and subject
17to any additional provisions of this Act, the document shall
18be signed as follows:
19        (1) The initial articles of organization shall be
20    signed by the organizer or organizers.
21        (2) A document filed on behalf of a dissolved limited
22    worker cooperative association that has no members must be
23    signed by the person winding up the association's
24    activities under Section 35-4 of the Limited Liability
25    Company Act.

 

 

HB3577 Enrolled- 12 -LRB102 13245 JLS 18589 b

1        (3) Any other document must be signed by a person
2    authorized by the limited worker cooperative association
3    to sign it.
4    (c) The name of a person signing the document and the
5capacity in which the person signs shall be stated beneath or
6opposite the person's signature.
7    (d) The execution of any document required by this Act by a
8person constitutes an affirmation under the penalties of
9perjury that the facts stated therein are true and that the
10person has authority to execute the document.
11    (e) When filed in the Office of the Secretary of State, an
12authorization, including a power of attorney, to sign a record
13must be in writing, then sworn to, verified, or acknowledged.
 
14    (805 ILCS 317/25)
15    Sec. 25. Articles of organization. (a) The articles of
16organization of a limited worker cooperative association shall
17state:
18        (1) the domestic entity name of the limited worker
19    cooperative association;
20        (2) the purposes for which the limited worker
21    cooperative association is formed, which may be for any
22    lawful purpose;
23        (3) the registered agent name and registered agent
24    address of the association's initial registered agent;
25        (4) the street address and, if different, mailing

 

 

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1    address of the association's initial principal office;
2        (5) the true name and street address and, if
3    different, mailing address of each organizer; and
4        (5.5) a statement that the association is a worker
5    cooperative or a collective worker cooperative, if
6    applicable; and
7        (6) any other provision, not inconsistent with law,
8    that the worker-members, members, or organizers elect to
9    set out in the articles for the regulation of the internal
10    affairs of the limited worker cooperative association,
11    including any provisions that, under this Act, are
12    required or permitted to be set out in the cooperative
13    agreement bylaws of the limited worker cooperative
14    association.
15(Source: P.A. 101-292, eff. 1-1-20; revised 9-4-20.)
 
16    (805 ILCS 317/30)
17    Sec. 30. Organization of limited worker cooperative
18association.
19    (a) After a limited worker cooperative association is
20formed:
21        (1) if initial managers or managing members directors
22    are named in the articles, the initial managers or
23    managing members directors shall hold an organizational
24    meeting to adopt initial cooperative agreement bylaws and
25    carry on any other business necessary or proper to

 

 

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1    complete the organization of the association; or
2        (2) if initial managers or managing members directors
3    are not named in the articles, the organizers shall
4    designate the initial managers or managing members
5    directors and call a meeting of the initial managers or
6    managing members directors to adopt initial cooperative
7    agreement bylaws and carry on any other business necessary
8    or proper to complete the organization of the association.
9    (b) Unless the articles otherwise provide, the initial
10managers or managing members directors may cause the limited
11worker cooperative association to accept members, including
12those necessary for the association to begin business.
13    (c) Initial managers directors need not be members.
14    (d) An initial manager or managing member director serves
15until a successor is elected and qualified at a members'
16meeting or the manager or managing member director is removed,
17resigns, is adjudged incompetent, or dies.
18(Source: P.A. 101-292, eff. 1-1-20.)
 
19    (805 ILCS 317/35)
20    Sec. 35. Cooperative agreement Bylaws.
21    (a) A cooperative agreement Bylaws shall include:
22        (1) a statement of the capital structure of the
23    limited worker cooperative association;
24        (2) the classes or other types of members' interests
25    and the relative rights, preferences, privileges, and

 

 

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1    restrictions granted to or imposed upon each class or
2    other type of member's interest, including:
3            (A) a statement concerning the manner in which
4        profits and losses are allocated and distributions are
5        made among members and, if community investors are
6        authorized, the manner in which profits and losses are
7        allocated and how distributions are made among
8        investor members and between members and community
9        investors;
10            (B) a statement designating voting and other
11        governance rights of each class or other type of
12        members' interests and, if relevant, community
13        investors, including which members have voting power
14        and any restriction on voting power;
15        (3) a statement of the method for admission of
16    members;
17        (4) a statement that a member's interest is
18    transferable, if it is to be transferable, and a statement
19    of the conditions upon which it may be transferred;
20        (5) a statement concerning:
21            (A) whether persons that are not members but
22        conduct business with the association may be permitted
23        to share in allocations of profits and losses and
24        receive distributions; and
25            (B) the manner in which profits and losses are
26        allocated and distributions are made with respect to

 

 

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1        those persons; and
2        (6) a statement of the number and terms of directors
3    or the method by which the number and terms are
4    determined; and
5        (7) a statement addressing members' contributions.
6    (b) A cooperative agreement Bylaws may contain any other
7provision for managing and regulating the affairs of the
8association.
9    (c) The cooperative agreement may not:
10        (1) unreasonably restrict a right to information or
11    access to records available under Section 1-40 or Section
12    10-15 of the Limited Liability Company Act;
13        (2) vary the right to expel a member in an event
14    specified in subdivision (6) of Section 35-45 of the
15    Limited Liability Company Act;
16        (3) vary the requirement to wind up the limited worker
17    cooperative association's business in a case specified in
18    subdivision (4), (5), or (6) of subsection (a) of Section
19    35-1 of the Limited Liability Company Act;
20        (4) restrict rights of a person, other than a
21    director, member, and transferee of a member's
22    distributional interest, under this Act;
23        (5) restrict the power of a member to dissociate under
24    Section 35-50 of the Limited Liability Company Act,
25    although a cooperative agreement may determine whether a
26    dissociation is wrongful under Section 35-50 of the

 

 

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1    Limited Liability Company Act;
2        (6) eliminate or reduce the obligation of good faith
3    and fair dealing under subsection (d) of Section 15-3 of
4    the Limited Liability Company Act, but the cooperative
5    agreement may determine the standards by which the
6    performance of the member's duties or the exercise of the
7    member's rights is to be measured;
8        (7) eliminate, vary, or restrict the priority of a
9    statement of authority over provisions in the articles of
10    organization as provided in subsection (h) of Section
11    13-15 of the Limited Liability Company Act;
12        (8) vary the law applicable under Section 1-65 of the
13    Limited Liability Company Act;
14        (9) vary the power of the court under Section 5-50 of
15    the Limited Liability Company Act; or
16        (10) restrict the right to approve a merger,
17    conversion, or domestication under Article 37 of the
18    Limited Liability Company Act or the Entity Omnibus Act of
19    a member that will have personal liability with respect to
20    a surviving, converted, or domesticated organization.
21    (d) The cooperative agreement may:
22        (1) restrict or eliminate a fiduciary duty, other than
23    the duty of care described in subsection (c) of Section
24    15-3 of the Limited Liability Company Act, but only to the
25    extent the restriction or elimination in the cooperative
26    agreement is clear and unambiguous;

 

 

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1        (2) identify specific types or categories of
2    activities that do not violate any fiduciary duty; and
3        (3) alter the duty of care, except to authorize
4    intentional misconduct or knowing violation of law.
5    (e) The cooperative agreement may specify the method by
6which a specific act or transaction that would otherwise
7violate the duty of loyalty may be authorized or ratified by
8one or more disinterested and independent persons after full
9disclosure of all material facts.
10    (f) The cooperative agreement may alter or eliminate the
11right to payment or reimbursement for a member or director
12provided by Section 15-7 of the Limited Liability Company Act
13and may eliminate or limit a member's or director's liability
14to the limited worker cooperative association and members for
15money damages, except for:
16        (1) subject to subsections (d) and (e) of this
17    Section, breach of the duties as required in subdivisions
18    (1), (2), and (3) of subsection (b) of Section 15-3 of the
19    Limited Liability Company Act;
20        (2) a financial benefit received by the member or
21    director to which the member or director is not entitled;
22        (3) a breach of a duty under Section 25-35 of the
23    Limited Liability Company Act;
24        (4) intentional infliction of harm on the association
25    or a member; or
26        (5) an intentional violation of criminal law.

 

 

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1    (g) A limited worker cooperative association is bound by
2and may enforce the cooperative agreement, whether or not the
3association has itself manifested assent to the cooperative
4agreement.
5    (h) A person that becomes a member of a limited worker
6cooperative association is deemed to assent to the cooperative
7agreement.
8    (i) A cooperative agreement may be entered into before,
9after, or at the time of filing of articles of organization
10and, whether entered into before, after, or at the time of the
11filing, may be made effective as of the time of formation of
12the limited worker cooperative association or as of the time
13or date provided in the cooperative agreement.
14(Source: P.A. 101-292, eff. 1-1-20.)
 
15    (805 ILCS 317/36 new)
16    Sec. 36. Annual reports.
17    (a) A limited worker cooperative association organized
18under the laws of this State shall file, within the time
19prescribed by this Act, an annual report setting forth all of
20the following:
21        (1) The name of the limited worker cooperative
22    association.
23        (2) The address, including street and number or rural
24    route number, of its registered office in this State and
25    the name of its registered agent at that address.

 

 

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1        (3) The address, including street and number or rural
2    route number of its principal place of business.
3        (4) The name and business address of all of the
4    directors and any member having the authority of a
5    director.
6        (5) Additional information that may be necessary or
7    appropriate in order to enable the Secretary of State to
8    administer this Act and to verify the proper amount of
9    fees payable by the limited worker cooperative
10    association.
11    The annual report shall be made on forms prescribed and
12furnished by the Secretary of State, and the information
13therein required by paragraphs (1) through (4) of this
14subsection (a), both inclusive, shall be given as of the date
15of execution of the annual report. The annual report shall be
16executed by a director or, if none, a member designated by the
17members pursuant to limited worker cooperative association
18action properly taken under Section 15-1 of the Limited
19Liability Company Act.
20    (b) The annual report, together with all fees and charges
21prescribed by this Act, shall be delivered to the Secretary of
22State within 60 days immediately preceding the first day of
23the anniversary month. Proof to the satisfaction of the
24Secretary of State that, before the first day of the
25anniversary month of the limited worker cooperative
26association, the report, together with all fees and charges as

 

 

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1prescribed by this Act, was deposited in the United States
2mail in a sealed envelope, properly addressed, with postage
3prepaid, shall be deemed a compliance with this requirement.
4If the Secretary of State finds that the report conforms to the
5requirements of this Act, he or she shall file it. If the
6Secretary of State finds that it does not so conform, he or she
7shall promptly return it to the limited worker cooperative
8association for any necessary corrections, in which event the
9penalties prescribed for failure to file the report within the
10time provided shall not apply if the report is corrected to
11conform to the requirements of this Act and returned to the
12Secretary of State within 60 days of the original due date of
13the report.
 
14    (805 ILCS 317/37 new)
15    Sec. 37. Fees.
16    (a) The Secretary of State shall charge and collect in
17accordance with the provisions of this Act and rules adopted
18under its authority all of the following:
19        (1) Fees for filing documents.
20        (2) Miscellaneous charges.
21        (3) Fees for the sale of lists of filings and for
22    copies of any documents.
23    (b) The Secretary of State shall charge and collect for
24all of the following:
25        (1) Filing articles of organization, $100.

 

 

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1        (2) Filing amendments, $25.
2        (3) Filing a statement of termination, $5.
3        (4) Filing an application for use of an assumed name,
4    the amount under the fee schedule in Section 50-10 of the
5    Limited Liability Company Act.
6        (5) Filing an application for change of assumed name,
7    $5.
8        (6) Filing an application for cancellation of an
9    assumed name, $5.
10        (7) Filing an annual report of a limited worker
11    cooperative association, $50, if filed as required by this
12    Act, plus a penalty if delinquent.
13        (8) Filing an application for reinstatement of a
14    limited worker cooperative association, $75.
15        (9) Filing articles of merger, $75 plus $25 for each
16    party to the merger in excess of the first 2 parties.
17        (10) Filing a statement of change of address of
18    registered office or change of registered agent, or both,
19    $25.
20        (11) Filing, amending, or cancelling a statement of
21    authority, $25.
22        (12) Filing, amending, or cancelling a statement of
23    denial, $5.
24    (c) The Secretary of State shall charge and collect for
25furnishing a copy or certified copy of any document,
26instrument, or paper relating to a limited worker cooperative

 

 

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1association, $25.
 
2    (805 ILCS 317/40)
3    Sec. 40. Members.
4    (a) An association formed under this Act may include
5multiple classes of patron members whose rights and
6proprietary interests shall be determined by the articles or
7cooperative agreement.
8    (b) (a) To begin business, a limited worker cooperative
9association must have at least 3 members unless the sole
10member is a cooperative.
11    (c) (b) A person becomes a member:
12        (1) as provided in the articles or cooperative
13    agreement bylaws;
14        (2) as the result of a merger or conversion under
15    Section 65; or
16        (3) with the consent of all the members.
17    (d) (c) A member, solely by reason of being a member, may
18not act for or bind the limited worker cooperative
19association.
20    (e) (d) Unless the articles provide otherwise, a debt,
21obligation, or other liability of a limited worker cooperative
22association is solely that of the association and is not the
23debt, obligation, or liability of a member solely by reason of
24being a member.
25    (f) (e) The total voting membership body shall constitute

 

 

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1the assembly of the limited worker cooperative association.
2    (g) (f) The assembly shall meet annually at a time
3provided in the articles or cooperative agreement bylaws or
4set by the board of managers or managing members directors not
5inconsistent with the articles and cooperative agreement
6bylaws.
7    (h) (g) Failure to hold an annual assembly meeting does
8not affect the validity of any action by the limited worker
9cooperative association.
10    (i) (h) A limited worker cooperative association shall
11notify each member of the time, date, and place of a members'
12meeting at least 10 and not more than 60 days before the
13meeting; except that, if the notice is of a meeting of the
14members in one or more districts or classes of members, the
15notice shall be given only to members in those districts or
16classes.
17(Source: P.A. 101-292, eff. 1-1-20.)
 
18    (805 ILCS 317/45)
19    Sec. 45. Voting.
20    (a) The articles or cooperative agreement bylaws may
21allocate voting power among patron members on the basis of one
22or a combination of the following:
23        (1) one member, one vote;
24        (2) if a member is a cooperative, the number of its
25    members; or

 

 

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1        (3) on the basis of use or patronage unless the
2    association is cooperative has elected to be a worker
3    cooperative.
4    (b) If the articles or cooperative agreement bylaws
5allocate voting power to patron members on the basis of use or
6patronage and a patron member would be denied a vote because
7the patron member did not use the limited cooperative
8association or conduct patronage with the association it
9during the period on which the allocation of voting power is
10determined, the articles or cooperative agreement bylaws must
11provide that the patron member shall nevertheless be allocated
12a vote equal to at least the minimum voting power allocated to
13patron members who used the association or conducted patronage
14with the association it during the period.
15    (c) The articles or cooperative agreement bylaws may
16provide for the allocation of member voting power by districts
17or class or any combination thereof.
18    (d) The voting power of members who are not patron members
19may be limited or eliminated. Community investors are not
20entitled to vote unless the articles or bylaws provide
21otherwise.
22    (e) At no time shall worker-members the members have less
23than a majority of the total voting power of a the limited
24worker cooperative association.
25(Source: P.A. 101-292, eff. 1-1-20.)
 

 

 

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1    (805 ILCS 317/50)
2    Sec. 50. Board of managers or managing members directors.
3    (a) A limited worker cooperative association must have a
4board of managers or managing members directors of at least 3
5individuals, unless the limited worker cooperative association
6is a collective worker cooperative. Subsections (b) through
7(e) do not apply to collective worker cooperatives.
8    (b) The affairs of a limited worker cooperative
9association must be managed by, or under the direction of, the
10board of managers or managing members directors unless the
11board delegates those duties to the assembly of the worker
12limited cooperative association. The board may adopt policies
13and procedures that do not conflict with the articles,
14cooperative agreement bylaws, or this Act.
15    (c) An individual is not an agent for a limited worker
16cooperative association solely by being a manager or managing
17member director.
18    (d) A debt, obligation, or other liability of a limited
19worker cooperative association is solely that of the
20association and is not a debt, obligation, or liability of a
21manager or managing member director solely by reason of being
22a manager or managing member director. An individual is not
23personally liable, directly or indirectly, for an obligation
24of an association solely by reason of being a manager or
25managing member director.
26    (e) Directors shall be elected for terms determined by the

 

 

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1bylaws by a majority vote of the assembly.
2(Source: P.A. 101-292, eff. 1-1-20.)
 
3    (805 ILCS 317/51 new)
4    Sec. 51. Earnings and losses.
5    (a) The net earnings and losses of an association formed
6under this Act shall be apportioned and distributed in such
7manner as the articles or cooperative agreement shall specify.
8Net earnings declared as patronage allocations with respect to
9a period of time, and paid or credited to patron members, shall
10be apportioned among the patron members in accordance with the
11ratio which each patron member's patronage during the
12applicable time period bears to the total patronage by all
13patron members during that period.
14    (b) The apportionment, distribution, and payment of net
15earnings required by subsection (a) of this Section may be in
16cash, credits, or written notices of allocation issued by the
17association.
 
18    (805 ILCS 317/52 new)
19    Sec. 52. System of internal capital accounts.
20    (a) A limited worker cooperative association may establish
21through its articles or cooperative agreement a system of
22internal capital accounts to reflect the book value and to
23determine the redemption price of membership interests and
24written notices of allocation.

 

 

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1    (b) The articles or cooperative agreement of a limited
2worker cooperative association may permit the periodic
3redemption of written notices of allocation and shall provide
4for recall and redemption of membership interests upon
5termination of membership in the association.
6    (c) An association may allocate a portion of retained net
7earnings and net losses to a collective reserve account.
8Earnings assigned to the collective reserve account may be
9used for any and all purposes as determined by the board of
10managers or managing members.
 
11    (805 ILCS 317/55)
12    Sec. 55. Assembly.
13    (a) A limited worker cooperative association, other than a
14collective worker cooperative, must have an assembly as
15constituted by the body of voting members.
16    (b) An individual is not an agent for a limited worker
17cooperative association solely by being a member of the
18assembly.
19    (c) A debt, obligation, or other liability of a limited
20worker cooperative association is solely that of the
21association and is not a debt, obligation, or liability of a
22member of the assembly solely by reason of being a voting
23member. An individual is not personally liable, directly or
24indirectly, for an obligation of an association solely by
25reason of being a voting member.

 

 

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1(Source: P.A. 101-292, eff. 1-1-20.)
 
2    (805 ILCS 317/60)
3    Sec. 60. Dissolution and termination. A limited worker
4cooperative association may be dissolved only by either (1) a
5two-thirds vote of the assembly, or (2) a majority vote of the
6assembly as of a supermajority threshold stated in the
7cooperative agreement, or (3) administratively bylaws that is
8more than two-thirds. The vote shall be in accordance with
9Section 55, and upon dissolution of its business and
10activities must be wound up and terminated in the manner
11provided under the Limited Liability Company Act for a limited
12liability company.
13(Source: P.A. 101-292, eff. 1-1-20.)
 
14    (805 ILCS 317/61 new)
15    Sec. 61. Grounds for administrative dissolution. The
16Secretary of State may dissolve any limited worker cooperative
17association administratively if:
18        (1) it has failed to file its annual report and pay its
19    fee as required by this Act before the first day of the
20    anniversary month or has failed to pay any required fees,
21    penalties, or charges;
22        (2) it has failed to file in the Office of the
23    Secretary of State any report after the expiration of the
24    period prescribed for filing the report;

 

 

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1        (3) it has misrepresented any material matter in any
2    application, report, affidavit, or other document
3    submitted by the limited worker cooperative association;
4        (4) it has failed to appoint and maintain a registered
5    agent in Illinois;
6        (5) a director or member to whom interrogatories have
7    been propounded by the Secretary of State as provided in
8    Section 5-60 of the Limited Liability Company Act fails to
9    answer the interrogatories fully and to timely file the
10    answer in the Office of the Secretary of State; or
11        (6) it has tendered payment to the Secretary of State
12    which is returned due to insufficient funds, a closed
13    account, or for any other reason, and acceptable payment
14    has not been subsequently tendered.
 
15    (805 ILCS 317/62 new)
16    Sec. 62. Procedure for administrative dissolution.
17    (a) After the Secretary of State determines that one or
18more grounds, as set forth in Section 35-25 of the Limited
19Liability Company Act, exist for the administrative
20dissolution of a limited worker cooperative association, the
21Secretary of State shall send a notice of delinquency by
22regular mail to the delinquent limited worker cooperative
23association at its registered office or, if the limited worker
24cooperative association has failed to maintain a registered
25office, then to the last known address shown on the records of

 

 

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1the Secretary of State for the principal place of business of
2the limited worker cooperative association.
3    (b) If the limited worker cooperative association does not
4correct the default described in paragraph (1) or (2) of
5Section 35-25 of the Limited Liability Company Act within 120
6days following the date of the notice of delinquency, the
7Secretary of State shall thereupon dissolve the limited worker
8cooperative association by issuing a certificate of
9dissolution that recites the grounds for dissolution and its
10effective date. If the limited worker cooperative association
11does not correct the default described in paragraph (2.5),
12(3), (4), or (5) of Section 35-25 of the Limited Liability
13Company Act within 60 days following the notice, the Secretary
14of State shall dissolve the limited worker cooperative
15association by issuing a certificate of dissolution that
16recites the grounds for dissolution and its effective date.
17The Secretary of State shall file the original of the
18certificate in his or her office and mail one copy to the
19limited worker cooperative association at its registered
20office or, if the limited worker cooperative association has
21failed to maintain a registered office, then to the last known
22address shown on the records of the Secretary of State for the
23principal place of business of the limited worker cooperative
24association.
25    (c) Upon the administrative dissolution of a limited
26worker cooperative association, a dissolved limited worker

 

 

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1cooperative association shall continue for only the purpose of
2winding up its business. A dissolved limited worker
3cooperative association may take all action authorized under
4Section 1-30 of the Limited Liability Company Act or otherwise
5necessary or appropriate to wind up its business and affairs
6and terminate.
 
7    (805 ILCS 317/63 new)
8    Sec. 63. Reinstatement following dissolution or
9termination.
10    (a) A limited worker cooperative association dissolved or
11terminated under Section 60 may be reinstated by the Secretary
12of State following the date of issuance of the notice of
13dissolution or statement of termination upon:
14        (1) The filing of an application for reinstatement.
15        (2) The filing with the Secretary of State by the
16    limited worker cooperative association of all reports then
17    due and theretofore becoming due.
18        (3) The payment to the Secretary of State by the
19    limited worker cooperative association of all fees and
20    penalties then due and theretofore becoming due.
21    (b) The application for reinstatement shall be executed
22and filed in duplicate in accordance with Section 25 of this
23Act and shall set forth all of the following:
24        (1) The name of the limited worker cooperative
25    association at the time of the issuance of the notice of

 

 

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1    dissolution or statement of termination.
2        (2) If the name is not available for use as determined
3    by the Secretary of State at the time of filing the
4    application for reinstatement, the name of the limited
5    worker cooperative association as changed, provided that
6    any change of name is properly effected under Section 1-10
7    and Section 5-25 of the Limited Liability Company Act.
8        (3) The date of issuance of the notice of dissolution
9    or statement of termination.
10        (4) The address, including street and number or rural
11    route number of the registered office of the limited
12    worker cooperative association upon reinstatement thereof
13    and the name of its registered agent at that address upon
14    the reinstatement of the limited worker cooperative
15    association, provided that any change from either the
16    registered office or the registered agent at the time of
17    dissolution is properly reported under Section 1-35 of the
18    Limited Liability Company Act.
19    (c) When a dissolved or terminated limited worker
20cooperative association has complied with the provisions of
21the Section, the Secretary of State shall file the application
22for reinstatement.
23    (d) Upon the filing of the application for reinstatement,
24the limited worker cooperative association existence shall be
25deemed to have continued without interruption from the date of
26the issuance of the notice of dissolution or statement of

 

 

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1termination. The limited worker cooperative association shall
2stand revived with the powers, duties, and obligations as if
3it had not been dissolved or terminated. All acts and
4proceedings of its members, directors, officers, employees,
5and agents, acting or purporting to act in that capacity, and
6which would have been legal and valid but for the dissolution
7or termination, shall stand ratified and confirmed.
8    (e) Without limiting the generality of subsection (d),
9upon the filing of the application for reinstatement, no
10member, director, or officer shall be personally liable for
11the debts and liabilities of the limited worker cooperative
12association incurred during the period of dissolution or
13termination by reason of the fact that the limited worker
14cooperative association was dissolved or terminated at the
15time the debts or liabilities were incurred.
 
16    (805 ILCS 317/65)
17    Sec. 65. Conversion. A limited worker cooperative
18association may convert into any form of entity permitted if
19the board of managers or managing members directors of the
20limited worker cooperative association adopts a plan of
21conversion and the assembly adopts such a plan by a two-thirds
22majority vote. In the case of a collective worker cooperative,
23a limited worker cooperative association may convert into any
24form of entity permitted if the members adopt a plan by a
25two-thirds majority vote. Conversions from other forms of

 

 

HB3577 Enrolled- 35 -LRB102 13245 JLS 18589 b

1entities to a limited worker cooperative association are
2governed by the Entity Omnibus Act.
3(Source: P.A. 101-292, eff. 1-1-20.)
 
4    (805 ILCS 317/70)
5    Sec. 70. Exemption from securities laws. Any interest
6security, patronage refund, per unit retain certificate, or
7evidence of membership issued or sold by a limited worker
8cooperative association as an investment in its capital to the
9members of a cooperative association formed under this Act or
10a similar law of any other state and authorized to transact
11business or conduct activities in this State is exempt from
12the registration requirements of the Illinois Securities Law
13of 1953. Such interests securities, patronage refunds, per
14unit retain certificates, or evidence of membership may be
15sold lawfully by the issuer or its members or salaried
16employees without the necessity of being registered as a
17broker or dealer under the Illinois Securities Law of 1953.
18(Source: P.A. 101-292, eff. 1-1-20.)
 
19    Section 10. The Entity Omnibus Act is amended by changing
20Section 111 as follows:
 
21    (805 ILCS 415/111)
22    Sec. 111. Application of other Acts. The Business
23Corporation Act of 1983, the General Not For Profit

 

 

HB3577 Enrolled- 36 -LRB102 13245 JLS 18589 b

1Corporation Act of 1986, the Limited Liability Company Act,
2the Uniform Limited Partnership Act (2001), and the Uniform
3Partnership Act (1997) and the Limited Worker Cooperative
4Association Act, as now or hereafter amended, shall govern all
5matters related to the entities named in each of those Acts and
6in this Act except where inconsistent with the letter and
7purpose of this Act. This Act controls in the event of any
8conflict with the provisions of the above-named Acts or other
9laws.
10(Source: P.A. 101-491, eff. 8-23-19.)
 
11    Section 99. Effective date. This Act takes effect July 1,
122021.