Illinois General Assembly - Full Text of HB3830
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Full Text of HB3830  99th General Assembly

HB3830 99TH GENERAL ASSEMBLY

  
  

 


 
99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3830

 

Introduced , by Rep. Will Guzzardi

 

SYNOPSIS AS INTRODUCED:
 
New Act
805 ILCS 310/Act rep.

    Creates the Illinois Cooperative Act. Repeals the Co-operative Act. Provides for the organization, operation, and regulation of cooperatives. Provides that cooperatives are not-for-profit entities. Sets forth requirements for articles of incorporation, amendments, number of incorporators, and voting rights. Provides for regulation by the Secretary of State. Sets forth requirements for directors. Defines terms. Provides for liquidation, consolidation, and dissolution of cooperatives.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3830LRB099 09561 JLS 29770 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 1. Short title. This Act may be cited as the
5Illinois Cooperative Act.
 
6    Section 5. Definitions.In this Act:
7    "Association" means any corporation organized under this
8Act.
9    "Board" means the board of directors of an association.
10    "Cooperative" means an association or a foreign
11association.
12    "Entity", except as otherwise provided, means a foreign
13association, a foreign or domestic corporation other than a
14cooperative, or a foreign or domestic limited liability
15company.
16    "Foreign association" means a corporation organized under
17the cooperative laws of another state or the District of
18Columbia or a foreign corporation organized under corporation
19laws of another state, the District of Columbia, or the United
20States that operates on a cooperative basis.
21    "Marketing agreement" means an agreement, contract, or
22other arrangement between a cooperative and a member in which
23the member agrees to market all or a part of the products or

 

 

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1produce produced by the member, or agrees to purchase all or a
2part of the member's requirements for inputs, services, or
3supplies.
4    "Member" means a person who has been qualified and accepted
5into membership in a cooperative.
6    "Membership stock" means any class of stock or other equity
7interest in a cooperative, continuous ownership of which is
8required for membership in the cooperative.
9     "Patron" means a person with which a cooperative has made
10an enforceable agreement to allocate and distribute a per unit
11retain, patronage dividend, or patronage refund with respect to
12business conducted by the cooperative with or for the person.
13    "Patronage stock" means any stock or other equity interest
14in a cooperative that was originally issued by the cooperative
15with respect to patronage transactions.
16    "Person" includes a natural person, partnership,
17corporation, cooperative, or other entity.
18    "Producer" means a person engaged in the production of
19agricultural products for the market.
 
20    Section 10. Purposes; deemed not-for-profit.
21    (a) An association may be organized under this Act for any
22lawful purpose permitted to corporations by the laws of this
23State, except any such purpose that is inconsistent with the
24provisions of this Act, the Business Corporation Act of 1983,
25or the General Not For Profit Corporation Act of 1986. This

 

 

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1Section does not authorize any professional services otherwise
2prohibited by law.
3    (b) Associations shall be corporations that are deemed
4not-for-profit because they are not organized for the purpose
5of making a profit for themselves as such, or for the purpose
6of making a profit for their members as such, but for their
7members as patrons. This Act and not the General Not For Profit
8Corporation Act of 1986 shall govern associations.
9    (c) A municipal power agency organized under the Illinois
10Municipal Code is not an association for the purposes of this
11Act.
 
12    Section 15. Powers of an association. An association
13incorporated under this Act shall have the following powers:
14    (1) It may make contracts, incur liabilities, and borrow
15money; issue capital stock and other equity interests and issue
16certificates therefor; acquire property; and dispose of,
17mortgage, pledge, lease, or otherwise use in any manner, any of
18its property, or any interest in its property, wherever
19situated.
20    (2) It may invest its funds, lend money for its purposes,
21and hold any property as security for repayment.
22    (3) It may act as the agent or representative of any
23members or other patrons in any activities authorized by this
24Act.
25    (4) It may conduct its business and affairs, have offices,

 

 

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1and exercise its power in the United States or in any foreign
2country.
3    (5) It may establish reserves and invest these funds.
4    (6) It may buy, hold, and exercise all privileges of
5ownership over such real or personal property as is necessary,
6convenient, or incidental to the conduct of any authorized
7business of the association.
8    (7) It may establish, secure, own, and develop patents,
9trademarks, copyrights, service marks, and other intellectual
10property.
11    (8) Notwithstanding the provisions of the Uniform
12Disposition of Unclaimed Property Act, it may effectuate the
13forfeiture of any unclaimed stock or other equity interests,
14dividends, and patronage allocations, for which the owner
15cannot be found after a period of 3 years. Notice of the
16existence of unclaimed stock or other equity interests and a
17request for written acknowledgment from the owner to the
18association shall be evidence of a bona fide attempt to deliver
19the unclaimed stock or other equity interests to the owner. If
20the notice is not acknowledged within 30 days after the notice
21is sent or within the period specified in the notice, if
22longer, all such unclaimed stock or other equity interests
23specified in the notice are forfeited and become the property
24of the association.
25    (9) It may make donations for charitable, scientific,
26educational, community development, or religious purposes, and

 

 

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1may use all or part of the funds forfeited to the association
2under item (8) for these purposes.
3    (10) It may do everything necessary, suitable, or proper
4for the accomplishment of any of the purposes enumerated in
5this Section. In addition it may exercise and possess all
6powers, rights, and privileges necessary or incidental to the
7purposes for which the association is organized or to the
8activities in which it is engaged, and any other powers,
9rights, and privileges granted to corporations by the laws of
10this State, except as are inconsistent with the express
11provisions of this Act.
 
12    Section 20. Use of words in name; prohibition.
13    (a) The name of any association organized under this Act
14shall include the word or abbreviation "cooperative," "coop,"
15"co-operative", "co-op", "association", "assn.", "company",
16"co.", "incorporated", "inc.", "corporation", or "corp.".
17    (b) No corporation or other person organized or applying to
18do business in this State shall use the word or abbreviation
19"cooperative," "coop," "co-operative," or "co-op" as a part of
20its corporate or other business name or title, unless at least
21one of the following applies:
22        (1) It is organized under this Act or has converted to
23    an association under this Act.
24        (2) It is organized and operating on a cooperative
25    basis under the General Not For Profit Corporation Act of

 

 

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1    1986 or the Agricultural Co-Operative Act, or it is
2    organized and operating for the purpose of ownership or
3    administration of residential property on a cooperative
4    basis.
5        (3) It is organized and operating in accordance with
6    the cooperative laws of another state, the District of
7    Columbia, or the United States.
8        (4) It is a state or federally chartered credit union.
 
9    Section 25. Number of incorporators; statutory agent.
10    (a) Two or more individuals may form an association under
11this Act.
12    (b) An association shall have and maintain a statutory
13agent upon whom any process, notice, or demand against the
14association may be served. The agent shall be one of the
15following:
16        (1) A natural person who is a resident of this State.
17        (2) A domestic or foreign corporation, not-for-profit
18    corporation, limited liability company, partnership,
19    limited partnership, limited liability partnership,
20    limited partnership association, professional association,
21    business trust, or unincorporated not-for-profit
22    association that has a business address in this State. If
23    the agent is an entity other than a domestic corporation,
24    the agent shall meet the requirements of Illinois law for
25    an entity of the agent's type to transact business or

 

 

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1    exercise privileges in this State.
2    (c) Whenever appointment or designation of a statutory
3agent is required by this Act, the appointment or designation
4shall be on a form prescribed by the Secretary of State for the
5administration of this Act.
 
6    Section 30. Articles of incorporation.
7    (a) The articles of incorporation of an association shall
8set forth all of the following:
9        (1) The name of the association.
10        (2) The association's purposes, as permitted by this
11    Act. It is sufficient to state in the articles that the
12    association may engage in any activity within the purposes
13    for which associations may be organized under this Act.
14        (3) The county and municipal corporation or township
15    where the association's principal place of business will be
16    located which need not be within this State.
17        (4) The names and addresses of the incorporators.
18        (5) The number of its directors or a statement that the
19    number of directors shall be as specified in the bylaws.
20        (6) The names and addresses of those who are to serve
21    as directors until the first meeting of members or until
22    the election and qualification of their successors.
23        (7) Whether the association is organized with or
24    without capital stock and:
25            (A) if the association is organized without

 

 

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1        capital stock, the articles shall set forth the general
2        rules by which the property rights and interests of
3        each member are to be determined; and
4            (B) if the association is organized with capital
5        stock, the total amount of the stock, the number and
6        par value of the shares, and dividend rights, if any;
7        if there is more than one class of stock, the articles
8        shall set forth a statement of the number of shares in
9        each class and a statement of the designations,
10        preferences, rights, and limitations of the shares in
11        each class.
12    (b) The articles may include additional provisions,
13consistent with law, including provisions that are required or
14permitted to be set forth in the bylaws.
15    (c) The articles shall be signed by the incorporators and
16filed with the Secretary of State in accordance with Section
1755. The articles shall be accompanied by the appointment of a
18statutory agent in accordance with Section 25. The legal
19existence of an association begins upon the filing of the
20articles and, unless the articles provide otherwise, its period
21of existence is perpetual.
 
22    Section 35. Amendment or restatement of articles.
23    (a) The articles of incorporation of an association may be
24altered or amended at any regular meeting of the association or
25at any special meeting called for that purpose, provided that

 

 

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1the text of the proposed change, or a general description of
2the change, is contained in the notice of the meeting. An
3amendment shall first be approved by two-thirds of the
4directors and shall then be adopted by an affirmative vote of
560% of the member votes cast on the amendment or, if the
6articles provide or permit, by the affirmative vote of a
7greater majority or by the affirmative vote of a simple
8majority of all member votes eligible to be cast on the
9amendment.
10    (b) Amendments to the articles of incorporation, when so
11adopted, shall be filed in accordance with Section 55.
12    (c) The board of an association may adopt a restatement of
13the articles without a member vote if the restatement merely
14incorporates amendments previously approved by the board and
15adopted by the members. An association may, by action taken in
16the manner required for an amendment, adopt restated articles
17that contain amendments made at the time of the restatement.
18Restated articles shall state that they are restated, or
19restated and amended, if amendments are adopted with the
20restatement, and shall supersede the existing articles and
21amendments. Restated articles shall meet the requirements of
22Section 30, except that the names and addresses of the
23incorporators and initial directors may be omitted. A
24restatement of the articles shall be filed in the manner
25prescribed for an amendment of the articles.
26    (d) Except as provided in the articles of incorporation,

 

 

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1the board may adopt an amendment to the articles of
2incorporation without a member vote in any of the following
3cases:
4        (1) to change the principal place of business of the
5    association;
6        (2) to designate and determine the rights and
7    restrictions of a series within a class of capital stock,
8    if permitted by the articles;
9        (3) to reduce the authorized number of shares of any
10    class or series of capital stock to any number down to and
11    including the number of the shares issued and outstanding,
12    and to assign the authorization for the number of shares so
13    reduced to another class or classes of capital stock
14    previously authorized;
15        (4) after a merger, consolidation, conversion,
16    division, or occurrence of any other contingent event
17    referred to in the articles of incorporation, to eliminate
18    from the articles any statement or provision pertaining
19    exclusively to the merger, consolidation, conversion,
20    division, or occurrence, and to make other changes required
21    by such elimination, but only after the deleted item has
22    been superseded in accordance with the articles of
23    incorporation or otherwise is no longer in effect.
 
24    Section 40. Voting on amendment.
25    (a)(1) Unless the board provides that division (a)(3) of

 

 

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1this Section applies to an amendment to the articles of
2incorporation, a holder of stock other than membership stock or
3patronage stock who is affected by a proposed amendment to the
4articles shall be entitled to cast one vote on the amendment
5regardless of the par or stated value of the stock, the number
6of shares, or the number of affected classes of stock held.
7    (2) A member holding stock affected by a proposed amendment
8may vote only as a member and shall not be entitled to vote or
9demand fair cash value as an affected stockholder.
10    (3) The board may provide that a stockholder otherwise
11entitled to vote under division (a)(1) of this Section shall
12instead be entitled to payment of fair cash value of the
13affected stock held by such stockholder in accordance with
14Section 170.
15    (b) For purposes of this Section, a holder of stock is
16affected as to any class of stock owned by the holder only if
17an amendment would expressly do any of the following:
18        (1) decrease the dividends to which that class may be
19    entitled or change the method by which the dividend rate on
20    that class is fixed;
21        (2) further restrict rights to transfer that class;
22        (3) give to another existing or any new class of stock
23    or equity interest not previously entitled thereto any
24    preference, as to dividends or upon dissolution, that is
25    higher than preferences of that class;
26        (4) change the par value of shares of that class or of

 

 

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1    any other class having the same or higher preferences as to
2    dividends or upon dissolution;
3        (5) increase the number of authorized shares of any
4    class having a higher preference as to dividends or upon
5    dissolution; or
6        (6) require or permit an exchange of shares of any
7    class with lower preferences as to dividends or upon
8    dissolution for shares of any other class with higher
9    preferences.
10    (c) If any proposed amendment will alter or change the
11powers, preferences, or special rights of one or more series of
12any class so as to affect them adversely, but shall not so
13affect the entire class, then only the shares of the series so
14affected by the amendment shall be considered a separate class
15for the purposes of subsection (b) of this Section.
16    (d) If stockholders are entitled to vote on an amendment,
17the amendment is adopted only if all of the following
18conditions are met:
19        (1) notice of the meeting, an exact copy of the
20    proposed amendment, and a ballot on the amendment have been
21    sent to each affected stockholder;
22        (2) approval by the members under Section 35; and
23        (3) approval by a simple majority of the affected
24    stockholders present and voting at a meeting of the
25    stockholders.
26    (c) This Section does not apply to stock issued prior to

 

 

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1the effective date of this Act, unless the association adopts
2an amendment to its articles of incorporation making the stock
3subject to this Section. As to such stock, an amendment shall
4first be approved by two-thirds of the directors and shall then
5be adopted by a vote representing a majority of all the members
6of the association.
 
7    Section 45. Evidence of incorporation.
8    (a) A copy of the association's articles of incorporation
9or amended articles filed in the office of the Secretary of
10State, and certified by the Secretary of State, is conclusive
11evidence, except as against the State, that the association has
12been incorporated under the laws of this State; and a copy
13certified by the Secretary of State of any certificate of
14amendment or other certificate is prima-facie evidence of such
15amendment or of the facts stated in the certificate, and of the
16observance and performance of all antecedent conditions
17necessary to the action that the certificate purports to
18evidence.
19    (b) A copy of amended articles filed in the office of the
20Secretary of State, and certified by the Secretary of State,
21shall be accepted in this State and other jurisdictions in lieu
22of the original articles, amendments to the articles, and prior
23amended articles.
24    (c) The original or a copy of the record of minutes of the
25proceedings of the incorporators of an association, or of the

 

 

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1proceedings or meetings of the members or any class of
2stockholders, or of the directors, or of any committee thereof,
3including any written consent, waiver, release, or agreement
4entered in such record or minutes, or the original or a copy of
5a statement that no specified proceeding was had or that no
6specified consent, waiver, release, or agreement exists,
7shall, when certified to be true by the secretary or an
8assistant secretary of an association, be received in the
9courts as prima-facie evidence of the facts stated therein.
10Every meeting referred to in the certified original or copy is
11considered duly called and held, and all motions and
12resolutions adopted and proceedings had at the meeting are
13considered duly adopted and had, and all elections of directors
14and all elections or appointments of officers chosen at the
15meeting are considered valid, until the contrary is proved; and
16whenever a person who is not a member, patron, or stockholder
17of an association has acted in good faith in reliance upon any
18such certified original or copy, it is conclusive in that
19person's favor.
 
20    Section 50. Reinstatement of association.
21    (a) An association whose articles of incorporation have
22been canceled or an association that has been dissolved in a
23manner other than for a voluntary dissolution as provided in
24Section 180, or a judicial dissolution, may be reinstated by
25filing, on a form prescribed by the Secretary of State for the

 

 

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1administration of this Act, an application for reinstatement
2and the required appointment of a statutory agent, and by
3paying a filing fee of $10.
4    (b) Upon reinstatement of an association's articles of
5incorporation, the rights, privileges, and franchises,
6including all real or personal property rights and credits and
7all contract and other rights, of the association existing at
8the time that its articles were canceled or the dissolution
9became effective shall continue in effect as if the articles
10had not been canceled or the dissolution had not occurred; and
11the association shall again be entitled to exercise the rights,
12privileges, and franchises authorized by its articles.
 
13    Section 55. Filing articles and certificates of amendment.
14    (a) For filing articles of incorporation or a certificate
15of amendment of articles or a certificate of merger,
16consolidation, division, or dissolution, an association
17organized under this Act shall pay to the Secretary of State
18the same fees required of corporations organized under the
19Business Corporation Act of 1983. In the case of a certificate
20of division, the filing fee shall be the same as for a
21certificate of merger or consolidation.
22    (b) When the articles of incorporation, or a certificate of
23amendment of articles, or a certificate of merger,
24consolidation, conversion, division, or dissolution is filed
25with the Secretary of State, the Secretary of State shall, if

 

 

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1the articles or certificate complies with this Act, endorse
2approval thereon, the date of filing, a file number, and make a
3legible copy thereof by any authorized method. The original or
4a copy of the articles or certificate, certified by the
5Secretary of State, shall be returned to the person filing the
6articles or certificate, who shall within 15 days file such
7document for record in the office of the recorder of the county
8in which the registered office of the corporation in this State
9is situated.
10    (c) All persons shall have the opportunity to acquire a
11copy of the articles and other certificates filed and recorded
12in the office of the Secretary of State, but no person dealing
13with the association shall be charged with constructive notice
14of the contents of any such articles or certificates by reason
15of the filing or recording.
 
16    Section 60. Dividends; stock; security interest.
17    (a) An association may pay dividends annually on its
18capital stock at a rate not exceeding 8% of its par value for
19any year, but dividends may be cumulative. The realized net
20earnings of the cooperative, to the extent attributable to
21business done with or for its patrons, shall be allocated and
22distributed among patrons in proportion to their patronage and
23in such manner and at such time as to constitute patronage
24dividends within the meaning of federal income tax law.
25    (b) Notwithstanding subsection (a), the articles or bylaws

 

 

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1may provide for any of the following:
2        (1) that eligibility for patronage dividends is
3    limited to members or to members in good standing;
4        (2) that the net earnings of the cooperative shall be
5    retained for the capital and development needs of the
6    cooperative and the improvement and extension of its
7    services;
8        (3) that the number of allocation units of the
9    cooperative shall be limited in any reasonable and
10    equitable manner; or
11        (4) that patronage-sourced net operating losses of the
12    cooperative shall not be allocated to patrons but shall be
13    carried forward to offset patronage-sourced net earnings
14    of subsequent years.
15    (c) An association, at any time, may purchase its own
16common stock at par or book value as determined by the board.
17    (d) An association shall have a continued perfected
18security interest in its membership stock and patronage stock
19to secure payment of any indebtedness or other obligation of
20the holder or owner to the association. Notwithstanding
21Articles 8 and 9 of the Uniform Commercial Code, the security
22interest shall have priority over all other perfected security
23interests. Unless otherwise provided in the association's
24articles of incorporation or bylaws, or by contract, a member
25or other patron has no right to compel an association to offset
26its membership stock or patronage stock against any

 

 

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1indebtedness or obligation owed to the association.
 
2    Section 65. Bylaws. An association shall adopt bylaws that
3are not inconsistent with this Act or the association's
4articles of incorporation. The bylaws may provide for any of
5the following:
6        (1) The time, place, and manner of calling and
7    conducting the association's meetings.
8        (2) The number of members constituting a quorum. If
9    voting by any method other than personal appearance is
10    used, members represented by a ballot may be counted in
11    computing a quorum only on those matters for which the
12    ballots were submitted.
13        (3) The right of members to vote by ballot delivered in
14    person, by mail, by electronic or telephonic transmittal,
15    or any combination of these, and the conditions, manner,
16    form, and effect of such votes.
17        (4) Subject to the provisions of Section 75, a method
18    of voting by members or delegates, and any limitations on
19    voting rights of any group or class of members or
20    delegates.
21        (5) The number of directors constituting a quorum.
22        (6) The number, qualifications, compensation, duties,
23    and terms of office of directors and officers, and the time
24    of their election and the manner of giving notice of the
25    election.

 

 

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1        (7) Penalties for violation of the bylaws.
2        (8) The amounts of entrance, organization, and
3    membership fees, if any, the manner of collecting them, and
4    the purposes for which they may be used, or the par value
5    and number of shares required for membership, if any.
6        (9) Any amount that each member is required to pay
7    annually or from time to time to carry on the business of
8    the association; any charge to be paid by each member for
9    services rendered by the association, and the time of
10    payment and the manner of collection of such charge; and
11    any marketing contract between the association and its
12    members that members may be required to sign.
13        (10) The number and qualifications of members of the
14    association and the conditions of membership or for
15    ownership of membership stock in the association.
16        (11) The time and manner of permitting members to
17    withdraw or the holders of membership stock to transfer
18    their stock; and the manner of assignment and transfer of
19    membership stock.
20        (12) The conditions upon which, and the time when, the
21    membership of any member ceases; and the suspension of the
22    rights of a member who ceases to be eligible for membership
23    in the association.
24        (13) The manner and effect of the expulsion of a
25    member.
26        (14) In the event of the death or withdrawal of a

 

 

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1    member or upon the expulsion of a member or the forfeiture
2    of membership, any of the following:
3            (A) the manner of determining the value of a
4        member's interest;
5            (B) provision for the purchase of a member's
6        interest by the association; or
7            (C) at the option of the association, provision for
8        such purchase at a price fixed by appraisal by the
9        board of directors of the association.
10        (15) Any other provision for any matter relative to the
11    control, regulation, operation, management, or government
12    of the association.
 
13    Section 70. Adoption, amendment, or repeal of bylaws.
14    (a) The initial bylaws may be adopted by the association's
15directors who are to serve until the first member meeting.
16After the initial bylaws are adopted, bylaws may be adopted and
17amended only by the members unless the articles or bylaws
18provide that the board, by a two-thirds vote of the entire
19board, may adopt or amend the bylaws or any specified bylaw.
20    (b) Any bylaw adopted or amended by the board shall be
21reported at the next member meeting. Any bylaw adopted or
22amended by the board shall not conflict with the association's
23articles of incorporation or with this Act. Any bylaw is
24subject to amendment or repeal by the members at any time.
25    (c) Unless the bylaws provide otherwise, any bylaw may be

 

 

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1adopted, amended, or repealed by a majority of the member votes
2cast on the adoption, amendment, or repeal.
 
3    Section 75. Members or delegates entitled to vote.
4    (a) A member entitled to vote shall have one vote, except
5that the articles or bylaws of the association may permit the
6following:
7        (1) voting by members in accordance with the amount of
8    business done with or through the association;
9        (2) voting by delegates, including a voting system that
10    provides any one or a combination of the following:
11            (A) that a delegate may cast only one vote;
12            (B) that a delegate may cast one vote for each
13        member represented by the delegate; or
14            (C) that another form of delegate voting may be
15        used.
16        (3) Voting by delegates or certain members on matters
17    that are to be submitted to a member vote.
18        (4) Voting by any combination of the methods set forth
19    in this subsection or any other method of voting set forth
20    in the bylaws, provided the association is controlled by
21    the members.
22    (b) If the articles or bylaws provide that only delegates
23or certain members are entitled to vote on matters to be
24submitted to a member vote, "member" or "members", as used in
25this Act with respect to the right of a member to vote, voting

 

 

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1procedure, the required proportion of member votes, actions
2that are required or permitted to be taken by members, and the
3number of members required for a quorum, means the delegates or
4other members entitled to vote. When voting is based on the
5amount of business done, provisions of this Act requiring a
6vote of the members are met if the required membership vote is
7satisfied based on the voting power of the members.
 
8    Section 80. Members; meetings.
9    (a) An association shall have 2 or more members. However,
10an association may have one member if that member is a
11cooperative that has 2 or more members.
12    (b) An association shall hold an annual meeting of its
13members. The board may call a special meeting of the members at
14any time. Any meeting of the members may be held at one time or
15in a series of meetings at one or more locations.
16    (c) Twenty per cent of the members entitled to vote may
17file with the board a petition stating any proper business to
18be brought before the association and demanding a special
19meeting at any time for consideration of such business. Upon
20compliance with this Section, the meeting shall be called by
21the board.
22    (d) Notice of every meeting, together with a statement of
23the purpose of the meeting, shall be sent to each member who is
24entitled to vote at the meeting and any affected stockholder at
25the member's or stockholder's current address, as shown in the

 

 

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1records of the association, at least 10 days prior to the
2meeting, in accordance with Section 85. The bylaws may provide
3that the notice be given by publication in a newspaper or
4newspapers of general circulation in the trade area of the
5association if notice to individual members and affected
6shareholders is impracticable.
 
7    Section 85. Methods of giving notice; waiver.
8    (a) Whenever notice is required by this Act to be given to
9any person, the notice may be given personally, by mail, or by
10electronic or telephonic transmittal. If mailed, the notice is
11given when it is deposited in the United States mail, with
12postage prepaid, addressed to the person at the person's
13address as it appears on the records of the association. If
14notice is sent by electronic or telephonic transmittal, notice
15is given when an electronic or telephonic confirmation of
16delivery is received by the association.
17    (b) A signed waiver is equivalent to personal notice to the
18person signing. The waiver may be signed at any time.
 
19    Section 90. Board of directors.
20    (a) Except where this Act or an association's articles of
21incorporation or bylaws require that action be otherwise
22authorized or taken, all of the authority of an association
23shall be exercised by or under the direction of the board. The
24board shall consist of not less than 5 directors, elected by

 

 

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1and from the members, unless the number of members is less than
25, in which case, the number of directors may equal the number
3of members.
4    (b) The bylaws may provide that the membership of an
5association be divided into districts or other groupings and
6that the directors shall be elected according to such districts
7or groupings. In that case, the bylaws shall specify the number
8of directors to be elected and the manner of reapportioning or
9redistricting the membership.
10    (c) The bylaws may provide that one or more directors may
11be appointed by the other directors. The appointed directors
12need not be members of the association, but shall have the same
13powers, rights, and responsibilities as other directors. The
14appointed directors shall not number more than 20% of the
15entire number of directors.
16    (d) The bylaws may provide for an executive committee and
17may allot to the executive committee any of the functions and
18powers of the board, subject to the general direction and
19control of the board.
20    (e) The association may provide a fair remuneration for the
21time actually spent by its officers and directors in its
22service, and for the services of the members of its executive
23committee.
24    (f) Unless the bylaws provide otherwise, when a vacancy on
25the board occurs other than by expiration of term, the
26remaining directors on the board, by a majority vote, may elect

 

 

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1a director to fill the vacancy. If the bylaws provide for an
2election of directors by the members in a district or other
3grouping, the board may call a special meeting of the members
4in that district or group to fill the vacancy.
 
5    Section 95. Indemnification.
6    (a) Subject to subsections (b) and (c) of this Section, an
7association may indemnify or agree to indemnify any person that
8was or is a party, or is threatened to be made a party, to any
9threatened, pending, or completed civil, criminal,
10administrative, or investigative action, suit, or proceeding,
11other than an action or suit by or in the right of the
12association, because the person is or was a director, officer,
13employee, agent, or volunteer of the association or is or was
14serving at the request of the association as a trustee,
15director, officer, employee, member, manager, agent, or
16volunteer of another association, entity, partnership, joint
17venture, trust, or other enterprise. The indemnification
18described in this subsection shall be for expenses, including
19attorney's fees, judgments, fines, and amounts paid in
20settlement actually and reasonably incurred by the person in
21connection with the action, suit, or proceeding described in
22this subsection.
23    (b) With respect to any noncriminal action or proceeding,
24the indemnification described in subsection (a) of this Section
25shall only be made if the person acted in good faith and in a

 

 

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1manner the person reasonably believed to be in or not opposed
2to the best interests of the association as described in
3subsection (d) of Section 100.
4    (c) With respect to any criminal action or proceeding, the
5indemnification described in subsection (a) of this Section
6shall only be made if the person acted in good faith and in a
7manner the person reasonably believed to be in or not opposed
8to the best interests of the association as described in
9subsection (d) of Section 100, and the person had no reasonable
10cause to believe the conduct was unlawful.
11    (d) For purposes of subsections (b) and (c) of this
12Section, the termination of any action, suit, or proceeding by
13judgment, order, settlement, or conviction or a plea of nolo
14contendere or its equivalent does not create, of itself, a
15presumption that the person did not act in good faith and in a
16manner the person reasonably believed to be in or not opposed
17to the best interests of the association or that the person had
18reasonable cause to believe that the conduct was unlawful.
19    (e) Subject to subsection (f) of this Section and provided
20the person acted in good faith and in a manner the person
21reasonably believed to be in or not opposed to the best
22interests of the association, an association may indemnify or
23agree to indemnify any person that was or is a party, or is
24threatened to be made a party, to any threatened, pending, or
25completed action or suit by or in the right of the association
26to procure a judgment in its favor, because the person is or

 

 

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1was a director, officer, employee, agent, or volunteer of the
2association or is or was serving at the request of the
3association as a trustee, director, officer, employee, member,
4manager, agent, or volunteer of another association, entity,
5partnership, joint venture, trust, or other enterprise. The
6indemnification described in this subsection shall be for
7expenses, including attorney's fees, actually and reasonably
8incurred by the person in connection with the defense or
9settlement of an action or suit described in this subsection.
10    (f) If a person is adjudged to be liable for negligence or
11misconduct in the performance of a duty to the association, the
12indemnification described in subsection (e) of this Section
13shall be made for any claim, issue, or matter only to the
14extent that the court in which the action or suit was brought
15determines, upon application, that despite the adjudication of
16liability and in view of all the circumstances of the case, the
17person fairly and reasonably is entitled to indemnity for
18expenses that the court in which the action or suit was brought
19considers proper.
20    (g) Notwithstanding subsections (a), (b), (c), (d), (e),
21and (f) of this Section, unless limited in the articles of
22incorporation, to the extent that a person has been successful
23on the merits in defense of any action, suit, or proceeding
24described in subsection (a), (b), (c), (d), (e), or (f) of this
25Section, the person shall be indemnified against expenses,
26including attorney's fees, actually and reasonably incurred in

 

 

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1connection with that action, suit, or proceeding.
2    (h) Unless ordered by a court or unless subsection (g) of
3this Section applies, the association shall make any
4indemnification under subsections (a), (b), (c), (d), (e), and
5(f) of this Section only as authorized in the specific case,
6upon a determination that indemnification of the person is
7proper in the circumstances because the person has met the
8applicable standard of conduct set forth in subsections (a),
9(b), (c), (d), (e), and (f) of this Section. This determination
10shall be made in any of the following manners:
11        (1) by a majority vote of a quorum consisting of
12    directors of the indemnifying association that were not and
13    are not parties to or threatened with the action, suit, or
14    proceeding described in subsections (a), (b), (c), (d),
15    (e), and (f) of this Section;
16        (2) whether or not a quorum as described in paragraph
17    (1) of this subsection is obtainable, and if a majority of
18    a quorum of disinterested directors so directs, in a
19    written opinion by independent legal counsel other than an
20    attorney or a firm of attorneys associated with that
21    attorney, that within the past 5 years has been retained by
22    or has performed services for the association or has
23    performed services for any person to be indemnified; or
24        (3) by the members.
25    (i) The association shall pay the expenses, including
26attorney's fees, incurred by the person in defending the

 

 

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1action, suit, or proceeding described in subsection (a), (b),
2(c), (d), (e), or (f) of this Section, unless either of the
3following applies:
4            (1) At the time of a person's act or omission that
5        is the subject of an action, suit, or proceeding
6        described in subsection (a), (b), (c), (d), (e), or (f)
7        of this Section, the articles or bylaws of the
8        association state, by specific reference to
9        subsections (a), (b), (c), (d), (e), and (f) of this
10        Section, that subsections (a), (b), (c), (d), (e), and
11        (f) of this Section do not apply to the association.
12            (2) The only liability asserted against a person in
13        an action, suit, or proceeding described in subsection
14        (a), (b), (c), (d), (e), or (f) of this Section is
15        pursuant to Section 110. Upon receipt of a request from
16        a person, the association may pay expenses, including
17        attorney's fees, incurred by a person in defending any
18        action, suit, or proceeding described in subsection
19        (a), (b), (c), (d), (e), or (f) of this Section as the
20        expenses are incurred in advance of the final
21        disposition of the action, suit, or proceeding, if the
22        board authorizes this payment in the specific case and
23        upon receipt of an undertaking by or on behalf of the
24        person to repay the amount if it ultimately is
25        determined that the person is not entitled to be
26        indemnified by the association.

 

 

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1    (j) Both of the following apply to the indemnification
2authorized by this Section:
3        (1) It is not exclusive of and is in addition to any
4    other rights granted to a person seeking indemnification
5    pursuant to the articles or bylaws of the association, any
6    agreement, a vote of members or disinterested directors of
7    the association, or otherwise, for action taken in the
8    person's official capacity and action taken in another
9    capacity while holding their office or position.
10        (2) It continues as to a person that has ceased to be a
11    director, officer, employee, member, manager, agent, or
12    volunteer and inures to the benefit of the heirs,
13    executors, and administrators of that person.
14    (k) As used in this Section, "association" includes all
15constituent associations and entities in a consolidation or
16merger and the new or surviving association or entity. Any
17person that is or was a director, officer, employee, agent, or
18volunteer of a constituent association or is or was serving at
19the request of a constituent association as a trustee,
20director, officer, employee, member, manager, agent, or
21volunteer of another association, entity, partnership, joint
22venture, trust, or other enterprise stands in the same position
23under this Section with respect to the new or surviving
24association or entity as the person would if the person had
25served the new or surviving association or entity in the same
26capacity.

 

 

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1    (l) An association may purchase and maintain insurance or
2furnish similar protection, including, but not limited to,
3trust funds, letters of credit, or self-insurance, for or on
4behalf of any person that is or was a director, officer,
5employee, agent, or volunteer of the association or is or was
6serving at the request of the association as a trustee,
7director, officer, employee, member, manager, agent, or
8volunteer of another association, entity, partnership, joint
9venture, trust, or other enterprise. The insurance or similar
10protection described in this subsection shall be against any
11liability asserted against the person and incurred by the
12person in any such capacity, whether or not the association
13would have the power to indemnify the person against that
14liability under this Section.
15    Insurance described in this subsection may be purchased
16from or maintained with a person in which the association has a
17financial interest.
 
18    Section 100. Standard of care for directors.
19    (a) A director shall perform the duties of a director,
20including duties as a member of any committee of the directors
21upon which the director serves, in good faith, in a manner the
22director reasonably believes to be in or not opposed to the
23best interests of the association, and with the care that an
24ordinarily prudent person in a like position would use under
25similar circumstances. In performing these duties, a director

 

 

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1is entitled to rely on information, opinions, reports, or
2statements, including financial statements and other financial
3data, that are prepared or presented by any of the following:
4        (1) One or more directors, officers, or employees of
5    the association whom the director reasonably believes are
6    reliable and competent in the matters prepared or
7    presented;
8        (2) Counsel, public accountants, or other persons as to
9    matters that the director reasonably believes are within
10    the person's professional or expert competence;
11        (3) A committee of the directors upon which the
12    director does not serve, established in accordance with the
13    association's articles of incorporation or bylaws, as to
14    matters within its designated authority, provided the
15    director reasonably believes the committee merits
16    confidence.
17    (b) For purposes of subsection (a) of this Section:
18        (1) A director shall not be found to have failed to
19    perform the duties in accordance with subsection (a) of
20    this Section, unless it is proved, by clear and convincing
21    evidence, in an action brought against the director that
22    the director has not acted in good faith, in a manner
23    reasonably believed to be in or not opposed to the best
24    interests of the association, or with the care that an
25    ordinarily prudent person in a like position would use
26    under similar circumstances. Such an action includes, but

 

 

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1    is not limited to, an action that involves or affects any
2    of the following:
3            (A) A change or potential change in control of the
4        association;
5            (B) A termination or potential termination of the
6        director's service to the association as a director;
7            (C) Service in any other position or relationship
8        with the association.
9        (2) A director shall not be considered to be acting in
10    good faith if the director has knowledge concerning the
11    matter in question that would cause reliance on
12    information, opinions, reports, or statements that are
13    prepared or presented by the persons described in
14    subsections (a)(1) through (a)(3) of this Section to be
15    unwarranted.
16        (3) Subsection (b) of this Section does not limit
17    relief available under Section 105.
18    (c) (1) Subject to subsections (c)(2) and (c)(3) of this
19Section, a director is liable in damages for any act that the
20director takes or fails to take as director only if it is
21proved, by clear and convincing evidence, in an action brought
22against the director that the act or omission of the director
23was undertaken with a deliberate intent to cause injury to the
24association or was undertaken with a reckless disregard for the
25best interests of the association.
26    (2) Subsection (c)(1) of this Section does not affect the

 

 

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1liability of a director under Section 110.
2    (3) Subject to subsection (c)(2) of this Section,
3subsection (c)(1) of this Section does not apply if, and only
4to the extent that, at the time of an act or omission of the
5director, the association's articles of incorporation or
6bylaws state, by specific reference to subsection (c)(1) of
7this Section, that its provisions do not apply to the
8association.
9    (d) For purposes of this Section and Section 95, in
10determining what is reasonably believed to be in or not opposed
11to the best interests of the association, a director shall
12consider the purposes of the association and may consider any
13of the following:
14        (1) the interests of the employees, suppliers,
15    creditors, and customers of the association;
16        (2) the economy of this State and of the United States;
17        (3) community, and societal, and environmental
18    matters;
19        (4) the long-term and short-term best interests of the
20    association;
21        (5) the interests of the members as patrons of the
22    association.
23    (e) Subsections (b) and (c) of this Section do not affect
24the duties of a director who acts in any capacity other than as
25a director.
 

 

 

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1    Section 105. Effect of self-dealing.
2    (a) Unless otherwise provided in an association's articles
3of incorporation or bylaws:
4        (1) no contract or transaction between an association
5    and one or more of its directors or officers, or between
6    the association and any other person in which one or more
7    of the association's directors or officers are directors or
8    officers, or have a financial or personal interest, shall
9    be void or voidable solely for this reason, or solely
10    because the director or officer is present at or
11    participates in the meeting of the board or committee that
12    authorizes the contract or transaction, or solely because
13    the director's or officer's votes are counted for such
14    purpose, if the contract or transaction is fair to the
15    association at the time it is authorized or approved, and
16    such authorization or approval is granted in either of the
17    following manners:
18            (A) the material facts as to the relationship or
19        interest and as to the contract or transaction are
20        disclosed or are known to the board or the committee,
21        and the board or committee in good faith authorizes the
22        contract or transaction by the affirmative vote of a
23        majority of the disinterested directors, even if the
24        disinterested directors constitute less than a quorum
25        of the board or the committee; or
26            (B) the material facts as to the relationship or

 

 

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1        interest and as to the contract or transaction are
2        disclosed or are known to the members entitled to vote
3        on the contract or transaction, and the contract or
4        transaction is specifically approved at a meeting of
5        the members.
6        (2) Common or interested directors may be counted in
7    determining the presence of a quorum at a meeting of the
8    board, or of a committee that authorizes the contract or
9    transaction.
10    (b) Items (1) and (2) of subsection (a) do not limit or
11otherwise affect the liability of directors under Section 110.
12    (c) For purposes of subsection (a), a director is not an
13interested director solely because the subject of a contract or
14transaction may involve or effect a change in control of the
15association or continuation in office as a director of the
16association.
 
17    Section 110. Liability of members, directors, and
18officers.
19    (a) No member, director, or officer of an association shall
20be personally liable for any obligation of the association to
21an amount exceeding the sum remaining unpaid on his membership
22fee or his subscription to the capital stock, including any
23unpaid balance on any promissory notes given in payment
24thereof.
25    (b) Directors who vote for or assent to any of the

 

 

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1following are jointly and severally liable to the association
2in accordance with this subsection:
3        (1) a distribution of assets to members, stockholders,
4    or patrons contrary to law, the association's articles of
5    incorporation, or bylaws;
6        (2) a distribution of assets to persons other than
7    creditors during the winding up of the affairs of the
8    association, on dissolution or otherwise, without the
9    payment of all known obligations of the association, or
10    without making adequate provision for the payment of the
11    obligations; or
12        (3) the making of loans, other than in the usual
13    conduct of the association's affairs or in accordance with
14    the association's articles or bylaws, to an officer,
15    director, or member of the association.
16    In cases under item (1) of this subsection, directors are
17liable up to the amount of the distribution in excess of the
18amount that could have been distributed without violation of
19law, the articles of incorporation, or bylaws, but not in
20excess of the amount that would inure to the benefit of the
21creditors of the association if it was insolvent at the time of
22the distribution or there was reasonable ground to believe that
23by such vote or assent it would be rendered insolvent, or to
24the benefit of the members or stockholders other than members
25or stockholders of the class in respect of which the
26distribution was made.

 

 

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1    In cases under item (2) of this subsection, directors are
2liable to the extent that the obligations, not otherwise barred
3by statute, are not paid, or for the payment of which adequate
4provision has not been made.
5    In cases under item (3) of this subsection, directors are
6liable for the amount of the loan with interest thereon at the
7rate of 6% per year until the amount has been paid.
8    A director is not liable under item (1) or (2) of this
9subsection if, in determining the amount available for any such
10distribution, the director in good faith relied on a financial
11statement of the association prepared by an officer or employee
12of the association in charge of its accounts or by a certified
13public accountant or firm of certified public accountants, or
14in good faith considered the assets to be of their book value,
15or followed what the director believed to be sound accounting
16and business practice.
17    (c) A director who is present at a meeting of the board or
18a committee of the board at which action on any matter is
19authorized or taken and who has not voted for or against such
20action shall be presumed to have voted for the action unless
21the director dissents from the action during the meeting and
22the dissent is noted in the minutes of the proceedings of the
23meeting, or a written dissent is filed either during the
24meeting or within a reasonable time after the adjournment of
25the meeting.
26    (d) A member, stockholder, or patron who receives any

 

 

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1distribution made contrary to law, the association's articles
2of incorporation, or bylaws is liable to the association for
3the amount received that is in excess of the amount that could
4have been distributed.
5    (e) A director against whom a claim is asserted under or
6pursuant to this Section and who is held liable on the claim is
7entitled to contribution, on equitable principles, from other
8directors who also are liable. In addition, any director
9against whom a claim is asserted under or pursuant to this
10Section, or who is held liable, has a right of contribution
11from the member, stockholder, or patron who received any
12distribution made contrary to law, the articles of
13incorporation, or bylaws, and such persons as among themselves
14also are entitled to contribution in proportion to the amounts
15received by them respectively.
16    (f) No action shall be brought by or on behalf of an
17association, upon any cause of action arising under item (1) or
18(2) of subsection (b), at any time after 2 years from the day
19on which the violation occurs; provided that no such action is
20barred by this subsection if it is commenced prior to the
21effective date of this Act.
 
22    Section 115. Officers.
23    (a) The officers of an association shall consist of a
24president, a secretary, a treasurer, and, if desired, a
25chairperson and one or more vice-chairpersons of the board, one

 

 

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1or more vice-presidents, and other officers and assistant
2officers as necessary. The officers shall be elected by the
3board. The chairperson and any vice-chairperson of the board
4shall be a director. Unless the association's articles of
5incorporation or bylaws provide otherwise, none of the other
6officers need be a director. Any 2 or more offices may be held
7by the same person, but no officer shall execute, acknowledge,
8or verify any instrument in more than one capacity if the
9instrument is required by law or by the articles or bylaws to
10be executed, acknowledged, or verified by 2 or more officers.
11Unless the articles or the bylaws provide otherwise, all
12officers shall be elected annually.
13    (b) All officers have the authority to perform, and shall
14perform, the duties as the bylaws provide, or as the board may
15determine in accordance with the bylaws.
 
16    Section 120. Surety bonds. If required by the association's
17bylaws, every officer, employee, and agent handling funds,
18negotiable instruments, or other property of or for an
19association shall execute and deliver adequate bonds for the
20faithful performance of the officer's, employee's, or agent's
21duties and obligations.
 
22    Section 125. Removal of officers or directors.
23    (a) Unless the bylaws provide otherwise, a director may be
24removed, with or without cause, by a majority vote of all

 

 

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1members at an annual or special meeting.
2    (b) If the bylaws provide for election of directors by the
3members in a district or other grouping, then the members
4residing in that district or belonging to the group may, by a
5majority vote at an annual or special meeting, remove the
6director representing such district or group.
7    (c) Any director or officer facing possible removal shall
8be given fair notice of the proposed action in writing prior to
9a meeting and shall have an opportunity at the meeting to be
10heard in person or in writing.
 
11    Section 130. Books and records; examination by member.
12    (a) An association shall keep correct and complete books
13and records of account, and shall also keep minutes of the
14proceedings of meetings of its members, board, and delegates.
15The association shall keep at its principal office records of
16the names and addresses of all members and stockholders with
17the amount of ownership interests and stock held by each.
18    (b) At any reasonable time, any member, upon written notice
19that states, with specificity, a proper purpose for an
20examination of books and records and that is delivered or sent
21to the association at least one week in advance, may examine
22those books and records pertinent to the purpose in the notice.
23The board may deny a request of a member to examine the books
24and records if the purpose is not proper because the purpose is
25not directly related to the person's interest as a member and

 

 

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1is contrary to the best interests of the association.
2    (c) At any reasonable time, a stockholder who is not a
3member, upon written notice that states, with specificity, a
4proper purpose for an examination of books and records and that
5is delivered or sent to the association at least one week in
6advance, may examine those books and records that are pertinent
7to the purpose in the notice. The board may deny a request of a
8stockholder to examine the books and records if the purpose is
9not proper because the purpose is not directly related to the
10person's interest as a stockholder and is contrary to the best
11interest of the association.
 
12    Section 135. Merger or consolidation with associations.
13    (a) An association may merge or consolidate with one or
14more associations under this Act. Before an association may
15merge or consolidate with any other association, a written
16agreement of merger or consolidation shall be approved by the
17board of each constituent association and by the members of
18each constituent association. The agreement shall set forth the
19terms of the merger or consolidation, including any provisions
20for amendment or abandonment of the agreement. In the case of a
21consolidation, the agreement also shall contain the articles of
22incorporation of the new association.
23    (b) If the agreement of merger or consolidation provides
24that a holder of stock other than membership stock or patronage
25stock in a constituent association will be affected, all of the

 

 

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1following apply:
2        (1) Unless the board of the constituent association
3    provides that item (2) of this subsection applies, the
4    affected stockholder shall be entitled to cast one vote on
5    the agreement regardless of the par or stated value, the
6    number of shares, or the number of affected classes of the
7    stock held.
8        (2) The board of a constituent association may provide
9    that a stockholder otherwise entitled to vote under item
10    (1) of this subsection shall instead be entitled to payment
11    of fair cash value of the affected stock held by the
12    stockholder in accordance with Section 170.
13        (3) A member holding stock affected by a proposed
14    agreement of merger or consolidation may vote only as a
15    member and shall not be entitled to vote or demand fair
16    cash value as an affected stockholder.
17    (c) For purposes of this Section, a holder of stock is
18affected as to any class of stock owned by the holder only if
19the agreement of merger or consolidation does any of the
20following:
21        (1) decreases the dividends to which that class may be
22    entitled or changes the method by which the dividend rate
23    on that class is fixed;
24        (2) provides for additional restriction of rights to
25    transfer shares of that class;
26        (3) gives to another existing or any new class of stock

 

 

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1    or equity interest not previously entitled thereto any
2    preference, as to dividends or upon dissolution, that is
3    higher than preferences of that class;
4        (4) changes the par value of shares of that class or of
5    any other class having the same or higher preferences as to
6    dividends or upon dissolution;
7        (5) increases the number of authorized shares of any
8    other class having the same or higher preferences as to
9    dividends or upon dissolution beyond the aggregate
10    authorizations for such classes in the constituent
11    associations; or
12        (6) requires or permits an exchange of shares of any
13    class with lower preferences as to dividends or upon
14    dissolution for shares of any other class with higher
15    preferences.
16    (d) The agreement is approved if both of the following
17conditions are met with respect to each constituent
18association:
19        (1) Notice of the meeting to vote on the agreement, the
20    agreement, and a description of the method of voting have
21    been sent to all members, and to all affected stockholders
22    entitled either to vote on the agreement or to receive
23    payment of fair cash value under subsection (b);
24        (2) 60% of the member votes cast approve the agreement,
25    and a simple majority of the votes cast by the affected
26    stockholders entitled to vote under subsection (b) approve

 

 

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1    the agreement.
2     (e) Notwithstanding subsection (d), no vote of the members
3or stockholders of a constituent association shall be necessary
4to approve a merger of a wholly owned subsidiary association
5with and into its parent cooperative or a merger or a
6consolidation of 2 or more subsidiary associations that are
7wholly owned by a cooperative.
8    (f) After approval of an agreement under this Section, but
9before the merger or consolidation is effective, the agreement
10may be amended in accordance with any provision for amendment
11set forth in the agreement, provided that an amendment made
12subsequent to adoption of the agreement by the members of any
13constituent association shall not do any of the following:
14        (1) change the membership rights, or the amount or kind
15    of stock, securities, cash, property, or other rights to be
16    received, exchanged, or converted in the merger or
17    consolidation;
18        (2) change the articles of incorporation or bylaws of
19    the surviving or new association as provided for in the
20    agreement;
21        (3) change any provision of the agreement with respect
22    to the rights of members or the manner of voting in the
23    surviving or new association.
24    (g) After approval of an agreement under this Section, but
25before the merger or consolidation is effective, the merger or
26consolidation may be abandoned in accordance with any provision

 

 

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1for abandonment set forth in the agreement.
2    (h) The merger or consolidation shall take effect in
3accordance with Sections 145 and 150.
 
4    Section 140. Association may merge or consolidate with
5other entities.
6    (a) An association may merge or consolidate with one or
7more entities, if such merger or consolidation is permitted by
8the laws under which each constituent entity exists and the
9association complies with this Section.
10    (b) Each constituent association shall comply with Section
11135 with respect to form and approval of an agreement of merger
12or consolidation, and each constituent entity shall comply with
13the applicable provisions of the laws under which it exists,
14except that the agreement of merger or consolidation, by
15whatever name designated, shall comply with subsections (c) and
16(d) of this Section.
17    (c) The agreement of merger or consolidation shall set
18forth all of the following:
19        (1) The names of the states and the laws under which
20    each constituent entity exists.
21        (2) All statements and matters required to be set forth
22    in agreements of merger or consolidation by the laws under
23    which any constituent entity exists.
24        (3) A statement that the surviving or new entity is to
25    be an association, a foreign association, a corporation

 

 

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1    other than a cooperative, or a limited liability company.
2        (4) If the surviving or new entity is to be a foreign
3    entity:
4            (A) the place where the principal office of the
5        surviving or new entity is to be located in the state
6        in which the surviving or new entity is to exist;
7            (B) the consent by the surviving or new entity that
8        it may be sued and served with process in this State in
9        any proceeding for the enforcement of any obligation of
10        any constituent association or domestic entity;
11            (C) the consent by the surviving or new entity that
12        it shall be subject to the applicable provisions of the
13        Business Corporation Act of 1983 if it is a foreign
14        corporation or foreign association or to the Limited
15        Liability Company Act if it is a foreign limited
16        liability company; and
17            (D) if it is desired that the surviving or new
18        entity exercise its corporate privileges in this State
19        as a foreign entity.
20    (d) The agreement also may set forth other provisions
21permitted by the laws of any state in which any constituent
22entity exists.
23    (e) If the surviving or new entity is an association, the
24merger or consolidation shall take effect in accordance with
25Sections 145 and 150.
26    (f) If the surviving or new entity is an entity other than

 

 

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1an association, the merger or consolidation shall take effect
2in accordance with the applicable provisions of the laws under
3which it exists.
 
4    Section 145. Effective date of merger or consolidation.
5    (a) Unless a later date is specified in the agreement, a
6merger or consolidation under Sections 135 and 140 is effective
7when the certificate of merger or consolidation is filed in
8accordance with Section 150. If, after filing the certificate
9but before the merger or consolidation is effective, the merger
10or consolidation is amended or abandoned, as provided in
11subsections (f) and (g) of Section 135, an authorized officer
12of each constituent association shall sign a certificate of
13amendment or abandonment stating that the agreement of merger
14or consolidation has been amended or abandoned and the date of
15such action, and shall file the certificate in the same manner
16as the certificate of merger or consolidation. Any certificate
17of amendment or abandonment shall be filed prior to the date
18the merger or consolidation would otherwise be effective.
19    (b) In the case of a merger, the surviving association or
20entity is the one designated in the agreement. In the case of a
21consolidation, the new association or entity is the one
22designated in the agreement. The separate existence of all
23constituent associations or entities in the agreement, except
24the surviving or new association or entity, ceases upon the
25effective date of the merger or consolidation.

 

 

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1    (c) The surviving or new association or entity possesses
2all the rights and all the property of each constituent
3association or entity, and is responsible for all their
4obligations. Title to any property is vested in the surviving
5or new association or entity with no reversion or impairment of
6the property caused by the merger or consolidation. A merger or
7consolidation shall not be considered an assignment. No right
8of any creditor shall be impaired by the merger or
9consolidation without the creditor's consent.
10    (d) If the surviving organization is an association, the
11articles of incorporation are amended to the extent provided in
12the agreement of merger.
 
13    Section 150. Certificate of merger or consolidation;
14filing; recording.
15    (a) Upon adoption of an agreement of merger or
16consolidation under Section 135 or 140, a certificate, signed
17by any authorized officer or representative of each constituent
18association or entity, shall be filed with the Secretary of
19State on a form prescribed by the Secretary of State that sets
20forth the following:
21        (1) the name and form of each constituent association
22    or entity and the State law under which each constituent
23    entity exists;
24        (2) a statement that each constituent association or
25    entity has adopted the agreement of merger or

 

 

HB3830- 50 -LRB099 09561 JLS 29770 b

1    consolidation, the manner of adoption, and that the
2    agreement was adopted in compliance with the laws
3    applicable to each constituent association or entity;
4        (3) the effective date of the merger or consolidation,
5    which date may be on or after the date of filing of the
6    certificate;
7        (4) in the case of a merger, a statement that one or
8    more specified constituent associations or entities will
9    be merged into a specified surviving association or entity
10    or, in the case of a consolidation, a statement that the
11    constituent associations or entities will be consolidated
12    into a new association or entity; and
13        (5) the name and address of the statutory agent upon
14    whom any process, notice, or demand against any constituent
15    association or entity, or the surviving or new association
16    or entity, may be served.
17    In the case of a merger into an association or domestic
18entity, any amendments to the articles of incorporation or the
19articles of organization of the surviving association or entity
20shall be filed with the certificate.
21    In the case of a consolidation to form a new domestic
22association or entity, the articles of incorporation or the
23articles of organization of the new association or entity shall
24be filed with the certificate.
25    If the surviving or new entity is a foreign entity that
26desires to transact business in this State as a foreign entity,

 

 

HB3830- 51 -LRB099 09561 JLS 29770 b

1the certificate shall be accompanied by the information
2required for qualification of a foreign entity in this State by
3the Business Corporation Act of 1983 in the case of a foreign
4corporation or foreign cooperative, or by the Limited Liability
5Company Act in the case of a foreign limited liability company.
6    (b) A copy of the certificate of merger or consolidation,
7certified by the Secretary of State, may be filed for record in
8the office of the county recorder of any county in this State.
9For such recording, the county recorder shall charge and
10collect the same fee as in the case of deeds. The certified
11copy of the certificate of merger or consolidation shall be
12recorded in the official records of the county recorder.
13    (c) For purposes of this Section, "domestic entity" means a
14corporation other than an association or a limited liability
15company organized under the laws of this State.
 
16    Section 155. Plan of division.
17    (a) An association may divide itself into 2 or more
18associations. A written plan of division shall be approved by
19the association's board. Such plan shall set forth all the
20terms of the division and the proposed effect of the division
21on all members and stockholders of the association. The plan
22also shall contain the articles of incorporation and bylaws of
23each association resulting from the division, which articles
24and bylaws shall conform to the requirements for associations
25organized under this Act.

 

 

HB3830- 52 -LRB099 09561 JLS 29770 b

1    (b) If the plan of division provides that a holder of stock
2other than membership stock or patronage stock will be
3affected, the following apply:
4        (1) Unless the board provides that item (2) of this
5    subsection applies, the affected stockholder shall be
6    entitled to cast one vote on the plan of division
7    regardless of the par or stated value, the number of
8    shares, or the number of affected classes of the stock
9    held.
10        (2) The board may provide that a stockholder otherwise
11    entitled to vote under item (1) of this subsection shall
12    instead be entitled to payment of fair cash value of the
13    affected stock held by the stockholder in accordance with
14    Section 170.
15        (3) A member holding stock affected by a proposed plan
16    of division may vote only as a member and shall not be
17    entitled to vote or demand fair cash value as an affected
18    stockholder.
19    (c) For purposes of this Section, a holder of stock is
20affected as to any class of stock owned by the holder only if
21the plan of division does any of the following:
22        (1) Decreases the dividends to which that class may be
23    entitled or changes the method by which the dividend rate
24    on that class is fixed.
25        (2) Provides any additional restriction on rights to
26    transfer shares of that class.

 

 

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1        (3) Gives to another existing or any new class of stock
2    or equity interest not previously entitled thereto any
3    preference, as to dividends or upon dissolution, that is
4    higher than preferences of that class in a resulting
5    association.
6        (4) Changes the par value of shares of that class or of
7    any other class having the same or higher preferences as to
8    dividends or upon dissolution.
9        (5) Increases the aggregate number of authorized
10    shares of any other class having the same or higher
11    preferences as to dividends or upon dissolution in the
12    resulting associations beyond the authorization for such
13    classes in the original association.
14        (6) Requires or permits an exchange of shares of any
15    class with lower preferences as to dividends or upon
16    dissolution in the original association for shares of any
17    other class with higher preferences in a resulting
18    association.
19    (d) The plan of division is approved if both of the
20following conditions are met:
21        (1) Notice of the meeting to vote on the plan, the plan
22    of division, and a description of the method of voting have
23    been sent to all members and to all affected stockholders
24    entitled either to vote on the plan or to receive payment
25    of fair cash value under subsection (b);
26        (2) 60% of the member votes cast approve the plan, and

 

 

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1    a simple majority of the votes cast by the affected
2    stockholders entitled to vote under subsection (b) approve
3    the plan.
4    (e) After approval of a plan of division under this
5Section, but before the division is effective, the plan may be
6amended or abandoned in accordance with a provision for
7amendment or abandonment set forth in the plan, provided that
8an amendment made subsequent to approval of the plan by the
9members shall not do any of the following:
10        (1) Change the membership rights, or the amount or kind
11    of stock, securities, cash, property, or other rights to be
12    received, exchanged, or converted in the division.
13        (2) Change the articles of incorporation or bylaws of
14    the resulting associations as provided for in the plan.
15        (3) Change any provision of the plan with respect to
16    the rights of members or the manner of voting in the
17    resulting associations.
18    (f) Upon approval of a plan of division, a certificate,
19signed by any authorized officer of the original association,
20shall be filed with the Secretary of State on a form prescribed
21by the Secretary of State setting forth the following:
22        (1) The name of the original association and the name
23    of each resulting association.
24        (2) A statement that the original association has
25    adopted the plan of division, the manner of adoption, and
26    that the plan was adopted in compliance with this Section;

 

 

HB3830- 55 -LRB099 09561 JLS 29770 b

1        (3) The effective date of the division, which date may
2    be on or after the date of filing of the certificate.
3        (4) A statement that the original association will be
4    divided into specified resulting associations.
5        (5) The name and address of the statutory agent upon
6    whom any process, notice, or demand against the original
7    association may be served, and the name and address of a
8    statutory agent for each resulting association upon whom
9    process, notice, or demand against that resulting
10    association may be served.
11    (g) The articles of incorporation of each of the resulting
12associations shall be filed with the certificate.
 
13    Section 160. Conversions.
14    (a) A domestic corporation that is not an association may
15convert itself into an association by adopting an amendment to
16its articles of incorporation in which it elects to become
17subject to this Act, together with any changes in its articles
18of incorporation and bylaws required by this Act and any other
19desirable changes permitted by this Act. The amendment shall be
20adopted, filed, and recorded in the manner provided by the law
21under which the corporation exists.
22    (b) An association may convert itself to a domestic
23corporation that is not an association by adopting an amendment
24to its articles of incorporation in which it elects to become
25subject to the Business Corporation Act of 1983, if so

 

 

HB3830- 56 -LRB099 09561 JLS 29770 b

1permitted by such Act, together with any changes in its
2articles of incorporation and bylaws required by such Act and
3any other desirable changes permitted by such Act. The
4amendment shall be adopted, filed, and recorded under this Act
5in the same manner as an amendment of the articles of
6incorporation under Sections 35 and 40.
 
7    Section 165. Setting aside reorganizations. An action to
8set aside a merger, consolidation, division, or conversion of
9an association, on the ground that any law has not been
10complied with, shall be brought within 90 days after the
11effective date of the merger, consolidation, division, or
12conversion, or such action shall be forever barred.
 
13    Section 170. Written demand for payment of fair cash value
14of stock.
15    (a) In order to obtain payment of the fair cash value, a
16stockholder entitled to payment of the fair cash value of stock
17under Section 40, 135, 140, or 155 shall deliver a written
18demand for payment of the fair cash value of the stock to the
19association no later than 15 days after notice is sent to
20members and stockholders in accordance with Section 40, 135,
21140, or 155, as the case may be. The written demand shall state
22the name and address of the stockholder, the number and class
23of the stock for which fair cash value is demanded, and the
24amount claimed by the stockholder to be the fair cash value of

 

 

HB3830- 57 -LRB099 09561 JLS 29770 b

1the stock. Delivery of written demand for payment of fair cash
2value of stock in accordance with this Section is sufficient if
3delivered to the association or to the surviving or new
4association or entity resulting from the merger,
5consolidation, division, or conversion, whether the demand is
6delivered before, on, or after the effective date of the
7action. If written demand is not timely delivered in conformity
8with this Section, the stockholder's right to payment of fair
9cash value with respect to the amendment to the articles of
10incorporation, agreement of merger or consolidation, plan of
11division, or conversion shall be barred.
12    (b) If a timely demand is delivered in accordance with this
13Section, fair cash value of the stock shall be determined and
14paid to the stockholder in accordance with the following
15procedures:
16        (1) The association or the surviving, new, or resulting
17    association or entity shall send a written acknowledgment
18    of receipt of the demand for fair cash value to the address
19    specified in the demand no later than 15 days after receipt
20    of the demand. If the board of the association or the
21    surviving, new, or resulting association or entity
22    believes that the demand has failed to comply with the
23    requirements of this Section, the acknowledgment shall
24    state any such defects. The acknowledgment also shall state
25    what the board believes to be the fair cash value of the
26    stock that is the subject of the demand. If the articles of

 

 

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1    incorporation of the constituent or original association
2    provide a value for the stock upon redemption, the fair
3    cash value of the stock presumptively shall be the lesser
4    of the redemption value or the fair market value of the
5    stock immediately prior to the merger, consolidation,
6    division, or conversion.
7        (2) The stockholder shall not transfer, encumber,
8    pledge, or otherwise dispose of the stock that is the
9    subject of the demand for fair cash value, or any
10    certificate representing the stock, until the demand is
11    finally resolved by agreement, withdrawal, or final
12    judicial determination.
13        (3) If the association's articles of incorporation or
14    bylaws provide a reasonable basis for determining and
15    paying the fair cash value of the stock that is the subject
16    of the demand for fair cash value, or if the association or
17    the surviving, new, or resulting association or entity and
18    the demanding stockholder reach an agreement on the fair
19    cash value of the stock within 3 months after delivery of
20    the demand for fair cash value, the fair cash value of the
21    stock shall be determined in accordance with the
22    constituent or original association's articles of
23    incorporation or bylaws or as agreed upon, as the case may
24    be. The association shall thereupon tender payment of the
25    fair cash value so determined to the stockholder within 30
26    days of delivery of any certificates representing the stock

 

 

HB3830- 59 -LRB099 09561 JLS 29770 b

1    or the stockholder's written waiver and release of claim to
2    all rights to the stock to the association or the
3    surviving, new, or resulting association or entity.
4    Without precluding other possible reasonable bases for
5    determining fair cash value of stock under this Section, a
6    provision in the constituent or original association's
7    articles of incorporation or bylaws that fair cash value
8    shall be determined by mediation or final and binding
9    arbitration, or that fair cash value shall be the lesser of
10    par value, book value, or fair market value, shall be
11    considered a reasonable basis for determining and paying
12    the fair cash value of stock.
13    (c) The right of a demanding stockholder to receive the
14fair cash value of stock as to which the stockholder seeks
15relief and the obligation of the association or the surviving,
16new, or resulting association or entity to furnish the fair
17cash value for those interests terminate if any of the
18following applies:
19        (1) The demanding stockholder fails to comply with this
20    Section.
21        (2) The association abandons the amendment of
22    articles, merger, consolidation, division, or conversion
23    or is finally enjoined or prevented from taking such
24    action.
25        (3) The demanding stockholder withdraws the demand for
26    fair cash value with consent of the association.

 

 

HB3830- 60 -LRB099 09561 JLS 29770 b

1        (4) The demanding stockholder attempts to sell,
2    transfer, or encumber the stock which is the subject of the
3    demand prior to final determination of its fair cash value
4    under this Section or a final judicial determination.
5        (5) All of the following apply:
6            (A) the articles of incorporation or bylaws of the
7        association do not provide a reasonable basis for
8        determining and paying fair cash value to an affected
9        stockholder;
10            (B) the association and the affected stockholder
11        have not agreed upon the fair cash value of the stock
12        which is the subject of the demand;
13            (C) the affected stockholder does not file a timely
14        complaint for judicial determination.
15    (d) The fair cash value that is agreed upon by the affected
16stockholder and the association, or determined using a
17reasonable basis for determining and paying fair cash value in
18the association's articles of incorporation or bylaws, or fixed
19by a court shall be paid within 30 days as follows:
20        (1) immediately to the holder of uncertificated stock;
21    or
22        (2) upon and simultaneously with the surrender of
23    certificates representing certificated stock.
 
24    Section 175. Disposing of assets of association.
25    (a) As used in this Section, "substantially all" means more

 

 

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1than two-thirds of the association's assets, measured, in the
2board's discretion, either by value as recorded in the books
3and records of the association or by fair market value.
4    (b) Unless the articles of incorporation or the bylaws of
5an association otherwise provide, a lease, sale, exchange,
6transfer, or other disposition of any assets of an association
7may be made upon terms and for consideration which may consist,
8in whole or in part, of money or other property, including
9shares or other securities or promissory obligations of any
10association or entity, as may be authorized by the board. If a
11lease, sale, exchange, transfer, or other disposition, or a
12series of such transactions, would dispose of all or
13substantially all of the assets of the association, then the
14disposition may be made only upon a written plan of disposition
15prepared by the board or by a committee selected by the board
16for that purpose, and adopted in the same manner as provided
17for the adoption of a resolution of dissolution in Section 180.
18A plan of disposition shall set forth a general description or
19summary of the assets subject to disposition; the method of
20disposition; the intended transferee of the assets, if known to
21the board; and a general description of any material effect the
22board believes the disposition will have on the interests of
23the members and stockholders. Notice of a meeting of the
24members at which a plan of disposition will be voted on shall
25be given to all members, whether or not entitled to vote at the
26meeting. The notice shall be accompanied by a copy or summary

 

 

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1of the plan of disposition and a ballot for those members
2entitled to vote on the plan.
3    (c) The association, by its board, may abandon a plan of
4disposition, subject to the contract rights of other persons,
5if the power of abandonment is conferred upon the board either
6by the terms of the transaction or in the plan of disposition.
7    (d) An action to set aside a disposition of assets by an
8association, on the ground that any law applicable to the
9lease, sale, exchange, transfer, or other disposition of all or
10substantially all the assets of the association has not been
11complied with, shall be brought within 90 days after such
12transaction, or the action is forever barred.
 
13    Section 180. Voluntary dissolution.
14    (a) An association may be dissolved voluntarily in the
15manner provided in this Section.
16    (b) A resolution of dissolution for an association shall
17state both of the following:
18        (1) that the association elects to be dissolved; and
19        (2) any additional provision considered necessary with
20    respect to the proposed dissolution and winding up.
21    (c) Before subscriptions for membership and any stock or
22other ownership interest have been received, the incorporators
23or a majority of the incorporators may adopt, by a writing
24signed by them, a resolution of dissolution.
25    (d) The directors may adopt a resolution of dissolution in

 

 

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1the following cases:
2        (1) when the association has been adjudged bankrupt or
3    has made a general assignment for the benefit of creditors;
4        (2) by leave of the court, when a receiver has been
5    appointed in a general creditors' suit or in any suit in
6    which the affairs of the association are to be wound up;
7        (3) when substantially all of the assets have been sold
8    at judicial sale or otherwise; or
9        (4) when the period of existence of the association
10    specified in its articles has expired.
11    (e) At a meeting held for such purpose, the members may
12adopt a resolution of dissolution by the affirmative vote of
1360% of the member votes cast on the proposal or, if the
14articles provide or permit, by the affirmative vote of a
15greater or lesser proportion though not less than a majority,
16of the voting power, of any particular class as is required by
17the articles of incorporation. Notice of the meeting of the
18members shall be given to all members and stockholders whether
19or not entitled to vote.
20    (f) Upon the adoption of a resolution of dissolution, a
21certificate shall be filed with the Secretary of State, on a
22form prescribed by the Secretary of State.
23    (g) The certificate described in subsection (f) of this
24Section shall be signed as follows:
25        (1) when the resolution of dissolution is adopted by
26    the incorporators, the certificate shall be signed by not

 

 

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1    less than a majority of the incorporators;
2        (2) when the resolution is adopted by the directors or
3    by the members, the certificate shall be signed by any
4    authorized officer. However, if no authorized officer
5    executes and files the certificate within 30 days after the
6    adoption of the resolution or upon any date specified in
7    the resolution as the date upon which the certificate is to
8    be filed or upon the expiration of any period specified in
9    the resolution as the period within which the certificate
10    is to be filed, whichever is latest, the certificate of
11    dissolution may be signed by any 3 members, or if there are
12    fewer than 3 members, by all of the members, and shall set
13    forth a statement that the persons signing the certificate
14    are members and are filing the certificate because of the
15    failure of an authorized officer to do so.
16    (h) Upon the filing of a certificate of dissolution, the
17association shall be dissolved.
 
18    Section 185. Public notice of voluntary dissolution.
19Following the filing of the certificate of dissolution, the
20directors, members, or incorporators who filed the
21certificate, as the case may be, shall cause a notice of
22voluntary dissolution to be published once a week on the same
23day of each week for 2 successive weeks, in a newspaper
24published and of general circulation in the county in which the
25principal place of business of the association was to be or is

 

 

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1located and shall cause written notice of dissolution to be
2given to all known creditors of, and to all known claimants
3against, the dissolved association.
 
4    Section 190. Action to wind up affairs or obtain
5restatement of articles.
6    (a) When an association is dissolved voluntarily, when the
7articles of incorporation of an association have been canceled,
8when a final order of a court is made dissolving an association
9under Section 195, or when the period of existence of the
10association specified in its articles of incorporation has
11expired, the association shall cease to carry on business and
12shall do only such acts as are required to wind up its affairs
13or to obtain reinstatement of the articles in accordance with
14Section 50.
15    (b) Any claim existing or action or proceeding pending by
16or against the association or which would have accrued against
17it may be prosecuted to judgment, with right of appeal as in
18other cases, but any proceeding, execution, or process, or the
19satisfaction or performance of any order, judgment, or decree,
20may be stayed as provided in Section 195.
21    (c) Any process, notice, or demand against the association
22may be served by delivering a copy to an officer, director,
23liquidator, or person having charge of its assets or, if no
24such person can be found, to the statutory agent.
25    (d) The directors of the association or their successors

 

 

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1shall act as the board of directors in accordance with the
2articles of incorporation and bylaws until the affairs of the
3association are completely wound up. Subject to the orders of
4courts of this State having jurisdiction over the association,
5the directors shall proceed as speedily as is practicable to a
6complete winding up of the affairs of the association and, to
7the extent necessary or expedient to that end, shall exercise
8all the authority of the association. Without limiting the
9generality of such authority, the directors may fill vacancies;
10elect officers; carry out contracts of the association; make
11new contracts; borrow money; mortgage or pledge the property of
12the association as security; sell its assets at public or
13private sale; make conveyances in the association's name; lease
14real estate for any term, including 99 years renewable forever;
15settle or compromise claims in favor of or against the
16association; appoint or employ one or more persons as
17liquidators to wind up the affairs of the association with
18authority as the directors see fit to grant; cause the title to
19any of the assets of the association to be conveyed to such
20liquidators for that purpose; apply assets to the payment of
21obligations; and, after paying or adequately providing for the
22payment of all known obligations of the association, distribute
23the remainder of the assets either in cash or in kind among the
24members, patrons, and stockholders according to their
25respective rights and interests. In addition, the directors may
26perform all other acts necessary or expedient to the winding up

 

 

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1of the affairs of the association.
2    (e) The directors, or any liquidator to whom the directors
3grant such authority, in the course of winding up the
4association's affairs, shall apply the assets of the
5association in the following order:
6        (1) to expenses incidental to winding up the
7    association's affairs;
8        (2) to all legally enforceable liabilities and
9    obligations of the association due claimants and
10    creditors;
11        (3) to the stockholders, members, and patrons of the
12    association as provided in the association's articles of
13    incorporation or bylaws.
14    (f) Without limiting the authority of the directors, any
15action within the purview of this Section that is authorized or
16approved at a meeting of the members by 60% of the member votes
17cast thereon shall be conclusive for all purposes upon all
18members, patrons, and stockholders of the association.
19    (g) All deeds and other instruments of the association
20shall be in the name of the association and shall be executed,
21acknowledged, and delivered by the officers appointed by the
22directors.
23    (h) At any time during the winding up of its affairs, the
24association by its directors may make application to the court
25of the county in this State in which the principal place of
26business of the association is located to have the winding up

 

 

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1continued under supervision of the court, as provided in
2Section 195. However, if the association has no principal place
3of business in this State, the application described in this
4Section may be made to a court in the county in this State
5where the statutory agent resides.
 
6    Section 195. Judicial liquidations.
7     (a) Without limiting the generality of its authority and
8subject to subsection (b), the court of the county in this
9State in which is located the principal place of business of a
10voluntarily dissolved association or of an association whose
11articles have been canceled or whose period of existence has
12expired, upon the complaint of the association, or a majority
13of the directors, or 10% of the members or 20 members,
14whichever is less, and upon such notice to all the directors
15and other persons interested as the court considers proper, at
16any time may order and adjudge any of the following matters:
17        (1) The presentation and proof of all claims and
18    demands against the association and of all rights,
19    interests, or liens in or on any of its property; the
20    fixing of the time and the manner in which such proof shall
21    be made and the person to whom presentation shall be made;
22    and the barring from participation in any distribution of
23    assets of all persons failing to make and present proofs as
24    required by the order of the court.
25        (2) The stay of the prosecution of any proceeding

 

 

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1    against the association or involving any of its property;
2    the requirement that the parties to the proceeding present
3    and prove their claims, demands, rights, interests, or
4    liens at the time and in the manner required of creditors
5    or others; or the grant of leave to bring or maintain an
6    independent proceeding to enforce liens.
7        (3) The settlement or determination of all claims of
8    every nature against the association or any of its
9    property; the determination of the assets required to be
10    retained to pay or provide for the payment of such claims
11    or any claim; the determination of the assets available for
12    distribution among and rights of members, patrons, and
13    stockholders; and the making of new parties to the
14    proceeding so far as the court considers proper for the
15    determination of all matters.
16        (4) The presentation and filing of intermediate and
17    final accounts of the directors or of the liquidators and
18    hearings on them; the allowance, disallowance, or
19    settlement of the accounts; and the discharge of the
20    directors, the liquidators, or any of them from their
21    duties and liabilities.
22        (5) The appointment of a special master commissioner to
23    hear and determine any matters with authority as the court
24    considers proper.
25        (6) The filling of any vacancies in the number of
26    directors or liquidators when the directors are unable to

 

 

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1    act on the vacancies for want of a quorum or for any other
2    reason.
3        (7) The appointment of a receiver, in accordance with
4    the usage of a court in equitable matters, to wind up the
5    affairs of the association, to take custody of any of its
6    property, or for any other purpose.
7        (8) The issuance or entry of any injunction or any
8    other order that the court considers proper in the
9    administration of the trust involved in the winding up of
10    the affairs of the association and the giving of notice of
11    the entry of injunction or order.
12        (9) The allowance and payment of compensation to the
13    directors or any of them, to liquidators, to a receiver, to
14    the attorney for the complainant, or to any person properly
15    rendering services beneficial to the association or to
16    those interested in it.
17        (10) The entry of a judgment or decree that, if it so
18    provides, may operate as the deed or other instrument
19    ordered to be executed, or the appointment of a master to
20    execute such deed or instrument in the name of the
21    association with the same effect as if executed by an
22    authorized officer pursuant to authority conferred by the
23    directors or the members, patrons, and stockholders of the
24    association, whenever there is no officer or agent
25    competent to execute such deed or instrument, whenever the
26    association or its officers do not perform or comply with a

 

 

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1    judgment or decree of court, or whenever the court
2    considers it proper.
3    (b) If the association has no principal place of business
4in this State, without limiting the generality of its
5authority, the court in the county in this State where the
6statutory agent resides may order and adjudge the matters
7described in subsection (a).
8    (c) A judicial proceeding under this Section concerning the
9winding up of the affairs of an association is a special
10proceeding, and final orders in the proceeding may be vacated,
11modified, or reversed on appeal pursuant to the Code of Civil
12Procedure.
 
13    Section 200. Receiver; winding up affairs of association.
14    (a) Whenever, after an association is dissolved
15voluntarily, the articles of an association have been canceled,
16or the period of existence of an association has expired, a
17receiver is appointed to wind up the affairs of the
18association, all the claims, demands, rights, interests, or
19liens of creditors, claimants, members, patrons, and
20stockholders shall be determined as of the day on which the
21receiver was appointed. Unless it is otherwise ordered, such
22appointment vests in the receiver and successors of the
23receiver the right to the immediate possession of all the
24property of the association, which shall, if so ordered,
25execute and deliver conveyances of such property to the

 

 

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1receiver.
2    (b) Any officer, director, member, or other person, whether
3a resident of the state or a nonresident and however
4interested, may be appointed as receiver.
5    (c) The receiver shall have all the authority vested in the
6directors and officers of the association, shall exercise such
7authority subject to such orders as are made by the court, and
8may be required to qualify by giving bond to the State in such
9amount as the court fixes, with surety to the satisfaction of
10the clerk of the court, conditioned for the faithful discharge
11of duties and for a due accounting for all money or property
12received.
 
13    Section 205. Marketing agreements.
14    (a) A cooperative and any member may make marketing
15agreements, whether written separately or contained in the
16bylaws, in which the member agrees to do any of the following:
17        (1) sell, market, or deliver all or any specified part
18    of products produced or to be produced either by the member
19    or under the member's control, to or through the
20    cooperative or any facilities furnished by it;
21        (2) authorize the cooperative or any facilities
22    furnished by it to act for the member in any manner with
23    respect to all or any specified part of products produced
24    or to be produced either by the member or under the
25    member's control and any services to be furnished by the

 

 

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1    member;
2        (3) buy or procure all or a specified part of goods or
3    services from or through the cooperative or any facilities
4    furnished by it; or
5        (4) authorize the cooperative or any facilities
6    furnished by it to act for the member in any manner in the
7    procurement of goods or services for the member.
8    (b) The term of marketing agreements may not exceed 10
9years.
10    (c) A marketing agreement authorized by subsection (a) may
11require that liquidated damages be paid by the member in the
12event of a breach of the marketing agreement. Liquidated
13damages shall be specific, reasonable sums. Any provisions for
14liquidated damages shall be enforceable and not regarded as
15penalties.
16    (d) If a member breaches or threatens to breach a marketing
17agreement authorized by this Section, the cooperative shall be
18entitled to an injunction to prevent the breach or any further
19breach, and to a decree of specific performance, unless the
20marketing agreement provides an alternative remedy or damages
21are more practicable than specific performance under the
22circumstances.
 
23    Section 210. Foreign association. Any foreign association
24may carry on any proper activities in this State upon
25compliance with the general regulations applicable to foreign

 

 

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1corporations desiring to do business in this State. All
2contracts that could be made by any association incorporated
3under this Act and that are made by or with such foreign
4associations, shall be enforceable in this State with all of
5the remedies set forth in this Act.
 
6    Section 215. Membership in other organizations. An
7association may organize, form, operate, own, control, have an
8interest in, own stock of, or be a member of any other
9cooperative, corporation, or other form of organization.
 
10    Section 220. Stock not considered securities. Membership
11stock and patronage stock of a cooperative are not to be
12considered securities under the Illinois Securities Law of
131953.
 
14    Section 225. Application of laws.
15    (a) Except as otherwise provided in this Act, this Act
16applies to all associations, whether organized under this Act
17prior to the effective date of this Act or on or after that
18date.
19    (b) Any law that is in conflict with this Act shall be
20construed as not applying to associations provided for in this
21Act.
 
22    (805 ILCS 310/Act rep.)

 

 

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1    Section 999. The Co-operative Act is repealed.