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Full Text of HB3577  102nd General Assembly

HB3577 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB3577

 

Introduced 2/22/2021, by Rep. Carol Ammons

 

SYNOPSIS AS INTRODUCED:
 
805 ILCS 317/12 new
805 ILCS 317/16 new
805 ILCS 317/21 new
805 ILCS 317/22 new
805 ILCS 317/25
805 ILCS 317/35
805 ILCS 317/36 new
805 ILCS 317/37 new
805 ILCS 317/60
805 ILCS 317/61 new
805 ILCS 317/62 new
805 ILCS 317/63 new

    Amends the Limited Worker Cooperative Association Act. Incorporates provisions of the Limited Liability Company Act relating to: the powers of the Secretary of State; names of associations; required forms and the filing of those forms; contents of cooperative agreements; fees; termination; procedures of administrative dissolution; annual reports; and reinstatements.


LRB102 13245 JLS 18589 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3577LRB102 13245 JLS 18589 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Limited Worker Cooperative Association Act
5is amended by changing Sections 25, 35, and 60 and by adding
6Sections 12, 16, 21, 22, 36, 37, 61, 62, and 63 as follows:
 
7    (805 ILCS 317/12 new)
8    Sec. 12. Powers of Secretary of State and rulemaking.
9    (a) The Secretary of State shall have the power and
10authority reasonably necessary to administer this Act
11efficiently and to perform the duties imposed in this Act. The
12Secretary of State's function under this Act is to be a central
13depository for the articles of organization and applications
14for admission required by this Act and to record the assumed
15names used by limited worker cooperative associations.
16    (b) The Secretary of State shall have the power and
17authority to adopt rules, in accordance with the Illinois
18Administrative Procedure Act, necessary to administer this Act
19efficiently and to perform the duties imposed in this Act.
 
20    (805 ILCS 317/16 new)
21    Sec. 16. Application of the Limited Liability Company Act.
22The Limited Liability Company Act applies to limited worker

 

 

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1cooperative associations, and they shall enjoy the powers and
2privileges and be subject to the duties, restrictions, and
3liabilities of limited liability companies, except where
4inconsistent with the letter and purpose of this Act. This Act
5shall take precedence in the event of any conflict with the
6provisions of the Limited Liability Company Act or other laws.
 
7    (805 ILCS 317/21 new)
8    Sec. 21. Limited worker cooperative association; name.
9    (a) The name of each limited worker cooperative
10association organized, existing, or subject to the provisions
11of this Act:
12        (1) shall contain the terms "Limited Worker
13    Cooperative Association", "LWCA", or "L.W.C.A.".
14        (2) may not contain a word or phrase, or an
15    abbreviation or derivation thereof, the use of which is
16    prohibited or restricted by any other statute of this
17    State unless the restriction has been complied with;
18        (3) shall consist of letters of the English alphabet,
19    Arabic or Roman numerals, or symbols capable of being
20    readily reproduced by the Office of the Secretary of
21    State;
22        (4) shall not contain any of the following terms:
23    "Corporation", "Corp.", "Incorporated", "Inc.", "Ltd.",
24    "Co.", "LLC", "Limited Partnership", or "L.P.";
25        (5) shall be the name under which the limited worker

 

 

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1    cooperative association transacts business in this State
2    unless the limited worker cooperative association also
3    elects to adopt an assumed name or names as provided in
4    this Act; however, the limited worker cooperative
5    association may use any divisional designation or trade
6    name without complying with the requirements of this Act
7    if the limited worker cooperative association also clearly
8    discloses its name;
9        (6) shall not contain any word or phrase that
10    indicates or implies that the limited worker cooperative
11    association is authorized or empowered to be in the
12    business of a corporate fiduciary unless otherwise
13    permitted by the Secretary of Financial and Professional
14    Regulation under Section 1-9 of the Corporate Fiduciary
15    Act. The word "trust", "trustee", or "fiduciary" may be
16    used by a limited worker cooperative association only if
17    it has first complied with Section 1-9 of the Corporate
18    Fiduciary Act; and
19        (7) shall contain the word "trust", if it is a limited
20    worker cooperative association organized for the purpose
21    of accepting and executing trusts.
22    (b) Nothing in this Act shall abrogate or limit the common
23law or statutory law of unfair competition or unfair trade
24practices, nor derogate from the common law or principles of
25equity or the statutes of this State or of the United States of
26America with respect to the right to acquire and protect

 

 

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1copyrights, trade names, trademarks, service marks, service
2names, or any other right to the exclusive use of names or
3symbols.
4    (c) The name shall be distinguishable upon the records in
5the Office of the Secretary of State from the name of all of
6the following:
7        (1) Any limited worker cooperative that has articles
8    of organization filed with the Secretary of State.
9        (2) Any limited liability company that has articles of
10    organization filed with the Secretary of State under
11    Section 5-5 of the Limited Liability Company Act.
12        (3) Any foreign limited liability company admitted to
13    transact business in this State.
14        (4) Any name for which an exclusive right has been
15    reserved in the Office of the Secretary of State under
16    Section 1-15 of the Limited Liability Company Act.
17        (5) Any assumed name that is registered with the
18    Secretary of State under Section 1-20 of the Limited
19    Liability Company Act.
20        (6) Any corporate name or assumed corporate name of a
21    domestic or foreign corporation subject to the provisions
22    of Section 4.05 of the Business Corporation Act of 1983 or
23    Section 104.05 of the General Not For Profit Corporation
24    Act of 1986.
25    (d) Subsection (c) of this Section shall not apply if the
26organizer files with the Secretary of State a certified copy

 

 

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1of a final judgment of a court establishing the prior right of
2the applicant to the use of that name in this State.
3    (e) The Secretary of State shall determine whether a name
4is distinguishable from another name for the purposes of this
5Act. Without excluding other names that may not constitute
6distinguishable names in this State, a name is not considered
7distinguishable, for purposes of this Act, solely because it
8contains one or more of the following:
9        (1) The word "limited", "worker", "cooperative", or
10    "association" or an abbreviation of one of those words.
11        (2) Articles, conjunctions, contractions,
12    abbreviations, or different tenses or number of the same
13    word.
 
14    (805 ILCS 317/22 new)
15    Sec. 22. Forms, execution, acknowledgment, and filing.
16    (a) All reports required by this Act to be filed in the
17Office of the Secretary of State shall be made on forms
18prescribed and furnished by the Secretary of State. Forms for
19all other documents to be filed in the Office of the Secretary
20of State shall be furnished by the Secretary of State upon
21request.
22    (b) Whenever any provision of this Act specifically
23requires any document to be executed by the limited worker
24cooperative association in accordance with this Section,
25unless otherwise specifically stated in this Act and subject

 

 

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1to any additional provisions of this Act, the document shall
2be signed as follows:
3        (1) The initial articles of organization shall be
4    signed by the organizer or organizers.
5        (2) A document filed on behalf of a dissolved limited
6    worker cooperative association that has no members must be
7    signed by the person winding up the association's
8    activities under Section 35-4 of the Limited Liability
9    Company Act.
10        (3) Any other document must be signed by a person
11    authorized by the limited worker cooperative association
12    to sign it.
13    (c) The name of a person signing the document and the
14capacity in which the person signs shall be stated beneath or
15opposite the person's signature.
16    (d) The execution of any document required by this Act by a
17person constitutes an affirmation under the penalties of
18perjury that the facts stated therein are true and that the
19person has authority to execute the document.
20    (e) When filed in the Office of the Secretary of State, an
21authorization, including a power of attorney, to sign a record
22must be in writing, then sworn to, verified, or acknowledged.
 
23    (805 ILCS 317/25)
24    Sec. 25. Articles of organization. (a) The articles of
25organization of a limited worker cooperative association shall

 

 

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1state:
2        (1) the domestic entity name of the limited worker
3    cooperative association;
4        (2) the purposes for which the limited worker
5    cooperative association is formed, which may be for any
6    lawful purpose;
7        (3) the registered agent name and registered agent
8    address of the association's initial registered agent;
9        (4) the street address and, if different, mailing
10    address of the association's initial principal office;
11        (5) the true name and street address and, if
12    different, mailing address of each organizer; and
13        (6) any other provision, not inconsistent with law,
14    that the worker-members, members, or organizers elect to
15    set out in the articles for the regulation of the internal
16    affairs of the worker cooperative, including any
17    provisions that, under this Act, are required or permitted
18    to be set out in the cooperative agreement; and bylaws of
19    the worker cooperative.
20        (7) a statement that the association is a worker
21    cooperative or a collective worker cooperative, if
22    applicable.
23    (b) A limited worker cooperative association is organized
24at the time the articles of organization are filed by the
25Secretary of State or at any later time, not more than 60 days
26after the filing of the articles of organization, specified in

 

 

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1the articles of organization.
2(Source: P.A. 101-292, eff. 1-1-20; revised 9-4-20.)
 
3    (805 ILCS 317/35)
4    Sec. 35. Cooperative agreement Bylaws.
5    (a) A cooperative agreement Bylaws shall include:
6        (1) a statement of the capital structure of the
7    limited worker cooperative association;
8        (2) the classes or other types of members' interests
9    and the relative rights, preferences, privileges, and
10    restrictions granted to or imposed upon each class or
11    other type of member's interest, including:
12            (A) a statement concerning the manner in which
13        profits and losses are allocated and distributions are
14        made among members and, if community investors are
15        authorized, the manner in which profits and losses are
16        allocated and how distributions are made among
17        investor members and between members and community
18        investors;
19            (B) a statement designating voting and other
20        governance rights of each class or other type of
21        members' interests and, if relevant, community
22        investors, including which members have voting power
23        and any restriction on voting power;
24        (3) a statement of the method for admission of
25    members;

 

 

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1        (4) a statement that a member's interest is
2    transferable, if it is to be transferable, and a statement
3    of the conditions upon which it may be transferred;
4        (5) a statement concerning:
5            (A) whether persons that are not members but
6        conduct business with the association may be permitted
7        to share in allocations of profits and losses and
8        receive distributions; and
9            (B) the manner in which profits and losses are
10        allocated and distributions are made with respect to
11        those persons; and
12        (6) a statement of the number and terms of directors
13    or the method by which the number and terms are
14    determined; and
15        (7) a statement addressing members' contributions.
16    (b) A cooperative agreement Bylaws may contain any other
17provision for managing and regulating the affairs of the
18association.
19    (c) The cooperative agreement may not:
20        (1) unreasonably restrict a right to information or
21    access to records available under Section 1-40 or Section
22    10-15 of the Limited Liability Company Act;
23        (2) vary the right to expel a member in an event
24    specified in subdivision (6) of Section 35-45 of the
25    Limited Liability Company Act;
26        (3) vary the requirement to wind up the limited worker

 

 

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1    cooperative association's business in a case specified in
2    subdivision (4), (5), or (6) of subsection (a) of Section
3    35-1 of the Limited Liability Company Act;
4        (4) restrict rights of a person, other than a
5    director, member, and transferee of a member's
6    distributional interest, under this Act;
7        (5) restrict the power of a member to dissociate under
8    Section 35-50 of the Limited Liability Company Act,
9    although a cooperative agreement may determine whether a
10    dissociation is wrongful under Section 35-50 of the
11    Limited Liability Company Act;
12        (6) eliminate or reduce the obligation of good faith
13    and fair dealing under subsection (d) of Section 15-3 of
14    the Limited Liability Company Act, but the cooperative
15    agreement may determine the standards by which the
16    performance of the member's duties or the exercise of the
17    member's rights is to be measured;
18        (7) eliminate, vary, or restrict the priority of a
19    statement of authority over provisions in the articles of
20    organization as provided in subsection (h) of Section
21    13-15 of the Limited Liability Company Act;
22        (8) vary the law applicable under Section 1-65 of the
23    Limited Liability Company Act;
24        (9) vary the power of the court under Section 5-50 of
25    the Limited Liability Company Act; or
26        (10) restrict the right to approve a merger,

 

 

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1    conversion, or domestication under Article 37 of the
2    Limited Liability Company Act or the Entity Omnibus Act of
3    a member that will have personal liability with respect to
4    a surviving, converted, or domesticated organization.
5    (d) The cooperative agreement may:
6        (1) restrict or eliminate a fiduciary duty, other than
7    the duty of care described in subsection (c) of Section
8    15-3 of the Limited Liability Company Act, but only to the
9    extent the restriction or elimination in the cooperative
10    agreement is clear and unambiguous;
11        (2) identify specific types or categories of
12    activities that do not violate any fiduciary duty; and
13        (3) alter the duty of care, except to authorize
14    intentional misconduct or knowing violation of law.
15    (e) The cooperative agreement may specify the method by
16which a specific act or transaction that would otherwise
17violate the duty of loyalty may be authorized or ratified by
18one or more disinterested and independent persons after full
19disclosure of all material facts.
20    (f) The cooperative agreement may alter or eliminate the
21right to payment or reimbursement for a member or director
22provided by Section 15-7 of the Limited Liability Company Act
23and may eliminate or limit a member's or director's liability
24to the limited worker cooperative association and members for
25money damages, except for:
26        (1) subject to subsections (d) and (e) of this

 

 

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1    Section, breach of the duties as required in subdivisions
2    (1), (2), and (3) of subsection (b) of Section 15-3 of the
3    Limited Liability Company Act;
4        (2) a financial benefit received by the member or
5    director to which the member or director is not entitled;
6        (3) a breach of a duty under Section 25-35 of the
7    Limited Liability Company Act;
8        (4) intentional infliction of harm on the association
9    or a member; or
10        (5) an intentional violation of criminal law.
11    (g) A limited worker cooperative association is bound by
12and may enforce the cooperative agreement, whether or not the
13association has itself manifested assent to the cooperative
14agreement.
15    (h) A person that becomes a member of a limited worker
16cooperative association is deemed to assent to the cooperative
17agreement.
18    (i) A cooperative agreement may be entered into before,
19after, or at the time of filing of articles of organization
20and, whether entered into before, after, or at the time of the
21filing, may be made effective as of the time of formation of
22the limited worker cooperative association or as of the time
23or date provided in the cooperative agreement.
24(Source: P.A. 101-292, eff. 1-1-20.)
 
25    (805 ILCS 317/36 new)

 

 

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1    Sec. 36. Annual reports.
2    (a) A limited worker cooperative association organized
3under the laws of this State shall file, within the time
4prescribed by this Act, an annual report setting forth all of
5the following:
6        (1) The name of the limited worker cooperative
7    association.
8        (2) The address, including street and number or rural
9    route number, of its registered office in this State and
10    the name of its registered agent at that address.
11        (3) The address, including street and number or rural
12    route number of its principal place of business.
13        (4) The name and business address of all of the
14    directors and any member having the authority of a
15    director.
16        (5) Additional information that may be necessary or
17    appropriate in order to enable the Secretary of State to
18    administer this Act and to verify the proper amount of
19    fees payable by the limited worker cooperative
20    association.
21    The annual report shall be made on forms prescribed and
22furnished by the Secretary of State, and the information
23therein required by paragraphs (1) through (4) of this
24subsection (a), both inclusive, shall be given as of the date
25of execution of the annual report. The annual report shall be
26executed by a director or, if none, a member designated by the

 

 

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1members pursuant to limited worker cooperative association
2action properly taken under Section 15-1 of the Limited
3Liability Company Act.
4    (b) The annual report, together with all fees and charges
5prescribed by this Act, shall be delivered to the Secretary of
6State within 60 days immediately preceding the first day of
7the anniversary month. Proof to the satisfaction of the
8Secretary of State that, before the first day of the
9anniversary month of the limited worker cooperative
10association, the report, together with all fees and charges as
11prescribed by this Act, was deposited in the United States
12mail in a sealed envelope, properly addressed, with postage
13prepaid, shall be deemed a compliance with this requirement.
14If the Secretary of State finds that the report conforms to the
15requirements of this Act, he or she shall file it. If the
16Secretary of State finds that it does not so conform, he or she
17shall promptly return it to the limited worker cooperative
18association for any necessary corrections, in which event the
19penalties prescribed for failure to file the report within the
20time provided shall not apply if the report is corrected to
21conform to the requirements of this Act and returned to the
22Secretary of State within 60 days of the original due date of
23the report.
 
24    (805 ILCS 317/37 new)
25    Sec. 37. Fees.

 

 

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1    (a) The Secretary of State shall charge and collect in
2accordance with the provisions of this Act and rules adopted
3under its authority all of the following:
4        (1) Fees for filing documents.
5        (2) Miscellaneous charges.
6        (3) Fees for the sale of lists of filings and for
7    copies of any documents.
8    (b) The Secretary of State shall charge and collect for
9all of the following:
10        (1) Filing articles of organization, $150.
11        (2) Filing amendments, $50.
12        (3) Filing a statement of termination, $5.
13        (4) Filing an application for use of an assumed name,
14    the amount under the fee schedule in Section 50-10 of the
15    Limited Liability Company Act.
16        (5) Filing an application for change of assumed name,
17    $25.
18        (6) Filing an application for cancellation of an
19    assumed name, $5.
20        (7) Filing an annual report of a limited worker
21    cooperative association, $75, if filed as required by this
22    Act, plus a penalty if delinquent.
23        (8) Filing an application for reinstatement of a
24    limited worker cooperative association, $200.
25        (9) Filing articles of merger, $100 plus $50 for each
26    party to the merger in excess of the first 2 parties.

 

 

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1        (10) Filing a statement of change of address of
2    registered office or change of registered agent, or both,
3    $25.
4        (11) Filing, amending, or cancelling a statement of
5    authority, $50.
6        (12) Filing, amending, or cancelling a statement of
7    denial, $10.
8    (c) The Secretary of State shall charge and collect for
9furnishing a copy or certified copy of any document,
10instrument, or paper relating to a limited worker cooperative
11association, $25.
 
12    (805 ILCS 317/60)
13    Sec. 60. Dissolution and termination. A limited worker
14cooperative association may be dissolved only by either (1) a
15two-thirds vote of the assembly, or (2) a majority vote of the
16assembly as of a supermajority threshold stated in the
17cooperative agreement, or (3) administratively bylaws that is
18more than two-thirds. The vote shall be in accordance with
19Section 55, and upon dissolution of its business and
20activities must be wound up and terminated in the manner
21provided under the Limited Liability Company Act for a limited
22liability company.
23(Source: P.A. 101-292, eff. 1-1-20.)
 
24    (805 ILCS 317/61 new)

 

 

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1    Sec. 61. Grounds for administrative dissolution. The
2Secretary of State may dissolve any limited worker cooperative
3association administratively if:
4        (1) it has failed to file its annual report and pay its
5    fee as required by this Act before the first day of the
6    anniversary month or has failed to pay any required fees,
7    penalties, or charges;
8        (2) it has failed to file in the Office of the
9    Secretary of State any report after the expiration of the
10    period prescribed for filing the report;
11        (3) it has misrepresented any material matter in any
12    application, report, affidavit, or other document
13    submitted by the limited worker cooperative association;
14        (4) it has failed to appoint and maintain a registered
15    agent in Illinois;
16        (5) a director or member to whom interrogatories have
17    been propounded by the Secretary of State as provided in
18    Section 5-60 of the Limited Liability Company Act fails to
19    answer the interrogatories fully and to timely file the
20    answer in the Office of the Secretary of State; or
21        (6) it has tendered payment to the Secretary of State
22    which is returned due to insufficient funds, a closed
23    account, or for any other reason, and acceptable payment
24    has not been subsequently tendered.
 
25    (805 ILCS 317/62 new)

 

 

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1    Sec. 62. Procedure for administrative dissolution.
2    (a) After the Secretary of State determines that one or
3more grounds, as set forth in Section 35-25 of the Limited
4Liability Company Act, exist for the administrative
5dissolution of a limited worker cooperative association, the
6Secretary of State shall send a notice of delinquency by
7regular mail to the delinquent limited worker cooperative
8association at its registered office or, if the limited worker
9cooperative association has failed to maintain a registered
10office, then to the last known address shown on the records of
11the Secretary of State for the principal place of business of
12the limited worker cooperative association.
13    (b) If the limited worker cooperative association does not
14correct the default described in paragraph (1) or (2) of
15Section 35-25 of the Limited Liability Company Act within 120
16days following the date of the notice of delinquency, the
17Secretary of State shall thereupon dissolve the limited worker
18cooperative association by issuing a certificate of
19dissolution that recites the grounds for dissolution and its
20effective date. If the limited worker cooperative association
21does not correct the default described in paragraph (2.5),
22(3), (4), or (5) of Section 35-25 of the Limited Liability
23Company Act within 60 days following the notice, the Secretary
24of State shall dissolve the limited worker cooperative
25association by issuing a certificate of dissolution that
26recites the grounds for dissolution and its effective date.

 

 

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1The Secretary of State shall file the original of the
2certificate in his or her office and mail one copy to the
3limited worker cooperative association at its registered
4office or, if the limited worker cooperative association has
5failed to maintain a registered office, then to the last known
6address shown on the records of the Secretary of State for the
7principal place of business of the limited worker cooperative
8association.
9    (c) Upon the administrative dissolution of a limited
10worker cooperative association, a dissolved limited worker
11cooperative association shall continue for only the purpose of
12winding up its business. A dissolved limited worker
13cooperative association may take all action authorized under
14Section 1-30 of the Limited Liability Company Act or otherwise
15necessary or appropriate to wind up its business and affairs
16and terminate.
 
17    (805 ILCS 317/63 new)
18    Sec. 63. Reinstatement following dissolution or
19termination.
20    (a) A limited worker cooperative association dissolved or
21terminated under Section 60 may be reinstated by the Secretary
22of State following the date of issuance of the notice of
23dissolution or statement of termination upon:
24        (1) The filing of an application for reinstatement.
25        (2) The filing with the Secretary of State by the

 

 

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1    limited worker cooperative association of all reports then
2    due and theretofore becoming due.
3        (3) The payment to the Secretary of State by the
4    limited worker cooperative association of all fees and
5    penalties then due and theretofore becoming due.
6    (b) The application for reinstatement shall be executed
7and filed in duplicate in accordance with Section 25 of this
8Act and shall set forth all of the following:
9        (1) The name of the limited worker cooperative
10    association at the time of the issuance of the notice of
11    dissolution or statement of termination.
12        (2) If the name is not available for use as determined
13    by the Secretary of State at the time of filing the
14    application for reinstatement, the name of the limited
15    worker cooperative association as changed, provided that
16    any change of name is properly effected under Section 1-10
17    and Section 5-25 of the Limited Liability Company Act.
18        (3) The date of issuance of the notice of dissolution
19    or statement of termination.
20        (4) The address, including street and number or rural
21    route number of the registered office of the limited
22    worker cooperative association upon reinstatement thereof
23    and the name of its registered agent at that address upon
24    the reinstatement of the limited worker cooperative
25    association, provided that any change from either the
26    registered office or the registered agent at the time of

 

 

HB3577- 21 -LRB102 13245 JLS 18589 b

1    dissolution is properly reported under Section 1-35 of the
2    Limited Liability Company Act.
3    (c) When a dissolved or terminated limited worker
4cooperative association has complied with the provisions of
5the Section, the Secretary of State shall file the application
6for reinstatement.
7    (d) Upon the filing of the application for reinstatement,
8the limited worker cooperative association existence shall be
9deemed to have continued without interruption from the date of
10the issuance of the notice of dissolution or statement of
11termination. The limited worker cooperative association shall
12stand revived with the powers, duties, and obligations as if
13it had not been dissolved or terminated. All acts and
14proceedings of its members, directors, officers, employees,
15and agents, acting or purporting to act in that capacity, and
16which would have been legal and valid but for the dissolution
17or termination, shall stand ratified and confirmed.
18    (e) Without limiting the generality of subsection (d),
19upon the filing of the application for reinstatement, no
20member, director, or officer shall be personally liable for
21the debts and liabilities of the limited worker cooperative
22association incurred during the period of dissolution or
23termination by reason of the fact that the limited worker
24cooperative association was dissolved or terminated at the
25time the debts or liabilities were incurred.