Full Text of SB0533 94th General Assembly
SB0533enr 94TH GENERAL ASSEMBLY
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| AN ACT concerning business.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Business Corporation Act of 1983 is amended | 5 |
| by changing Section 12.56 and adding Section 7.90 as follows: | 6 |
| (805 ILCS 5/7.90 new) | 7 |
| Sec. 7.90. Waiver.
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| (a) Unless otherwise provided in the articles of | 9 |
| incorporation, a shareholder who executes and delivers to the | 10 |
| corporation a written instrument irrevocably waiving the right | 11 |
| (i) to vote any shares held by such shareholder, whether for | 12 |
| the election of directors or otherwise, (ii) to be a director | 13 |
| or officer of the corporation, and (iii) in any other manner to | 14 |
| control, directly or indirectly, corporate actions or the | 15 |
| election or removal of any director or officer of the | 16 |
| corporation, and who at the time of such waiver is not a | 17 |
| director or officer of the corporation, shall have no fiduciary | 18 |
| duty to the corporation or any of its shareholders arising out | 19 |
| of the fact that such person is a shareholder of the | 20 |
| corporation. No such waiver shall affect any breach of | 21 |
| fiduciary duty arising prior to the effective date of the | 22 |
| waiver. | 23 |
| (b) The corporation shall give prompt notice of such waiver | 24 |
| to the remaining shareholders, except that no such notice need | 25 |
| be given by a corporation that has shares listed on a national | 26 |
| securities exchange or regularly traded in a market maintained | 27 |
| by one or more members of a national or affiliated securities | 28 |
| association.
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| (c) The waiver referred to in this Section shall not affect | 30 |
| any other rights or obligations of the shareholder, including | 31 |
| but not limited to the rights under Sections 7.80, 11.65, | 32 |
| 11.70, 12.55 and 12.56 of this Act.
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| (d) Shares that cannot be voted because of a waiver under | 2 |
| this Section shall not be counted in determining the number of | 3 |
| shares necessary for a quorum or for shareholder action under | 4 |
| Section 7.60 of this Act. A waiver under this Section shall not | 5 |
| apply to any transferee of the shares.
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| (e) The waiver referred to in this Section is specifically | 7 |
| enforceable in accordance with the principles of equity.
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| (f) This Section is not intended to describe or suggest the | 9 |
| circumstances under which any fiduciary duty arises or exists, | 10 |
| including with respect to any shareholder who fails to make a | 11 |
| waiver under this Section.
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| (805 ILCS 5/12.56)
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| Sec. 12.56. Shareholder remedies: non-public corporations.
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| (a) In an action by a shareholder in a corporation that has
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| no shares listed on a national securities exchange or regularly
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| traded in a market maintained by one or more members of a
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| national or affiliated securities association, the Circuit | 18 |
| Court
may order one or more of the remedies listed in | 19 |
| subsection (b) if
it is established that:
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| (1) The directors are deadlocked, whether because of
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| even division in the number of directors or because of | 22 |
| greater than
majority voting requirements in the articles | 23 |
| of incorporation or
the by-laws or otherwise, in the | 24 |
| management of the corporate
affairs; the shareholders are | 25 |
| unable to break the deadlock; and
either irreparable injury | 26 |
| to the corporation is thereby caused or
threatened or the | 27 |
| business of the corporation can no longer be
conducted to | 28 |
| the general advantage of the shareholders; or
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| (2) The shareholders are deadlocked in voting power
and | 30 |
| have failed, for a period that includes at least 2
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| consecutive annual meeting dates, to elect successors to
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| directors whose terms have expired and either irreparable | 33 |
| injury
to the corporation is thereby caused or threatened | 34 |
| or the
business of the corporation can no longer be | 35 |
| conducted to the
general advantage of the shareholders; or
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| (3) The directors or those in control of the
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| corporation have acted, are acting, or will act in a manner | 3 |
| that
is illegal, oppressive, or fraudulent with respect to | 4 |
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petitioning shareholder whether in his or her capacity | 5 |
| as a
shareholder, director, or officer; or
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| (4) The corporation assets are being misapplied or
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| wasted.
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| (b) The relief which the court may order in an action under
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| subsection (a) includes but is not limited to the following:
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| (1) The performance, prohibition, alteration, or
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| setting aside of any action of the corporation or of its
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| shareholders, directors, or officers of or any other party | 13 |
| to the
proceedings;
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| (2) The cancellation or alteration of any provision in
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| the corporation's articles of incorporation or by-laws;
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| (3) The removal from office of any director or
officer;
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| (4) The appointment of any individual as a director or
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| officer;
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| (5) An accounting with respect to any matter in
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| dispute;
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| (6) The appointment of a custodian to manage the
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| business and affairs of the corporation to serve for the | 23 |
| term and
under the conditions prescribed by the court;
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| (7) The appointment of a provisional director to serve
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| for the term and under the conditions prescribed by the | 26 |
| court;
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| (8) The submission of the dispute to mediation or
other | 28 |
| forms of non-binding alternative dispute resolution;
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| (9) The payment of dividends;
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| (10) The award of damages to any aggrieved party;
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| (11) The purchase by the corporation or one or more
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| other shareholders of all, but not less than all, of the | 33 |
| shares
of the petitioning shareholder for their fair value | 34 |
| and on the
terms determined under subsection (e); or
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| (12) The dissolution of the corporation if the court
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| determines that no remedy specified in subdivisions (1) |
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| through
(11) or other alternative remedy is sufficient to | 2 |
| resolve the
matters in dispute. In determining whether to | 3 |
| dissolve the
corporation, the court shall consider among | 4 |
| other relevant
evidence the financial condition of the | 5 |
| corporation but may not
refuse to dissolve the corporation | 6 |
| solely because it has
accumulated earnings or current | 7 |
| operating profits.
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| (c) The remedies set forth in subsection (b) shall not be
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| exclusive of other legal and equitable remedies which the court
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| may impose.
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| (d) In determining the appropriate relief to order pursuant
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| to this Section, the court may take into consideration the
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| reasonable expectations of the corporation's shareholders as | 14 |
| they
existed at the time the corporation was formed and | 15 |
| developed
during the course of the shareholders' relationship | 16 |
| with the
corporation and with each other.
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| (e) If the court orders a share purchase,
it shall:
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| (i) Determine the fair value of the shares, with or
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| without the assistance of appraisers, taking into | 20 |
| account any
impact on the value of the shares resulting | 21 |
| from the actions
giving rise to a petition under this | 22 |
| Section;
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| (ii) Consider any financial or legal constraints | 24 |
| on the
ability of the corporation or the purchasing | 25 |
| shareholder to
purchase the shares;
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| (iii) Specify the terms of the purchase, | 27 |
| including, if
appropriate, terms for installment | 28 |
| payments, interest at the rate
and from the date | 29 |
| determined by the court to be equitable,
subordination | 30 |
| of the purchase obligation to the rights of the
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| corporation's other creditors, security for a deferred | 32 |
| purchase
price, and a covenant not to compete or other | 33 |
| restriction on the
seller;
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| (iv) Require the seller to deliver all of his or | 35 |
| her
shares to the purchaser upon receipt of the | 36 |
| purchase price or the
first installment of the purchase |
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| price; and
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| (v) Retain jurisdiction to enforce the purchase | 3 |
| order
by, among other remedies, ordering the | 4 |
| corporation to be
dissolved if the purchase is not | 5 |
| completed in accordance with the
terms of the purchase | 6 |
| order.
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| The purchase ordered pursuant to this subsection (e) shall
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| be consummated within 20 days after the date the order becomes
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| final unless before that time the corporation files with the
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| court a notice of its intention to dissolve and articles of
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| dissolution are properly filed with the Secretary of State | 12 |
| within
50 days after filing the notice with the court.
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| After the purchase order is entered and before the
purchase | 14 |
| price is fully paid, any party may petition the court to
modify | 15 |
| the terms of the purchase and the court may do so if it
finds | 16 |
| that such changes are equitable.
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| Unless the purchase order is modified by the court, the
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| selling shareholder shall have no further rights as a | 19 |
| shareholder
from the date the seller delivers all of his or her | 20 |
| shares to the
purchaser or such other date specified by the | 21 |
| court.
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| If the court orders shares to be purchased by one or
more | 23 |
| other shareholders, in allocating the shares to be purchased
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| the other shareholders, unless equity requires otherwise, the
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| court shall attempt to preserve the existing distribution of
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| voting rights and other designations, preferences,
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| qualifications, limitations, restrictions and special or | 28 |
| relative
rights among the holders of the class or classes and | 29 |
| may direct
that holders of a specific class or classes shall | 30 |
| not participate
in the purchase.
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| (f) When the relief requested by the petition includes the | 32 |
| purchase of the petitioner's shares, then at
At any time within | 33 |
| 90 days after the filing of the
petition under this Section, or | 34 |
| at such time determined by the
court to be equitable, the | 35 |
| corporation or one or more
shareholders may elect to purchase | 36 |
| all, but not less than all, of
the shares owned by the |
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| petitioning shareholder for their fair
value. An election | 2 |
| pursuant to this Section shall state in
writing the amount | 3 |
| which the electing party will pay for the
shares.
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| (1) The election shall be irrevocable unless the court
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| determines that it is equitable to set aside or modify the
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| election.
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| (2) If the election to purchase is filed by one or
more | 8 |
| shareholders, the corporation shall, within 10 days
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| thereafter, give written notice to all shareholders. The | 10 |
| notice
must state: (i) the name and number of shares owned | 11 |
| by the
petitioner; (ii) the name and number of shares owned | 12 |
| by each
electing shareholder; and (iii) the amount which | 13 |
| each electing
party will pay for the shares and must advise | 14 |
| the recipients of
their right to join in the election to | 15 |
| purchase shares.
Shareholders who wish to participate must | 16 |
| file notice of their
intention to join in a purchase no | 17 |
| later than 30 days after the
date of the notice to them or | 18 |
| at such time as the court in its
discretion may allow. All | 19 |
| shareholders who have filed an
election or notice of their | 20 |
| intention to participate in the
election to purchase | 21 |
| thereby become parties to the proceeding and
shall | 22 |
| participate in the purchase in proportion to their
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| ownership of shares as of the date the first election was | 24 |
| filed,
unless they otherwise agree or the court otherwise | 25 |
| directs.
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| (3) The court in its discretion may allow the
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| corporation and all non-petitioning shareholders to file | 28 |
| an
election to purchase the petitioning shareholder's | 29 |
| shares at a
higher price. If the court does so, it shall | 30 |
| allow other
shareholders an opportunity to join in the | 31 |
| purchase at the higher
price in accordance with their | 32 |
| proportionate ownership interest.
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| (4) After an election has been filed by the
corporation | 34 |
| or one or more shareholders, the proceeding filed
under | 35 |
| this Section may not be discontinued or settled, nor may
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| the petitioning shareholder sell or otherwise dispose of |
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| his or
her shares, unless the court determines that it | 2 |
| would be
equitable to the corporation and the shareholders, | 3 |
| other than the
petitioner, to permit the discontinuance, | 4 |
| settlement, sale, or
other disposition. In considering | 5 |
| whether equity exists to
approve any settlement, the court | 6 |
| may take into consideration the
reasonable expectations of | 7 |
| the shareholders as set forth in
subsection (d), including | 8 |
| any existing agreement among the
shareholders.
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| (5) If, within 30 days of the filing of the latest
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| election allowed by the court, the parties reach agreement | 11 |
| as to
the fair value and terms of purchase of the | 12 |
| petitioner's shares,
the court shall enter an order | 13 |
| directing the purchase of
petitioner's shares upon the | 14 |
| terms and conditions agreed to by
the parties.
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| (6) If the parties are unable to reach an agreement as
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| provided for in paragraph (5) of this subsection (f), the | 17 |
| court,
upon application of any party, shall stay the
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| proceeding under subsection (a) and shall determine the | 19 |
| fair value of the
petitioner's
shares pursuant to | 20 |
| subsection (e) as of the day before the date
on which the | 21 |
| petition under subsection (a) was filed or as of
such other | 22 |
| date as the court deems appropriate under the
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| circumstances.
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| (g) In any proceeding under this Section, the court shall
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| allow reasonable compensation to the custodian, provisional
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| director, appraiser, or other such person appointed by the | 27 |
| court
for services rendered and reimbursement or direct payment | 28 |
| of
reasonable costs and expenses, which amounts shall be paid | 29 |
| by the
corporation.
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| (Source: P.A. 89-169, eff. 7-19-95; 89-364, eff. 8-18-95; | 31 |
| 89-626, eff.
8-9-96.)
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| Section 99. Effective date. This Act takes effect July 1, | 33 |
| 2005.
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