(215 ILCS 5/10)
(from Ch. 73, par. 622)
(Section scheduled to be repealed on January 1, 2027)
(1) After the date of incorporation, as determined
by Section 18, and until the first meeting of shareholders, the
incorporators shall have the powers and perform the duties ordinarily
possessed and exercised by a board of directors.
(2) Upon the issuance of a certificate of authority to a company
organized under this article, the corporate powers shall be exercised by,
and its business and affairs shall be under the control of, a board of
directors composed of not less than 3 nor more than 21 natural persons who
are shareholders, except where the Company is a wholly owned subsidiary, and
who are at least 18 years of age and at least 3 of whom are residents and
citizens of this State.
After June 30, 2002, at least 20%, but not less than one,
of the directors of a company that is not subject to Section 131.20b shall be
persons who are not officers or employees of the company. A person convicted
felony may not be a director, and all directors shall be of good character and
known professional, administrative, or business ability, such business ability
to include a practical knowledge of insurance, finance, or investment.
board of directors shall be elected at
the first meeting of shareholders, and, except as provided in subsection
(3) below, all directors shall be elected annually thereafter.
(3) If the board of directors consists of 6 or more members, in lieu of
electing the membership of the whole board of directors annually, the
articles of incorporation may provide that the directors shall be divided
into two or three classes, each class to be as nearly equal in number as is
possible. The term of office of directors of the first class shall expire
at the first annual meeting of shareholders after their election, that of
the second class shall expire at the second annual meeting after their
election, and that of the third class, if any, shall expire at the third
annual meeting after their election. At each annual meeting after such
classification, a number of directors equal to the number of directors in
the class whose terms expire at the time of such meeting shall be elected
to hold office until the second succeeding annual meeting, if there are two
classes, or until the third succeeding annual meeting, if there are three
(4) In all elections for directors every shareholder of common shares
has the right to vote, in person or by proxy, for the number of common
shares owned by him, for as many persons as there are directors to be
elected, or to cumulate his shares, and give one candidate as many votes as
the number of directors multiplied by the number of his shares equals, or
to distribute them on the same principle among as many candidates as he
thinks fit, and directors shall not be elected in any other manner.
(5) Meetings of the board of directors, regular or special, may be held
either within or without the State. Meetings of the board of directors
shall be upon such notice as the by-laws may prescribe. Attendance of a
director at any meeting shall constitute a waiver of notice of such meeting
except where a director attends the meeting for the express purpose of
objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting, unless
expressly otherwise provided by this Code.
Unless specifically prohibited by the articles of incorporation or
by-laws, members of the board of directors or of any committee of the board
of directors may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can
hear each other. Participation in such meeting shall constitute attendance
and presence in person at the meeting of the person or persons so
participating. Unless specifically prohibited by the articles of
incorporation or by-laws, members of the board of directors or of any
committee of the board of directors may take action without a meeting, if a
consent in writing setting forth the action so taken shall be signed by all
of the directors entitled to vote with respect to the subject matter
thereof, or by all of the members of such committee, as the case may be.
The consent shall be evidenced by one or more written approvals, each of
which sets forth the action taken and bears the signature of one or more
directors or committee members. All approvals evidencing the consent shall
be filed in the company's corporate records. The action taken shall be
effective when all of the directors, or members of the committee, have
approved the consent unless the consent specifies a different effective date.
(6) If the number of directors provided for in the articles of
incorporation be indefinite, the number of directors to be elected, within
the minimum and maximum limits set forth in paragraph (2), shall be as
provided in the by-laws. The number of directors may be increased or
decreased from time to time by amendment to the by-laws.
The by-laws may establish a variable range for the size of the board by
prescribing a minimum and maximum number of directors. The maximum may not
exceed the minimum by more than 5. If a variable range is established, the
number of directors may be fixed or changed from time to time, within the
minimum and maximum, by the directors or the shareholders without further
amendment to the by-laws.
(7) (a) A company may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the company) by
reason of the fact that he or she is or was a director, officer, employee
or agent, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, if such person
acted in good faith and in a manner he or she reasonably believed to be in,
or not opposed to the best interests of the company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interest of the company
or, with respect to any criminal action or proceeding, that the person had
reasonable cause to believe that his or her conduct was unlawful.
(b) A company may indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the company to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the company, or is or was serving at
the request of the company as a director, officer, employee or agent of
another company, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of
such action or suit, if such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to the best interests
of the company, provided that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the company, unless, and only to the extent that the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses as the court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
company has been successful, on the merits or otherwise, in the defense of
any action, suit or proceeding referred to in subsections (a) and (b), or
in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by
a court) shall be made by the company only as authorized in the specific
case, upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in subsections (a) or (b).
Such determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or
even if obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the shareholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the company in advance of the final disposition
of such action, suit or proceeding, as authorized by the board of directors
in the specific case, upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he or she is entitled to be indemnified by
the company as authorized in this Section.
(f) The indemnification provided by this Section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or
disinterested directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent, and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) A company may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the company,
or who is or was serving at the request of the company as a director,
officer, employee or agent of another company, partnership, joint venture,
trust or other enterprise, against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of
his or her status as such, whether or not the company would have the power
to indemnify such person against such liability under the provisions of this Section.
(h) If a company has paid indemnification or has advanced expenses to a
director, officer, employee or agent, the company shall report the
indemnification or advance in writing to the shareholders with or before
the notice of the next shareholders meeting.
(i) For purposes of this Section, references to "the company" shall
include, in addition to the surviving company, any merging company
(including any company having merged with a merging company) absorbed in a
merger which, if its separate existence had continued, would have had the
power and authority to indemnify its directors, officers, and employees or
agents, so that any person who was a director, officer, employee or agent
of such merging company, or was serving at the request of such merging
company as a director, officer, employee or agent of another company,
partnership, joint venture, trust or other enterprise, shall stand in the
same position under the provisions of this Section with respect to the
surviving company as such person would have with respect to such merging
company if its separate existence had continued.
(j) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the company" shall
include any service as a director, officer, employee or agent of the
company which imposes duties on, or involves services by such director,
officer, employee, or agent with respect to any employee benefit plan, its
participants, or beneficiaries. A person who acted in good faith and in a
manner he or she reasonably believed to be in the best interests of the
participants and beneficiaries of any employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interest of the company"
as referred to in this Section.
(Source: P.A. 92-140, eff. 7-24-01