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(805 ILCS 5/9.20)
Reduction of paid-in capital.
(a) A corporation may reduce its paid-in capital:
(1) by resolution of its board of directors by
charging against its paid-in capital (i) the paid-in capital represented by shares acquired and cancelled by the corporation as permitted by law, to the extent of the cost from the paid-in capital of the reacquired and cancelled shares or a lesser amount as may be elected by the corporation, (ii) dividends paid on preferred shares, or (iii) distributions as liquidating dividends; or
(2) pursuant to an approved reorganization in
bankruptcy that specifically directs the reduction to be effected.
(b) Notwithstanding anything to the contrary contained in this Act, at no
time shall the paid-in capital be reduced to an amount less than the aggregate
par value of all issued shares having a par value.
(c) Until the report under Section 14.30 has been filed in the Office of the
Secretary of State showing a reduction in paid-in capital, the basis of the
annual franchise tax payable by the corporation shall not be reduced; provided,
however, that in no event shall the annual franchise tax for any taxable year
be reduced if the report is not filed prior to the first day of the anniversary
month or, in the case of a corporation that has established an extended filing
month, the extended filing month of the corporation of that taxable year and
before payment of its annual franchise tax.
(d) A corporation that reduced its paid-in capital after December 31,
1986 by one or more of the methods described in subsection (a)
report the reduction pursuant to Section 14.30, subject to the restrictions of
subsections (b) and (c) of this Section.
(e) Nothing in this Section shall be construed to forbid any reduction in
paid-in capital to be effected under Section 9.05 of this Act.
(f) In the case of a vertical merger, the paid-in capital of a subsidiary
may be eliminated if either (1) it was created, totally funded, and wholly owned
by the parent or (2) the amount of the parent's investment in the subsidiary
was equal to or exceeded the subsidiary's paid-in capital.
(Source: P.A. 94-605, eff. 1-1-06.)