|Public Act 096-0126
||LRB096 07539 KTG 17634 b
AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
The Limited Liability Company Act is amended by
changing Sections 1-5, 1-10, and 15-5 and adding Section 1-26
(805 ILCS 180/1-5)
As used in this Act, unless
context otherwise requires:
"Anniversary" means that day every year exactly one or
years after: (i) the date the articles of organization
under Section 5-5 of this Act were filed by the Office
Secretary of State, in the case of a limited liability
or (ii) the date the application for admission to
business filed under Section 45-5 of this Act was
filed by the
Office of the Secretary of State, in the case of
limited liability company.
"Anniversary month" means the month in which the
anniversary of the limited liability company occurs.
"Articles of organization" means the articles of
organization filed by the Secretary of State for the purpose
forming a limited liability company as specified in
"Assumed limited liability company name" means any
liability company name other than the true limited
company name, except that the identification by a
liability company of its business with a trademark or
mark of which it is the owner or licensed user shall
constitute the use of an assumed name under this Act.
"Bankruptcy" means bankruptcy under the Federal Bankruptcy
Code of 1978, Title 11, Chapter 7 of the United States Code.
"Business" includes every trade, occupation, profession,
and other lawful
purpose, whether or not carried on for profit.
"Contribution" means any cash, property, or services
rendered or a promissory note or other binding obligation to
contribute cash or property or to perform services, that a
person contributes to the limited liability company in that
person's capacity as a member.
"Court" includes every court and judge having
in a case.
"Debtor in bankruptcy" means a person who is the subject of
an order for
under Title 11 of the United States Code, a
order under a successor statute of general
application, or a comparable order
under federal, state, or
foreign law governing insolvency.
"Distribution" means a transfer of money, property, or
other benefit from a limited liability company to a member in
the member's capacity as a
member or to a transferee of the
member's distributional interest.
"Distributional interest" means all of a member's interest
the limited liability company.
"Entity" means a person other than an individual.
"Federal employer identification number" means either (i)
employer identification number assigned by the
Service to the limited liability company or
foreign limited liability company
or (ii) in the case of a
limited liability company or foreign
limited liability company
not required to have a federal employer
any other number that may be assigned by the
Service for purposes of identification.
"Foreign limited liability company" means an
unincorporated entity organized
under laws other than the laws
of this State that afford
limited liability to its owners
comparable to the liability under Section 10-10
and is not
required to register to transact business under any law of
State other than this Act.
"Insolvent" means that a limited liability company is
unable to pay its debts as they become due in the usual
of its business.
"Limited liability company" means a limited liability
organized under this Act.
"L3C" or "low-profit limited liability company" means a
for-profit limited liability company which satisfies the
requirements of Section 1-26 of this Act and does not have as a
significant purpose the production of income or the
appreciation of property.
"Manager" means a person, whether or not a member of a
company, who is vested with authority under
"Manager-managed company" means a limited liability
company which is so
designated in its articles of organization.
"Member" means a person
who becomes a member of the limited
liability company upon formation of the
company or in the
manner and at the time provided in the operating agreement
if the operating agreement does not so provide, in the manner
and at the
time provided in this Act.
"Member-managed company" means a limited liability company
other than a
"Membership interest" means a member's rights in the
limited liability company, including the member's right to
receive distributions of the limited liability
"Operating agreement" means the agreement under Section
15-5 concerning the
relations among the members, managers, and
liability company. The term "operating agreement"
includes amendments to the
"Organizer" means one of the signers of the original
articles of organization.
"Person" means an individual, partnership, domestic or
foreign limited partnership, limited liability company or
foreign limited liability company, trust, estate,
corporation, governmental body, or other
"Registered office" means that office maintained by the
limited liability company in this State, the address,
street, number, city and county, of which is on
file in the
office of the Secretary of State, at which, any
notice, or demand required or permitted by law may be
upon the registered agent of the limited liability
"Registered agent" means a person who is an agent for
service of process on the limited liability company who is
appointed by the limited liability company and whose address
the registered office of the limited liability company.
"Restated articles of organization" means the articles
organization restated as provided in Section 5-30.
"State" means a state, territory, or possession of the
United States, the District of Columbia, or the Commonwealth
"Transfer" includes an assignment, conveyance, deed, bill
of sale, lease,
mortgage, security interest, encumbrance, and
(Source: P.A. 90-424, eff. 1-1-98.)
(805 ILCS 180/1-10)
Limited liability company name.
(a) The name of each limited liability company as set
in its articles of organization:
(1) shall contain the terms "limited liability
company", "L.L.C.", or "LLC"
, or, if organized as a
low-profit limited liability company under Section 1-26 of
this Act, shall contain the term "L3C"
(2) may not contain a word or phrase, or an
abbreviation or derivation thereof, the use of which is
prohibited or restricted by any other statute of this
unless the restriction has been complied with;
(3) shall consist of letters of the English
Arabic or Roman numerals, or symbols capable
readily reproduced by the Office of the
Secretary of State;
(4) shall not contain any of the following terms:
"Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.,"
"Co.," "Limited Partnership" or "L.P.";
(5) shall be the name under which the limited
company transacts business in this State
unless the limited
liability company also elects to
adopt an assumed name or
names as provided in this Act;
provided, however, that the
limited liability company
may use any divisional
designation or trade name without
complying with the
requirements of this Act, provided
the limited liability
company also clearly discloses its
(6) shall not contain any word or phrase that indicates
or implies that
the limited liability company is authorized
or empowered to be in the business
of a corporate fiduciary
unless otherwise permitted by the Commissioner of the
Office of Banks and Real Estate under Section 1-9 of the
Act. The word "trust", "trustee", or
"fiduciary" may be used by a limited
liability company only
if it has first complied with Section 1-9 of the
Fiduciary Act; and
(7) shall contain the word "trust", if it is a limited
organized for the purpose of accepting
and executing trusts.
(b) Nothing in this Section or Section 1-20 shall
or limit the common law or statutory law of unfair
or unfair trade practices, nor derogate from the
common law or
principles of equity or the statutes of this
State or of the
United States of America with respect to the
right to acquire
and protect copyrights, trade names,
marks, service names, or any other right
to the exclusive use
of names or symbols.
(d) The name shall be distinguishable upon the records
the Office of the Secretary of State from all of the following:
(1) Any limited liability company that has
organization filed with the Secretary of
(2) Any foreign limited liability company admitted
transact business in this State.
(3) Any name for which an exclusive right has been
reserved in the Office of the Secretary of State
(4) Any assumed name that is registered with the
Secretary of State under Section 1-20.
(5) Any corporate name or assumed corporate name of a
foreign corporation subject to the provisions
of Section 4.05 of the
Business Corporation Act of 1983
Section 104.05 of the General Not For Profit Corporation
Act of 1986.
(e) The provisions of subsection (d) of this Section
not apply if the organizer files with the Secretary of
certified copy of a final decree of a court of
jurisdiction establishing the prior right of the
the use of that name in this State.
(f) The Secretary of State shall determine whether a
is "distinguishable" from another name for the purposes
Act. Without excluding other names that may not
distinguishable names in this State, a name is not
distinguishable, for purposes of this Act, solely
contains one or more of the following:
(1) The word "limited", "liability" or "company"
abbreviation of one of those words.
(2) Articles, conjunctions, contractions,
abbreviations, or different tenses or number of the same
(Source: P.A. 92-33, eff. 7-1-01; 93-59, eff. 7-1-03.)
(805 ILCS 180/1-26 new)
Low-profit limited liability company.
(a) A low-profit limited liability company shall at all
times significantly further the accomplishment of one or more
charitable or educational purposes within the meaning of
Section 170(c)(2)(B) of the Internal Revenue Code of 1986, 26
U.S.C. 170(c)(2)(B), or its successor, and would not have been
formed but for the relationship to the accomplishment of such
charitable or educational purposes.
(b) A limited liability company which intends to qualify as
a low-profit limited liability company pursuant to the
provisions of this Section shall so indicate in its articles of
organization, and further state that:
(1) no significant purpose of the company is the
production of income or the appreciation of property;
however, the fact that a person produces significant income
or capital appreciation shall not, in the absence of other
factors, be conclusive evidence of a significant purpose
involving the production of income or the appreciation of
(2) no purpose of the company is to accomplish one or
more political or legislative purposes within the meaning
of Section 170(c)(2)(D) of the Internal Revenue Code of
1986, 26 U.S.C. 170(c)(2)(D), or its successor.
(c) A company that no longer satisfies the requirements of
this Section 1-26 continues to exist as a limited liability
company and shall promptly amend its articles of organization
so that its name and purpose no longer identify it as a
low-profit limited liability company or L3C.
(d) Any company operating or holding itself out as a
low-profit limited liability company in Illinois, any company
formed as a low-profit limited liability company under this
Act, and any chief operating officer, director, or manager of
any such company is a "trustee" as defined in Section 3 of the
Charitable Trust Act.
(e) Nothing in this Section 1-26 prevents a limited
liability company that is not organized under it from electing
a charitable or educational purpose in whole or in part for
doing business under this Act.
(805 ILCS 180/15-5)
members of a
limited liability company may enter
into an operating agreement to
regulate the affairs of the
company and the conduct of its business and to
among the members, managers, and company. To the extent
operating agreement does not otherwise provide, this Act
among the members, managers, and company.
Except as provided in subsection (b) of this Section, an
may modify any provision or provisions of
this Act governing relations among
the members, managers, and
(b) The operating agreement may not:
(1) unreasonably restrict a right to information or
access to records
(2) vary the right to expel a member in an event
specified in subdivision
(6) of Section
(3) vary the requirement to wind up the limited
in a case specified in
subdivisions (3) or (4) of Section 35-1;
(4) restrict rights of a person, other than a manager,
transferee of a member's distributional
interest, under this Act;
(5) restrict the power of a member to dissociate under
although an operating agreement may
determine whether a dissociation is wrongful under Section
35-50, and it may
eliminate or vary the obligation of the
liability company to purchase the dissociated
member's distributional interest
(6) eliminate or reduce a member's fiduciary duties,
(A) identify specific types or categories of
activities that do not
violate these duties, if not
manifestly unreasonable; and
(B) specify the number or percentage of members or
managers that may authorize or ratify,
after full disclosure of all materials
specific act or transaction that otherwise would
violate these duties;
(6.5) eliminate or reduce the obligations or purposes a
low-profit limited liability company undertakes when
organized under Section 1-26; or
(7) eliminate or reduce the obligation of good faith
and fair dealing
subsection (d) of Section 15-3, but
the operating agreement may determine the
which the performance of the obligation is to be measured,
standards are not manifestly unreasonable.
(c) In a limited liability company with only one member,
includes any of the following:
(1) Any writing, without regard to whether the writing
agreement, as to the company's
affairs signed by the sole
(2) Any written agreement between the member and the
company as to the
(3) Any agreement, which need not be in writing,
between the member and
company as to a company's
affairs, provided that the company is managed by
who is a person other than the member.
(Source: P.A. 92-33, eff. 7-1-01.)