Extensive changes enacted to Illinois Limited Liability Company Act
August 7, 2017
More than 70 business entity statutes were added or amended by the Illinois legislature during the latest legislative session, including extensive changes to the state’s Limited Liability Company Act. The 2017 Edition of Illinois Laws Governing Business Entities captures these and other changes made during the 2017 legislative session.
The amended LLC Act, which became effective July 1, 2017, aligns the state’s LLC law more closely with the Revised Uniform Liability Company Act promulgated by the National Conference of Commissioners on Uniform State Laws. The amended Act:
- Establishes distinctions between full membership interests and distributional interest (which is an interest in only the distributions of a limited liability company);
- Provides that limited liability companies may appoint officers. (Initially, the statute provided that limited liability companies could “elect managers and appoint agents”);
- Authorizes the use of oral operating agreements, notwithstanding the Illinois Statute of Frauds;
- Recognizes the effects of the Illinois Electronic Commerce Security Act, which establishes the equivalence between electronic and written records in Illinois law, on the Illinois Limited Liability Company Act;
- Establishes a procedure for members requesting records from the limited liability company;
- Provides that members of a limited liability company are not agents solely because of membership;
- Rewrote the section regarding operating agreements such that now operating agreements may, among other things, eliminate and alter certain fiduciary duties;
- Provides that members and managers who vote to make a distribution, while their limited liability company is insolvent or unable to pay its debts that become do in the ordinary course of business, will be personally liable to the limited liability company for the amount of the distributions that exceed the amount that could have been distributed without violating the Illinois Limited Liability Company Act, the articles of organization, or the operating agreement, if members or managers breach their fiduciary duty of loyalty or care;
- Provides that creditors acquire only distributional rights and no other rights when a court enters a charging order against the distributional interest of a judgment creditor;
- Requires a court to enter a judicial decree for dissolution based upon illegality, member oppression, or fraud;
- Abolishes certain statutory buyout rights;
- Describes the process by which an Illinois limited liability company may convert to a foreign limited liability company and an organization may convert to an Illinois limited liability company;
- Allows limited liability companies to limit the authority of its members or managers by filing a Statement of Authority with the Secretary of State.
The 2017 Edition of Illinois Laws Governing Business Entities is updated through Public Act 99-938. Legislative changes are listed in the Table of Sections Affected, and Blackline Amendment notes in the book indicate where information has been added or deleted.
The deskbook also includes over two dozen new case notes from state and federal court decisions, as well as the full text of five significant covering recent legal developments regarding administrative hearings, continuation, joint ventures, provisional directors, and piercing the corporate veil. New case notes are listed in the Table of New Annotations, and are indicated with gray bars inside the book.
Other resources include insightful commentary from legal advisors Darrell Pierce and Darnell Clayborn of Dykema Gossett PLLC, as well as a companion CD-ROM containing more than 100 Illinois forms for incorporation/formation, qualification, mergers, dissolution, and name reservation for all entity types. A listing of the forms and contact information for the Illinois Secretary of State can be found in the book’s forms appendix.
Illinois Laws Governing Business Entities is available as a softbound book or as an ebook, compatible with dedicated e-reader devices, computers, tablets and smartphones that use e-reader software or applications. It is also available on the LexisNexis Digital Library.
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To learn more about the 2017 Edition of Illinois Laws Governing Business Entities, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc.