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| Public Act 094-0394 |
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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 | ||||
by changing Section 12.56 and adding Section 7.90 as follows: | ||||
(805 ILCS 5/7.90 new) | ||||
Sec. 7.90. Waiver.
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(a) Unless otherwise provided in the articles of | ||||
incorporation, a shareholder who executes and delivers to the | ||||
corporation a written instrument irrevocably waiving the right | ||||
(i) to vote any shares held by such shareholder, whether for | ||||
the election of directors or otherwise, (ii) to be a director | ||||
or officer of the corporation, and (iii) in any other manner to | ||||
control, directly or indirectly, corporate actions or the | ||||
election or removal of any director or officer of the | ||||
corporation, and who at the time of such waiver is not a | ||||
director or officer of the corporation, shall have no fiduciary | ||||
duty to the corporation or any of its shareholders arising out | ||||
of the fact that such person is a shareholder of the | ||||
corporation. No such waiver shall affect any breach of | ||||
fiduciary duty arising prior to the effective date of the | ||||
waiver. | ||||
(b) The corporation shall give prompt notice of such waiver | ||||
to the remaining shareholders, except that no such notice need | ||||
be given by a corporation that has shares listed on a national | ||||
securities exchange or regularly traded in a market maintained | ||||
by one or more members of a national or affiliated securities | ||||
association.
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(c) The waiver referred to in this Section shall not affect | ||||
any other rights or obligations of the shareholder, including | ||||
but not limited to the rights under Sections 7.80, 11.65, | ||||
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 | ||
this Section shall not be counted in determining the number of | ||
shares necessary for a quorum or for shareholder action under | ||
Section 7.60 of this Act. A waiver under this Section shall not | ||
apply to any transferee of the shares.
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(e) The waiver referred to in this Section is specifically | ||
enforceable in accordance with the principles of equity.
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(f) This Section is not intended to describe or suggest the | ||
circumstances under which any fiduciary duty arises or exists, | ||
including with respect to any shareholder who fails to make a | ||
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 | ||
Court
may order one or more of the remedies listed in | ||
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 | ||
greater than
majority voting requirements in the articles | ||
of incorporation or
the by-laws or otherwise, in the | ||
management of the corporate
affairs; the shareholders are | ||
unable to break the deadlock; and
either irreparable injury | ||
to the corporation is thereby caused or
threatened or the | ||
business of the corporation can no longer be
conducted to | ||
the general advantage of the shareholders; or
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(2) The shareholders are deadlocked in voting power
and | ||
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 | ||
injury
to the corporation is thereby caused or threatened | ||
or the
business of the corporation can no longer be | ||
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 | ||
that
is illegal, oppressive, or fraudulent with respect to | ||
the
petitioning shareholder whether in his or her capacity | ||
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 | ||
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 | ||
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 | ||
court;
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(8) The submission of the dispute to mediation or
other | ||
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 | ||
shares
of the petitioning shareholder for their fair value | ||
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) | ||
through
(11) or other alternative remedy is sufficient to | ||
resolve the
matters in dispute. In determining whether to | ||
dissolve the
corporation, the court shall consider among | ||
other relevant
evidence the financial condition of the | ||
corporation but may not
refuse to dissolve the corporation | ||
solely because it has
accumulated earnings or current | ||
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 | ||
they
existed at the time the corporation was formed and | ||
developed
during the course of the shareholders' relationship | ||
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 | ||
account any
impact on the value of the shares resulting | ||
from the actions
giving rise to a petition under this | ||
Section;
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(ii) Consider any financial or legal constraints | ||
on the
ability of the corporation or the purchasing | ||
shareholder to
purchase the shares;
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(iii) Specify the terms of the purchase, | ||
including, if
appropriate, terms for installment | ||
payments, interest at the rate
and from the date | ||
determined by the court to be equitable,
subordination | ||
of the purchase obligation to the rights of the
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corporation's other creditors, security for a deferred | ||
purchase
price, and a covenant not to compete or other | ||
restriction on the
seller;
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(iv) Require the seller to deliver all of his or | ||
her
shares to the purchaser upon receipt of the | ||
purchase price or the
first installment of the purchase | ||
price; and
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(v) Retain jurisdiction to enforce the purchase | ||
order
by, among other remedies, ordering the | ||
corporation to be
dissolved if the purchase is not | ||
completed in accordance with the
terms of the purchase | ||
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 | ||
within
50 days after filing the notice with the court.
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After the purchase order is entered and before the
purchase | ||
price is fully paid, any party may petition the court to
modify | ||
the terms of the purchase and the court may do so if it
finds | ||
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 | ||
shareholder
from the date the seller delivers all of his or her | ||
shares to the
purchaser or such other date specified by the | ||
court.
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If the court orders shares to be purchased by one or
more | ||
other shareholders, in allocating the shares to be purchased
by | ||
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 | ||
relative
rights among the holders of the class or classes and | ||
may direct
that holders of a specific class or classes shall | ||
not participate
in the purchase.
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(f) When the relief requested by the petition includes the | ||
purchase of the petitioner's shares, then at
At any time within | ||
90 days after the filing of the
petition under this Section, or | ||
at such time determined by the
court to be equitable, the | ||
corporation or one or more
shareholders may elect to purchase | ||
all, but not less than all, of
the shares owned by the | ||
petitioning shareholder for their fair
value. An election | ||
pursuant to this Section shall state in
writing the amount | ||
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 | ||
shareholders, the corporation shall, within 10 days
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thereafter, give written notice to all shareholders. The | ||
notice
must state: (i) the name and number of shares owned | ||
by the
petitioner; (ii) the name and number of shares owned | ||
by each
electing shareholder; and (iii) the amount which | ||
each electing
party will pay for the shares and must advise | ||
the recipients of
their right to join in the election to | ||
purchase shares.
Shareholders who wish to participate must | ||
file notice of their
intention to join in a purchase no | ||
later than 30 days after the
date of the notice to them or | ||
at such time as the court in its
discretion may allow. All | ||
shareholders who have filed an
election or notice of their | ||
intention to participate in the
election to purchase | ||
thereby become parties to the proceeding and
shall | ||
participate in the purchase in proportion to their
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ownership of shares as of the date the first election was | ||
filed,
unless they otherwise agree or the court otherwise | ||
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 | ||
an
election to purchase the petitioning shareholder's | ||
shares at a
higher price. If the court does so, it shall | ||
allow other
shareholders an opportunity to join in the | ||
purchase at the higher
price in accordance with their | ||
proportionate ownership interest.
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(4) After an election has been filed by the
corporation | ||
or one or more shareholders, the proceeding filed
under | ||
this Section may not be discontinued or settled, nor may
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the petitioning shareholder sell or otherwise dispose of | ||
his or
her shares, unless the court determines that it | ||
would be
equitable to the corporation and the shareholders, | ||
other than the
petitioner, to permit the discontinuance, | ||
settlement, sale, or
other disposition. In considering | ||
whether equity exists to
approve any settlement, the court | ||
may take into consideration the
reasonable expectations of | ||
the shareholders as set forth in
subsection (d), including | ||
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 | ||
as to
the fair value and terms of purchase of the | ||
petitioner's shares,
the court shall enter an order | ||
directing the purchase of
petitioner's shares upon the | ||
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 | ||
court,
upon application of any party, shall stay the
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proceeding under subsection (a) and shall determine the | ||
fair value of the
petitioner's
shares pursuant to | ||
subsection (e) as of the day before the date
on which the | ||
petition under subsection (a) was filed or as of
such other | ||
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 | ||
court
for services rendered and reimbursement or direct payment | ||
of
reasonable costs and expenses, which amounts shall be paid | ||
by the
corporation.
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(Source: P.A. 89-169, eff. 7-19-95; 89-364, eff. 8-18-95; | ||
89-626, eff.
8-9-96.)
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Section 99. Effective date. This Act takes effect July 1, | ||
2005.
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