Public Act 096-0126
 		





SB0239 Enrolled
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:




 
    Section 5. The Limited Liability Company Act is amended  by 
changing Sections 1-5, 1-10, and 15-5 and adding Section 1-26 
as follows:
 



    (805 ILCS 180/1-5)



    Sec. 1-5. Definitions. As used in this Act, unless
the 
context otherwise requires:

    "Anniversary" means that day every year exactly one or
more 
years after:  (i) the date the articles of organization
filed 
under Section 5-5 of this Act were filed by the Office
of the 
Secretary of State, in the case of a limited liability
company; 
or (ii) the date the application for admission to
transact 
business filed under Section 45-5 of this Act was
filed by the 
Office of the Secretary of State, in the case of
a foreign 
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
of 
forming a limited liability company as specified in
Article 5.

    "Assumed limited liability company name" means any
limited 
liability company name other than the true limited
liability 
company name, except that the identification by a
limited 
liability company of its business with a trademark or
service 
mark of which it is the owner or licensed user shall
not 
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
jurisdiction 
in a case.

    "Debtor in bankruptcy" means a person who is the subject of 
an order for
relief
under Title 11 of the United States Code, a 
comparable
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 
in distributions
by
the limited liability company.

    "Entity" means a person other than an individual.

    "Federal employer identification number" means either (i) 
the federal
employer identification number assigned by the 
Internal Revenue
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
identification number, 
any other number that may be assigned by the
Internal
Revenue 
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
this 
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
course 
of its business.

    "Limited liability company" means a limited liability

company
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 
manager-managed
company, who is vested with authority under 
Section 13-5.

    "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
or, 
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
manager-managed company.

    "Membership interest" means a member's rights in the

limited liability company, including the member's right to 
receive distributions of the limited liability
company's 
assets.

    "Operating agreement" means the agreement under Section 
15-5 concerning the
relations among the members, managers, and 
limited
liability company.  The term "operating agreement" 
includes amendments to the
agreement.

    "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,
association, 
corporation, governmental body, or other
juridical being.

    "Registered office" means that office maintained by the

limited liability company in this State, the address,
including 
street, number, city and county, of which is on
file in the 
office of the Secretary of State, at which, any
process, 
notice, or demand required or permitted by law may be
served 
upon the registered agent of the limited liability
company.

    "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
is 
the registered office of the limited liability company.

    "Restated articles of organization" means the articles
of 
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
of 
Puerto Rico.

    "Transfer" includes an assignment, conveyance, deed, bill 
of sale, lease,
mortgage, security interest, encumbrance, and 
gift.

(Source: P.A. 90-424, eff. 1-1-98.)

 



    (805 ILCS 180/1-10)



    Sec. 1-10. Limited liability company name. 

    (a) The name of each limited liability company as set
forth 
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
State 
    unless the restriction has been complied with;


        (3) shall consist of letters of the English
alphabet, 
    Arabic or Roman numerals, or symbols capable
of being 
    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
liability 
    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
name;


        (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 
    Corporate Fiduciary
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
Corporate 
    Fiduciary Act; and


        (7) shall contain the word "trust", if it is a limited 
    liability company
organized for the purpose of accepting 
    and executing trusts.

    (b) Nothing in this Section or Section 1-20 shall
abrogate 
or limit the common law or statutory law of unfair
competition 
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,
trademarks, service 
marks, service names, or any other right
to the exclusive use 
of names or symbols.

    (c) (Blank).

    (d) The name shall be distinguishable upon the records
in 
the Office of the Secretary of State from all of the following:


        (1) Any limited liability company that has
articles of 
    organization filed with the Secretary of
State under 
    Section 5-5.


        (2) Any foreign limited liability company admitted
to 
    transact business in this State.


        (3) Any name for which an exclusive right has been

    reserved in the Office of the Secretary of State
under 
    Section 1-15.


        (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 
    domestic or
foreign corporation subject to the provisions 
    of Section 4.05 of the
Business Corporation Act of 1983
or 
    Section 104.05 of the General Not For Profit Corporation 
    Act of 1986.

    (e) The provisions of subsection (d) of this Section
shall 
not apply if the organizer files with the Secretary of
State a 
certified copy of a final decree of a court of
competent 
jurisdiction establishing the prior right of the
applicant to 
the use of that name in this State.

    (f) The Secretary of State shall determine whether a
name 
is "distinguishable" from another name for the purposes
of this 
Act.  Without excluding other names that may not
constitute 
distinguishable names in this State, a name is not
considered 
distinguishable, for purposes of this Act, solely
because it 
contains one or more of the following:


        (1) The word "limited", "liability" or "company"
or an 
    abbreviation of one of those words.


        (2) Articles, conjunctions, contractions,

    abbreviations, or different tenses or number of the same

    word.

(Source: P.A. 92-33, eff. 7-1-01; 93-59, eff. 7-1-03.)

 
    (805 ILCS 180/1-26 new)

    Sec. 1-26. 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 
    property; and 
        (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)


    Sec. 15-5. Operating agreement. 

    (a) All
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
govern relations 
among the members, managers, and company.  To the extent
the 
operating agreement does not otherwise provide, this Act 
governs relations
among the members, managers, and company.

Except as provided in subsection (b) of this Section, an 
operating agreement
may modify any provision or provisions of 
this Act governing relations among
the members, managers, and 
company.

    (b) The operating agreement may not:


        (1) unreasonably restrict a right to information or 
    access to records
under
Section 10-15;


        (2) vary the right to expel a member in an event 
    specified in subdivision
(6) of Section
35-45;


        (3) vary the requirement to wind up the limited 
    liability company's
business
in a case specified in 
    subdivisions (3) or (4) of Section 35-1;


        (4) restrict rights of a person, other than a manager, 
    member, and
transferee of a member's distributional 
    interest, under this Act;


        (5) restrict the power of a member to dissociate under 
    Section 35-50,
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 
    limited
liability company to purchase the dissociated 
    member's distributional interest
under Section
35-60;


        (6) eliminate or reduce a member's fiduciary duties, 
    but may;


            (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 
        disinterested
managers that may authorize or ratify, 
        after full disclosure of all materials
facts, a 
        specific act or transaction that otherwise would 
        violate these duties;
or

        (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
under
subsection (d) of Section 15-3, but 
    the operating agreement may determine the
standards by 
    which the performance of the obligation is to be measured, 
    if the
standards are not manifestly unreasonable.

    (c) In a limited liability company with only one member, 
the operating
agreement
includes any of the following:


        (1) Any writing, without regard to whether the writing 
    otherwise
constitutes an
agreement, as to the company's 
    affairs signed by the sole
member.


        (2) Any written agreement between the member and the 
    company as to the
company's
affairs.


        (3) Any agreement, which need not be in writing, 
    between the member and
the
company as to a company's 
    affairs, provided that the company is managed by
a manager 
    who is a person other than the member.

(Source: P.A. 92-33, eff. 7-1-01.)