(805 ILCS 180/Art. 15 heading)
Article 15.
Management
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(805 ILCS 180/15-1)
Sec. 15-1.
Management of limited liability company.
(a) In a member-managed company:
(1) each member has equal rights in the management
| | and conduct of the company's business; and
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(2) except as otherwise provided in subsection (c) of
| | this Section, any matter relating to the business of the company may be decided by a majority of the members.
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(b) In a manager-managed company:
(1) each manager has equal rights in the management
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(2) except as otherwise provided in subsection (c) of
| | this Section, any matter relating to the business of the company may be exclusively decided by the manager or, if there is more than one manager, by a majority of the managers; and
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(3) a manager:
(A) must be designated, appointed, elected,
| | removed, or replaced by a vote, approval, or consent of a majority of the members; and
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(B) holds office until a successor has been
| | elected and qualified, unless the manager sooner resigns or is removed.
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(c) The only matters of a member or manager-managed company's business
requiring the consent of all of the members are the following:
(1) the amendment of the operating agreement under
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(2) an amendment to the articles of organization
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(3) the compromise of an obligation to make a
| | contribution under Section 20-5;
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(4) the compromise, as among members, of an
| | obligation of a member to make a contribution or return money or other property paid or distributed in violation of this Act;
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(5) the making of interim distributions under
| | subsection (a) of Section 25-1, including the redemption of an interest;
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(6) the admission of a new member;
(7) the use of the company's property to redeem an
| | interest subject to a charging order;
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(8) the consent to dissolve the company under
| | subdivision (2) of subsection (a) of Section 35-1;
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(9) a waiver of the right to have the company's
| | business wound up and the company terminated under Section 35-3;
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(10) the consent of members to merge with another
| | entity under Section 37-20; and
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(11) the sale, lease, exchange, or other disposal of
| | all, or substantially all, of the company's property with or without goodwill.
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(d) Action requiring the consent of members or managers under this Act may
be taken without a meeting.
(e) A member or manager may appoint a proxy to vote or otherwise act for the
member or manager by signing an appointment instrument, either personally
or by the member or manager's attorney-in-fact.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/15-3)
Sec. 15-3. General standards of member and manager's conduct.
(a) The fiduciary duties a member owes to a member-managed company and its
other members include the duty of loyalty and the duty of care referred to in
subsections (b) and (c) of this Section.
(b) A member's duty of loyalty to a member-managed company and its other
members includes the following:
(1) to account to the company and to hold as trustee
| | for it any property, profit, or benefit derived by the member in the conduct or winding up of the company's business or derived from a use by the member of the company's property, including the appropriation of a company's opportunity;
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(2) to act fairly when a member deals with the
| | company in the conduct or winding up of the company's business as or on behalf of a party having an interest adverse to the company; and
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(3) to refrain from competing with the company in the
| | conduct of the company's business before the dissolution of the company.
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(c) A member's duty of care to a member-managed company and its other
members in the conduct of and winding up of the company's business is limited to
refraining from engaging in grossly negligent or reckless conduct, intentional
misconduct, or a knowing violation of law.
(d) A member shall discharge his or her duties to a member-managed company
and its other members under this Act or under the operating agreement and
exercise any rights consistent with the obligation of good faith and fair
dealing.
(e) A member of a member-managed company does not violate a duty or
obligation under this Act or under the operating agreement merely because the
member's conduct furthers the member's own interest.
(f) This Section applies to a person winding up the limited liability
company's business as the personal or legal representative of the last
surviving member as if the person were a member.
(g) In a manager-managed company:
(1) a member who is not also a manager owes no duties
| | to the company or to the other members solely by reason of being a member;
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(2) a manager is held to the same standards of
| | conduct prescribed for members in subsections (b), (c), (d), and (e) of this Section;
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(3) a member is held to the standards of conduct in
| | subsections (b), (c), (d), and (e) of this Section to the extent that the member exercises the managerial authority vested in a manager by this Act; and
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(4) a manager is relieved of liability imposed by law
| | for violations of the standards prescribed by subsections (b), (c), (d), and (e) to the extent of the managerial authority delegated to the members by the operating agreement.
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(Source: P.A. 95-331, eff. 8-21-07; 96-263, eff. 1-1-10.)
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(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;
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(2) vary the right to expel a member in an event
| | specified in subdivision (6) of Section 35-45;
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(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;
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(4) restrict rights of a person, other than a
| | manager, member, and transferee of a member's distributional interest, under this Act;
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(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;
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(6) eliminate or reduce a member's fiduciary duties,
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(A) identify specific types or categories of
| | activities that do not violate these duties, if not manifestly unreasonable; and
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(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;
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(6.5) eliminate or reduce the obligations or purposes
| | a low-profit limited liability company undertakes when organized under Section 1-26; or
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(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.
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(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.
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(2) Any written agreement between the member and the
| | company as to the company's affairs.
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(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.
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(Source: P.A. 96-126, eff. 1-1-10.)
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(805 ILCS 180/15-7)
Sec. 15-7.
Member and manager's right to payments and reimbursement.
(a) A limited liability company shall reimburse a member or manager for
payments made and indemnify a member or manager for liabilities
incurred by the member or manager in the ordinary course of the business of the
company or for the preservation of its business or property.
(b) A limited liability company shall reimburse a member for an advance to
the company beyond the amount of contribution the member agreed to make.
(c) A payment or advance made by a member that gives rise to an obligation
of a limited liability company under subsection (a) or (b) of this Section
constitutes a
loan to the company upon which interest accrues from the date of the payment or
advance.
(d) A member is not entitled to remuneration for services performed for a
limited liability company, except for reasonable compensation for services
rendered in winding up the business of the company.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/15-10)
Sec. 15-10.
(Repealed).
(Source: P.A. 87-1062. Repealed by P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/15-15)
Sec. 15-15.
Discharge of duties; consideration.
In discharging the duties of their respective positions,
members and individual managers may, in considering the best
long term and short term interests of the limited liability
company, consider the effects of any action (including
without limitation, action that may involve or relate to a
change or potential change in control of the limited
liability company) upon employees, suppliers, and customers of
the limited liability company or its subsidiaries,
communities in which offices or other establishments of the
limited liability company or its subsidiaries are located,
and all other pertinent factors.
(Source: P.A. 87-1062.)
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(805 ILCS 180/15-20)
Sec. 15-20.
Actions by members.
(a) A member may maintain an action against a limited liability company or
another member for legal or equitable relief, with or without an
accounting as to the company's business, to enforce all of the following:
(1) The member's rights under the operating agreement.
(2) The member's rights under this Act.
(3) The rights and otherwise protect the interests of
| | the member, including rights and interests arising independently of the member's relationship to the company.
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(b) The accrual, and any time limited for the assertion, of a right of
action for a remedy under this Section is governed by other law. A
right to an accounting upon a dissolution and winding up does not revive a
claim barred by law.
(Source: P.A. 90-424, eff. 1-1-98.)
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