In July 2017, the Illinois LLC Act underwent a variety of substantive changes affecting everything from how an LLC is organized with the Illinois Secretary of State to the ability of its of members to disclaim certain fiduciary duties.
The following is a list of some of the important recent changes to the LLC Act:
- Filing/Management: The Articles of Organization filed with the Secretary of State no longer need to specify whether the LLC is member-managed or manager-managed (§ 5-5), an important distinction for a variety of reasons, including indicating who has day-to-day decision-making authority. The default management of the LLC is by the members unless changed in the operating agreement. (§ 15-1(a))
- Fiduciary Duties of Members and Managers: Other than the duty of care (the scope of which can be altered), members may eliminate their (or a manager’s) fiduciary duties owed to the LLC and each other. (§ 15-3 and §15-5(c))
- No Purchase of a Dissociated Member’s Distributional Interest: Section 35-60 was repealed such that the LLC and its members are no longer required to repurchase the distributional interest of a member who dissociates. A dissociated member’s interest that is not purchased is treated in the same manner as a transferee of a member. (§ 35-55)
- Member Rights to Information. A dissociated member must submit a written demand to have access to records and state the purpose for the request, which must be proper. This is similar to a request for records from shareholders of a corporation. The LLC must respond within 10 days. (§ 10-15(a), (b))
- Assumed Binding Effect of Operating Agreement on LLC and New Members. The LLC is bound by and may enforce the operating agreement regardless of whether it assented to it. A new member is deemed to assent to the operating agreement. (§15-5(f), (g))
- Termination of the LLC. A Statement of Termination as opposed to the previously filed Articles of Dissolution is now filed when an LLC has been wound up. (§35-15)
The above changes are not intended to be an exhaustive list of changes that the LLC Act underwent. If you need representation regarding forming or operating a limited liability company, corporation, or other business entity, please call our office at (312) 715-8770 to set up a consultation.