Chapter 805 - Business Organizations - Limited Liability Company Act.

(805 ILCS 180/Art. 15 heading)

Article 15. Management

    (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

(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.

(b) In a manager- managed company:
(1) each manager has equal rights in the management

and conduct of the company's business;

(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

(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

(B) holds office until a successor has been

elected and qualified, unless the manager sooner resigns or is removed.

(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

Section 15- 5;

(2) an amendment to the articles of organization

under Article 5;

(3) the compromise of an obligation to make a

contribution under Section 20- 5;

(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;

(5) the making of interim distributions under

subsection (a) of Section 25- 1, including the redemption of an interest;

(6) the admission of a new member;
(7) the use of the company's property to redeem an

interest subject to a charging order;

(8) the consent to dissolve the company under

subdivision (2) of subsection (a) of Section 35- 1;

(9) a waiver of the right to have the company's

business wound up and the company terminated under Section 35- 3;

(10) the consent of members to merge with another

entity under Section 37- 20; and

(11) the sale, lease, exchange, or other disposal of

all, or substantially all, of the company's property with or without goodwill.

(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.)

    (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;

(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

(3) to refrain from competing with the company in

the conduct of the company's business before the dissolution of the company.

    (c) A member's duty of care to a member- managed company and its other members in the conduct of a 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;

(2) a manager is held to the same standards of

conduct prescribed for members in subsections (b), (c), (d), and (e) of this Section;

(3) a member who pursuant to the operating agreement

exercises some or all of the authority of a manager in the management and conduct of the company's business 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

(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.

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

    (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

(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.)

    (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.)

(805 ILCS 180/15- 10)
Sec. 15- 10. (Repealed).
(Source: P.A. 87- 1062. Repealed by P.A. 90- 424, eff. 1- 1- 98.)

(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.)