215 ILCS 5/10
2021 Illinois Compiled Statutes|Chapter 215 - INSURANCE|215 ILCS 5/ - Illinois Insurance Code.|Article II - Domestic Stock Companies

 (from Ch. 73, par. 622)(Section scheduled to be repealed on January 1, 2027)Sec. 10.     Directors.(1) After the date of incorporation, as determined  by Section 18, and until the first meeting of shareholders, the  incorporators shall have the powers and perform the duties ordinarily  possessed and exercised by a board of directors.(2) Upon the issuance of a certificate of authority to a company  organized under this article, the corporate powers shall be exercised by,  and its business and affairs shall be under the control of, a board of  directors composed of not less than 3 nor more than 21 natural persons who  are shareholders, except where the Company is a wholly owned subsidiary, and  who are at least 18 years of age and at least 3 of whom are residents and  citizens of this State.  After June 30, 2002, at least 20%, but not less than one,  of the directors of a company that is not subject to Section 131.20b shall be  persons who are not officers or employees of the company.  A person convicted  of a  felony may not be a director, and all directors shall be of good character and  known professional, administrative, or business ability, such business ability  to include a practical knowledge of insurance, finance, or investment.  The first  board of directors shall be elected at  the first meeting of shareholders, and, except as provided in subsection  (3) below, all directors shall be elected annually thereafter.(3) If the board of directors consists of 6 or more members, in lieu of  electing the membership of the whole board of directors annually, the  articles of incorporation may provide that the directors shall be divided  into two or three classes, each class to be as nearly equal in number as is  possible.  The term of office of directors of the first class shall expire  at the first annual meeting of shareholders after their election, that of  the second class shall expire at the second annual meeting after their  election, and that of the third class, if any, shall expire at the third  annual meeting after their election.  At each annual meeting after such  classification, a number of directors equal to the number of directors in  the class whose terms expire at the time of such meeting shall be elected  to hold office until the second succeeding annual meeting, if there are two  classes, or until the third succeeding annual meeting, if there are three  classes.(4) In all elections for directors every shareholder of common shares  has the right to vote, in person or by proxy, for the number of common  shares owned by him, for as many persons as there are directors to be  elected, or to cumulate his shares, and give one candidate as many votes as  the number of directors multiplied by the number of his shares equals, or  to distribute them on the same principle among as many candidates as he  thinks fit, and directors shall not be elected in any other manner.(5) Meetings of the board of directors, regular or special, may be held  either within or without the State. Meetings of the board of directors  shall be upon such notice as the by-laws may prescribe. Attendance of a  director at any meeting shall constitute a waiver of notice of such meeting  except where a director attends the meeting for the express purpose of  objecting to the transaction of any business because the meeting is not  lawfully called or convened. Neither the business to be transacted at, nor  the purpose of, any regular or special meeting of the board of directors  need be specified in the notice or waiver of notice of such meeting, unless  expressly otherwise provided by this Code.  Unless specifically prohibited by the articles of incorporation or  by-laws, members of the board of directors or of any committee of the board  of directors may participate in and act at any meeting of such board or  committee through the use of a conference telephone or other communications  equipment by means of which all persons participating in the meeting can  hear each other.  Participation in such meeting shall constitute attendance  and presence in person at the meeting of the person or persons so  participating.  Unless specifically prohibited by the articles of  incorporation or by-laws, members of the board of directors or of any  committee of the board of directors may take action without a meeting, if a  consent in writing setting forth the action so taken shall be signed by all  of the directors entitled to vote with respect to the subject matter  thereof, or by all of the members of such committee, as the case may be.  The consent shall be evidenced by one or more written approvals, each of  which sets forth the action taken and bears the signature of one or more  directors or committee members.  All approvals evidencing the consent shall  be filed in the company's corporate records.  The action taken shall be  effective when all of the directors, or members of the committee, have  approved the consent unless the consent specifies a different effective date.(6) If the number of directors provided for in the articles of  incorporation be indefinite, the number of directors to be elected, within  the minimum and maximum limits set forth in paragraph (2), shall be as  provided in the by-laws. The number of directors may be increased or  decreased from time to time by amendment to the by-laws.  The by-laws may establish a variable range for the size of the board by  prescribing a minimum and maximum number of directors.  The maximum may not  exceed the minimum by more than 5.  If a variable range is established, the  number of directors may be fixed or changed from time to time, within the  minimum and maximum, by the directors or the shareholders without further  amendment to the by-laws.(7) (a) A company may indemnify any person who was or is a party or is  threatened to be made a party to any threatened, pending or completed  action, suit or proceeding, whether civil, criminal, administrative or  investigative (other than an action by or in the right of the company) by  reason of the fact that he or she is or was a director, officer, employee  or agent, against expenses (including attorneys' fees), judgments, fines  and amounts paid in settlement actually and reasonably incurred by such  person in connection with such action, suit or proceeding, if such person  acted in good faith and in a manner he or she reasonably believed to be in,  or not opposed to the best interests of the company, and, with respect to  any criminal action or proceeding, had no reasonable cause to believe his  or her conduct was unlawful.  The termination of any action, suit or  proceeding by judgment, order, settlement, conviction, or upon a plea of  nolo contendere or its equivalent, shall not, of itself, create a presumption  that the person did not act in good faith and in a manner which he or she  reasonably believed to be in or not opposed to the best interest of the company  or, with respect to any criminal action or proceeding, that the person had  reasonable cause to believe that his or her conduct was unlawful.(b) A company may indemnify any person who was or is a party, or is  threatened to be made a party to any threatened, pending  or completed action or suit by or in the right of the company to procure a  judgment in its favor by reason of the fact that such person is or was a  director, officer, employee or agent of the company, or is or was serving at  the request of the company as a director, officer, employee or agent of  another company, partnership, joint venture, trust or other enterprise,  against expenses (including attorneys' fees) actually and reasonably  incurred by such person in connection with the defense or settlement of  such action or suit, if such person acted in good faith and in a manner he  or she reasonably believed to be in, or not opposed to the best interests  of the company, provided that no indemnification shall be made in respect  of any claim, issue or matter as to which such person shall have been  adjudged to be liable for negligence or misconduct in the performance of  his or her duty to the company, unless, and only to the extent that the  court in which such action or suit was brought shall determine upon  application that, despite the adjudication of liability, but in view of all  the circumstances of the case, such person is fairly and reasonably  entitled to indemnification for such expenses as the court shall deem proper.(c) To the extent that a director, officer, employee or agent of a  company has been successful, on the merits or otherwise, in the defense of  any action, suit or proceeding referred to in subsections (a) and (b), or  in defense of any claim, issue or matter therein, such person shall be  indemnified against expenses (including attorneys' fees) actually and  reasonably incurred by such person in connection therewith.(d) Any indemnification under subsections (a) and (b) (unless ordered by  a court) shall be made by the company only as authorized in the specific  case, upon a determination that indemnification of the director, officer,  employee or agent is proper in the circumstances because he or she has met  the applicable standard of conduct set forth in subsections (a) or (b).  Such determination shall be made (1) by the board of directors by a majority  vote of a quorum consisting of directors who were not parties to such  action, suit or proceeding, or (2) if such a quorum is not obtainable, or  even if obtainable, if a quorum of disinterested directors so directs, by  independent legal counsel in a written opinion, or (3) by the shareholders.(e) Expenses incurred in defending a civil or criminal action, suit or  proceeding may be paid by the company in advance of the final disposition  of such action, suit or proceeding, as authorized by the board of directors  in the specific case, upon receipt of an undertaking by or on behalf of the  director, officer, employee or agent to repay such amount, unless it shall  ultimately be determined that he or she is entitled to be indemnified by  the company as authorized in this Section.(f) The indemnification provided by this Section shall not be deemed  exclusive of any other rights to which those seeking indemnification may be  entitled under any by-law, agreement, vote of shareholders or  disinterested directors, or otherwise, both as to action in his or her  official capacity and as to action in another capacity while holding such  office, and shall continue as to a person who has ceased to be a director,  officer, employee or agent, and shall inure to the benefit of the heirs,  executors and administrators of such a person.(g) A company may purchase and maintain insurance on  behalf of any  person who is or was a director, officer, employee or agent of the company,  or who is or was serving at the request of the company as a director,  officer, employee or agent of another company, partnership, joint venture,  trust or other enterprise, against any liability asserted against such  person and incurred by such person in any such capacity, or arising out of  his or her status as such, whether or not the company would have the power  to indemnify such person against such liability under the provisions of this Section.(h) If a company has paid indemnification or has advanced expenses to a  director, officer, employee or agent, the company shall report the  indemnification or advance in writing to the shareholders with or before  the notice of the next shareholders meeting.(i) For purposes of this Section, references to "the company" shall  include, in addition to the surviving company, any merging company  (including any company having merged with a merging company) absorbed in a  merger which, if its separate existence had continued, would have had the  power and authority to indemnify its directors, officers, and employees or  agents, so that any person who was a director, officer, employee or agent  of such merging company, or was serving at the request of such merging  company as a director, officer, employee or agent of another company,  partnership, joint venture, trust or other enterprise, shall stand in the  same position under the provisions of this Section with respect to the  surviving company as such person would have with respect to such merging  company if its separate existence had continued.(j) For purposes of this Section, references to "other enterprises"  shall include employee benefit plans; references to "fines" shall include  any excise taxes assessed on a person with respect to any employee benefit  plan; and references to "serving at the request of the company" shall  include any service as a director, officer, employee or agent of the  company which imposes duties on, or involves services by such director,  officer, employee, or agent with respect to any employee benefit plan, its  participants, or beneficiaries.  A person who acted in good faith and in a  manner he or she reasonably believed to be in the best interests of the  participants and beneficiaries of any employee benefit plan shall be deemed  to have acted in a manner "not opposed to the best interest of the company"  as referred to in this Section.    (Source: P.A. 92-140, eff. 7-24-01.)