2023 Illinois Compiled Statutes › Chapter 805 - BUSINESS ORGANIZATIONS › 805 ILCS 180/ - Limited Liability Company Act. › Article 15 - Management

(805 ILCS 180/Art. 15 heading)
Article 15.  
		Management
(805 ILCS 180/15-1)
Sec. 15-1. Management of limited liability company.
(a)  A limited liability company is a member-managed limited liability company unless the operating agreement:
(1)  expressly provides that:
(A)  the company is or will be manager-managed;
(B)  the company is or will be managed by         managers; or
(C)  management of the company is or will be         vested in managers; or
(2) includes words of similar import.
(b) 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 (d) of     this Section, any matter relating to the business of the company may be decided by a majority of the members.
(c) 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 (d) 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.
(d) 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 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) the consent of members to convert, merge with     another entity or domesticate under Article 37 or the Entity Omnibus Act; and
(10) the sale, lease, exchange, or other disposal of     all, or substantially all, of the company's property with or without goodwill.
(e) Action requiring the consent of members or managers under this Act may
be taken without a meeting.
(f) 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. 99-637, eff. 7-1-17; 100-561, eff. 7-1-18.)
(805 ILCS 180/15-3)
Sec. 15-3. General standards of member and manager's conduct.
(a) Without limiting any fiduciary duties owed at common law, 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 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) The implied contractual covenant of good faith and fair dealing applies to the operating agreement and members of a member-managed company in the same manner and to the same extent that it applies at law to other contracts and parties to the contracts.
(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 exercises some or all of the     authority of a manager in the conduct of the company's business is held to the standards of conduct in subsections (b), (c), (d), and (e) of this Section;
(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; and
(5)    subsection (d) of this Section applies to the     operating agreement and members and managers of the company. (Source: P.A. 102-230, eff. 1-1-22.)
(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. The operating agreement may establish that a limited liability company is a manager-managed limited liability company and the rights and duties under this Act of a person in the capacity of a manager.  To the extent
the operating agreement does not otherwise provide, this Act governs relations
among the members, managers, and company.
Except as provided in subsections (b), (c), (d), and (e) 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 1-40 or 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 subdivision (4), (5), or (6) of subsection (a) 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;
(6) (blank);
(6.5) eliminate or reduce the obligations or purposes     a low-profit limited liability company undertakes when organized under Section 1-26;
(7) eliminate or reduce the implied contractual     covenant 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 member's or manager's duties or the exercise of the member's or manager's rights is to be measured;
(8)  eliminate, vary, or restrict the priority of a     statement of authority over provisions in the articles of organization as provided in subsection (h) of Section 13-15;
(9)  vary the law applicable under Section 1-65;
(10)  vary the power of the court under Section 5-50;     or
(11)  restrict the right to approve a merger,     conversion, or domestication under Article 37 or the Entity Omnibus Act of a member that will have personal liability with respect to a surviving, converted, or domesticated organization.
(c) In addition, with respect to fiduciary duties, the operating agreement:
(1) may not  restrict or eliminate a fiduciary duty     owed at common law or under this Act, unless the restriction or elimination in the operating agreement is clear and unambiguous;
(2) may not restrict or eliminate the fiduciary duty     described in paragraph (2) of subsection (b) of Section 15-3, except in the manner described in paragraph (4) of this subsection (c);
(3) may not  alter the duty of care to authorize     intentional misconduct or knowing violation of law; and
(4)   may identify, subject to paragraph (1),     specific types or categories of activities or provide one or more examples of activities that do not violate any fiduciary duty described in subsection (b) of Section 15-3 or any fiduciary duty owed at common law and may determine standards by which the performance of the fiduciary duty is to be measured.
The changes made to paragraphs (2) and (4) of this subsection by this amendatory Act of the 102nd General Assembly apply to: (i) any operating agreement entered into before the effective date of this amendatory Act of the 102nd General Assembly if the fiduciary duties of the members or managers of the company described in paragraph (2) of subsection (b) of Section 15-3 are modified in any respect on or after the effective date of this amendatory Act of the 102nd General Assembly; and (ii) any operating agreement entered into on or after the effective date of this amendatory Act of the 102nd General Assembly.
(d)  The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by all the members or by one or more disinterested and independent members or persons after full disclosure of all material facts.
(e)  The operating agreement may alter or eliminate the right to payment or reimbursement for a member or manager provided by Section 15-7 and may eliminate or limit a member or manager's liability to the limited liability company and members for money damages, except for:
(1)  subject to subsections (c) and (d) of this     Section, breach of the duties as required in subdivisions (1), (2), and (3) of subsection (b) of Section 15-3 and subsection (g) of Section 15-3;
(2)  a financial benefit received by the member or     manager to which the member or manager is not entitled;
(3)  a breach of a duty under Section 25-35;
(4)  intentional infliction of harm on the company or     a member; or
(5)  an intentional violation of criminal law.
(f)  A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.
(g)  A person that becomes a member of a limited liability company is deemed to assent to the operating agreement.
(h)  An operating agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of the filing, may be made effective as of the time of formation of the limited liability company or as of the time or date provided in the operating agreement.
(Source: P.A. 102-230, eff. 1-1-22.)
(805 ILCS 180/15-7)
Sec. 15-7. Member and manager's right to reimbursement and indemnification.
(a) A limited liability company shall reimburse a member or manager for
payments made and indemnify a member or manager for debts, obligations, or other liabilities
incurred by the member or manager in the course of the member's or manager's activities on behalf of the company, if, in making the payment or incurring the debt, obligation, or other liability, the member or manager complied with the duties stated in Sections 15-3 and 25-35.
(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.
(e)   A limited liability company may purchase and maintain insurance on behalf of a member or manager of the company against liability asserted against or incurred by the member or manager in that capacity or arising from that status even if, under subsection (e) of Section 15-5, the operating agreement could not eliminate or limit the person's liability to the company for the conduct giving rise to the liability.
(Source: P.A. 99-637, eff. 7-1-17.)
(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.)
(805 ILCS 180/15-20)
Sec. 15-20. Actions by members.
(a) A member may maintain an action against a limited liability company, a manager, 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.
(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. 101-553, eff. 1-1-20.)