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| Illinois Limited Liability Company Act | |
|---|---|
| Title | Illinois Limited Liability Company Act |
| Enacted by | Illinois General Assembly |
| Citation | 805 ILCS 180/1‑1 et seq. |
| Enacted | 1994 |
| Status | current |
Illinois Limited Liability Company Act The Illinois Limited Liability Company Act is the statutory framework that governs the formation, operation, rights, and dissolution of limited liability companies in Illinois. It establishes procedures for registration with the Secretary of State (Illinois), prescribes standards for member and manager governance, allocates fiduciary duties among stakeholders, and coordinates with federal statutes such as the Internal Revenue Code and state codes including the Uniform Commercial Code. The Act has been shaped by judicial interpretation from courts such as the Illinois Supreme Court and the United States Court of Appeals for the Seventh Circuit.
The Act codifies the legal form of the limited liability company as recognized in Illinois statutory law and aligns with model principles from the Uniform Limited Liability Company Act and trends in the American Bar Association. It situates LLCs alongside other entity forms governed by parallel statutes like the Illinois Business Corporation Act and the Illinois Partnership Act, while interacting with federal statutes such as the Securities Act of 1933 in capital-raising contexts. Judicial pronouncements in cases from the Northern District of Illinois and rulings referencing the Restatement (Second) of Contracts have influenced statutory interpretation.
Formation requires filing Articles of Organization with the Secretary of State (Illinois), including the name compliant with naming rules similar to those under the Trademark Act of 1946 for distinctiveness. Statutory provisions define required elements like registered agent designation, term, and purpose, echoing filing practices used in jurisdictions such as Delaware—notably the Delaware Limited Liability Company Act. Documents may be supplemented by an Operating Agreement, akin to agreements under the Uniform Partnership Act (1997). Disputes over formation have been litigated in venues including the Circuit Court of Cook County and appealed to the Illinois Appellate Court.
The Act permits member-managed or manager-managed structures, enabling flexibility paralleling governance choices found in the New York Limited Liability Company Law and the California Corporations Code. It addresses voting rights, meeting procedures, and amendment processes, intersecting with fiduciary duty doctrines as developed in cases like those before the Illinois Supreme Court and the Seventh Circuit. Governance mechanisms often reference corporate governance best practices from institutions such as the American Institute of Certified Public Accountants and rules impacting public companies subject to the Securities Exchange Act of 1934 when LLCs are involved in securities transactions.
The Act delineates member rights regarding distributions, information access, and transfer restrictions, with creditor protections including charging order remedies comparable to provisions under the Uniform Commercial Code and interpretations from the United States Bankruptcy Court for the Northern District of Illinois. Remedies and enforcement actions have been considered in litigation involving firms with ties to entities regulated by agencies like the Federal Trade Commission and cases referencing precedents from the United States Supreme Court. Contractual freedom under Operating Agreements interacts with statutory mandatory provisions and doctrines from the Restatement (Second) of Contracts.
Tax classification choices under the Internal Revenue Code—including partnership taxation, disregarded entity status, or corporate treatment—affect federal obligations and state-level reporting with the Illinois Department of Revenue. The Act preserves limited liability shielding members from company obligations, subject to equitable remedies such as veil-piercing applied by courts including the Illinois Supreme Court and the United States Court of Appeals for the Seventh Circuit. Interaction with tax statutes and decisions from the United States Tax Court has shaped planning by practitioners from firms in Chicago and law schools such as the University of Chicago Law School.
Dissolution procedures—voluntary, administrative, judicial, or upon specified events—require winding up, asset distribution, and filing of Certificates of Termination with the Secretary of State (Illinois). Creditors’ claims processes parallel insolvency principles applied in proceedings under the Bankruptcy Code and have been the subject of adjudication in the United States District Court for the Northern District of Illinois. Judicial supervision of dissolution has invoked equitable doctrines seen in decisions from the Illinois Appellate Court and federal appellate panels.
The Act has undergone amendments addressing notice requirements, electronic filings, and clarity on fiduciary duties, reflecting technological and doctrinal shifts similar to reforms in Delaware and model acts promulgated by the Uniform Law Commission. Recent legislative sessions in the Illinois General Assembly considered updates impacting registered agents, series LLCs, and statutory safe harbors inspired by developments in jurisdictions such as Nevada and Wyoming. Commentary from bar associations including the Illinois State Bar Association and scholarship from institutions like Northwestern University Pritzker School of Law have informed reform debates.
Category:Illinois statutes