United States: Overhaul Of Illinois LLC Act Provides Modernization, Increased Flexibility

Tom Kinasz is a partner in our Chicago office.


  • Extensive changes made to the Illinois Limited Liability Company Act (the Act) will impact both existing and new LLCs.
  • The changes are designed to adopt a "freedom of contract" approach for Illinois LLCs as well as give business owners and investors increased flexibility in drafting the governing provisions for their LLCs.
  • The changes, which took effect on July 1, 2017, bring the Act into closer conformity with the Revised Uniform Limited Liability Company Act adopted by other states.

Significant changes have been made to the Illinois Limited Liability Company Act (the Act) that will impact both existing and new LLCs. These changes, which took effect on July 1, 2017, were designed in part to bring the Act into closer conformity with the Revised Uniform Limited Liability Company Act that has been adopted by numerous other states. The primary intentions of the changes are to adopt a "freedom of contract" approach for Illinois LLCs as well as give business owners and investors increased flexibility in drafting the governing provisions for their LLCs.

Key Highlights

A summary of the more significant changes of interest include the following:

  1. Members are not automatically agents of the LLC. A member no longer is an agent of the LLC solely by reason of being a member. (Prior to the change, each member of a member-managed LLC and each manager of a manager-managed LLC was considered an agent of the LLC.) An LLC may file a Statement of Authority with the Illinois Secretary of State to identify a manager or member authorized to execute instruments related to the transfer of real property or other transactions. Similarly, the LLC may file a Statement of Denial with the Secretary of State to deny any authority granted in the Statement of Authority.
  2. Oral and implied operating agreements are now recognized. The Act states that an operating agreement is enforceable "whether or not there is a writing signed or record authenticated by a party against whom enforcement is sought, even if the agreement is not capable of performance within one year of its making."
  3. Binding effect of operating agreement. The LLC is automatically bound by its operating agreement, even if does not expressly consent to the agreement. Any individual who becomes a member is deemed to agree to the operating agreement. The operating agreement may be entered into before, after or at the time of the filing of the LLC's Articles of Organization.
  4. Presumed member-managed status of LLC. The LLC is deemed to be member-managed unless otherwise expressly stated in the operating agreement. The Articles of Organization filed with the Secretary of State will no longer specify management by members or managers. However, managers and members with manager authority must be reported in the Articles of Organization.
  5. Member status. A person may become a member without acquiring an economic interest in the LLC or being obligated to contribute to the capital of the LLC.
  6. Fiduciary duties. The operating agreement may eliminate or reduce a member's fiduciary duty of loyalty owed to the LLC by clear and unambiguous language. Also, the fiduciary duty of care may be altered, except to authorize intentional wrongdoing or knowing violations of law. The obligations of good faith and fair dealing may not be restricted or eliminated.
  7. Rights to inspect LLC records. The Act changes a member's right to information so that the LLC is no longer required to automatically give the information to a dissociated member unless such member submits a written demand upon the LLC stating the records request and purpose, and the purpose must be proper or it may be denied. The LLC will have 10 days to respond to a member's request for records. Transferees of distributional interests have limited rights to request LLC records.
  8. Judgment creditors of members. The rights of a judgment creditor of a member are modified, including limiting the creditor to a lien on a member's distributional rights.
  9. Dispute resolution. Courts will now have the authority to resolve disputes between LLC members by ordering a remedy other than dissolution, including the purchase of a separating member's interest.
  10. Dissociated members. The LLC is no longer required to purchase the interests held by a dissociated member.
  11. Conversion/domestication. The Act provides expanded rights permitting conversion of an LLC into a different entity form (such as a corporation) and vice versa. The Act will now permit domestication of a foreign LLC whereby it may become an Illinois LLC, and for an Illinois LLC to become an LLC in a foreign state.
  12. Documenting the dissolution. Upon completion of the winding-up process in dissolution, a Statement of Termination (replacing the Articles of Dissolution) is filed with the Secretary of State. Other changes apply to events of dissolution and how an LLC continues operation after dissolution.
  13. Recognition of electronic records. Greater recognition of electronic records is available. The definition of "record" now reads "information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form." All "writing" requirements are now subject to the Illinois Electronic Commerce Security Act. The act of signing a document has been expanded to cover electronic records: "sign" with respect to a record means to "adopt a tangible symbol" or "to attach to or logically associate with the record an electronic symbol, sound or process."

The preceding is not an exhaustive list of all changes that took effect on July 1. Because of these changes, amendments to operating agreements and/or the manner in which an LLC conducts business may be necessary. For a review of your Illinois LLC and how the recent changes to the Act could impact your company's governance and activities, contact your Holland & Knight attorney.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
McLane Middleton, Professional Association
Archer & Greiner P.C.
Womble Bond Dickinson
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
McLane Middleton, Professional Association
Archer & Greiner P.C.
Womble Bond Dickinson
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions