How Recent Changes to Illinois Law Affect Limited Liability Companies

 Posted on January 30, 2019 in Business Law

In mid-2017, a 112-page bill from the Illinois General Assembly significantly altered the Illinois Limited Liability Company Act. Its purpose was to align Illinois law with the Revised Uniform Limited Liability Company Act adhered to in most states. In addition to affecting the formation of future companies, the law also applied to LLCs already in existence. Changes that significantly impacted Illinois business entities and individuals starting a new company include:

Clarification of Procedures for Records Inspection and Copying

If an LLC member wishes to assess the business’ transactions and financial status, the company must provide the necessary records within 10 days of the request, unless it is understood the individual already knows the information contained therein. Disassociated members also maintain these rights, and any denial of access must be made in writing by the company.

Verbal and Inferred Agreements Now Accepted 

While this reverses the previous standard regarding oral and implied operating agreements, a written operating contract is still the preferred method. In some situations, a court may decide there is no proof of an oral agreement, but persons who neglected to draft a written agreement now have an avenue to assert their rights.

Members Not Automatically LLC Agents

While LLC members are not prevented from serving as an acting agent, the recent changes limit their potential impact. Prior law stated that every member was an agent in relation to company business.

Member’s Dissolution Not a Necessary Requirement 

If a member petitions for an exit because of alleged improprieties, the court can now force a buyout of their interest in the company. Also, if an LLC no longer has any members, it may remain in existence if the attorney for the last member pursues an agreement to keep it open within one calendar year of the final member’s dissociation. The lawyer is allowed to become a member to preserve the entity.

A Member Ending their Association Does Not End Their Obligation

An individual who dissociates from an LLC is not freed from any debts, liabilities, or requirements incurred to the business while they were a member.

Contact a Kane County Business Lawyer

Before you start a new business, you want an Elgin business attorney you can trust to advise you through the initial formation and in the years ahead. With its personal liability protection, an LLC might be your best option. To learn how Ariano Hardy Ritt Nyuli Richmond Lytle & Goettel, P.C.can help your enterprise, call us at 847-695-2400 to schedule a free consultation.  

Sources:

https://www.lexisnexis.com/lextalk/legal-content-insider/f/21/t/3810.aspx

https://www.natlawreview.com/article/10-things-illinois-limited-liability-companies-should-know-about-new-limited