Bill Text: IL HB3670 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Amends the Business Corporation Act of 1983. Increases from $200 to $500 the minimum base penalty for transacting business in this State without authority. Provides that a corporation that effects a change in the number of issued shares or the amount of paid-in capital prior to January 1, 2018, rather than effecting a change at any time, shall file a report regarding the issued shares or paid-in capital. Provides that franchise taxes are not payable on or after January 1, 2018. Provides that on and after January 1, 2018, a corporation that fails to file an annual report shall pay a penalty of $50 plus $10 per month or part of a month that the report is delinquent.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB3670 Detail]

Download: Illinois-2017-HB3670-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3670

Introduced , by Rep. David Harris

SYNOPSIS AS INTRODUCED:
805 ILCS 5/13.70 from Ch. 32, par. 13.70
805 ILCS 5/14.30 from Ch. 32, par. 14.30
805 ILCS 5/15.35 from Ch. 32, par. 15.35
805 ILCS 5/15.65 from Ch. 32, par. 15.65
805 ILCS 5/15.97 from Ch. 32, par. 15.97
805 ILCS 5/16.05 from Ch. 32, par. 16.05

Amends the Business Corporation Act of 1983. Increases from $200 to $500 the minimum base penalty for transacting business in this State without authority. Provides that a corporation that effects a change in the number of issued shares or the amount of paid-in capital prior to January 1, 2018, rather than effecting a change at any time, shall file a report regarding the issued shares or paid-in capital. Provides that franchise taxes are not payable on or after January 1, 2018. Provides that on and after January 1, 2018, a corporation that fails to file an annual report shall pay a penalty of $50 plus $10 per month or part of a month that the report is delinquent.
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FISCAL NOTE ACT MAY APPLY

A BILL FOR

HB3670LRB100 10806 JLS 21038 b
1 AN ACT concerning business.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Business Corporation Act of 1983 is amended
5by changing Sections 13.70, 14.30, 15.35, 15.65, 15.97, and
616.05 as follows:
7 (805 ILCS 5/13.70) (from Ch. 32, par. 13.70)
8 Sec. 13.70. Transacting business without authority.
9 (a) No foreign corporation transacting business in this
10State without authority to do so is permitted to maintain a
11civil action in any court of this State, until the corporation
12obtains that authority. Nor shall a civil action be maintained
13in any court of this State by any successor or assignee of the
14corporation on any right, claim or demand arising out of the
15transaction of business by the corporation in this State, until
16authority to transact business in this State is obtained by the
17corporation or by a corporation that has acquired all or
18substantially all of its assets.
19 (b) The failure of a foreign corporation to obtain
20authority to transact business in this State does not impair
21the validity of any contract or act of the corporation, and
22does not prevent the corporation from defending any action in
23any court of this State.

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1 (c) A foreign corporation that transacts business in this
2State without authority is liable to this State, for the years
3or parts thereof during which it transacted business in this
4State without authority, in an amount equal to all fees,
5franchise taxes, penalties and other charges that would have
6been imposed by this Act upon the corporation had it duly
7applied for and received authority to transact business in this
8State as required by this Act, but failed to pay the franchise
9taxes that would have been computed thereon, and thereafter
10filed all reports required by this Act; and, if a corporation
11fails to file an application for authority within 60 days after
12it commences business in this State, in addition thereto it is
13liable for a penalty of either 10% of the filing fee, license
14fee and franchise taxes or $500 $200 plus $25 $5.00 for each
15month or fraction thereof in which it has continued to transact
16business in this State without authority therefor, whichever
17penalty is greater. The Attorney General shall bring
18proceedings to recover all amounts due this State under this
19Section.
20 (d) The Attorney General shall bring an action to restrain
21a foreign corporation from transacting business in this State,
22if the authority of the foreign corporation to transact
23business has been revoked under subsection (m) of Section 13.50
24of this Act.
25(Source: P.A. 95-515, eff. 8-28-07.)

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1 (805 ILCS 5/14.30) (from Ch. 32, par. 14.30)
2 Sec. 14.30. Cumulative report of changes in issued shares
3or paid-in capital.
4 (a) Each domestic corporation and each foreign
5corporation authorized to transact business in this State that
6effects any change in the number of issued shares or the amount
7of paid-in capital prior to January 1, 2018 that has not
8theretofore been reported in any report other than an annual
9report, interim annual report, or final transition annual
10report, shall execute and file, in accordance with Section 1.10
11of this Act, a report with respect to the changes in its issued
12shares or paid-in capital:
13 (1) that have occurred subsequent to the last day of
14 the third month preceding its anniversary month in the
15 preceding year and prior to the first day of the second
16 month immediately preceding its anniversary month in the
17 current year; or
18 (2) in the case of a corporation that has established
19 an extended filing month, that have occurred during its
20 fiscal year; or
21 (3) in the case of a statutory merger or consolidation
22 or an amendment to the corporation's articles of
23 incorporation that affects the number of issued shares or
24 the amount of paid-in capital, that have occurred between
25 the last day of the third month immediately preceding its
26 anniversary month and the date of the merger,

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1 consolidation, or amendment or, in the case of a
2 corporation that has established an extended filing month,
3 that have occurred between the first day of its fiscal year
4 and the date of the merger, consolidation, or amendment; or
5 (4) in the case of a statutory merger or consolidation
6 or an amendment to the corporation's articles of
7 incorporation that affects the number of issued shares or
8 the amount of paid-in capital, that have occurred between
9 the date of the merger, consolidation, or amendment (but
10 not including the merger, consolidation, or amendment) and
11 the first day of the second month immediately preceding its
12 anniversary month in the current year, or in the case of a
13 corporation that has established an extended filing month,
14 that have occurred between the date of the merger,
15 consolidation or amendment (but not including the merger,
16 consolidation or amendment) and the last day of its fiscal
17 year.
18 (b) The corporation shall file the report required under
19subsection (a) not later than (i) the time its annual report is
20required to be filed in 1992 and in each subsequent year and
21(ii) not later than the time of filing the articles of merger,
22consolidation, or amendment to the articles of incorporation
23that affects the number of issued shares or the amount of
24paid-in capital of a domestic corporation or the certified copy
25of merger of a foreign corporation.
26 (c) The report shall net decreases against increases that

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1occur during the same taxable period. The report shall set
2forth:
3 (1) The name of the corporation and the state or
4 country under the laws of which it is organized.
5 (2) A statement of the aggregate number of shares which
6 the corporation has authority to issue, itemized by classes
7 and series, if any, within a class.
8 (3) A statement of the aggregate number of issued
9 shares as last reported to the Secretary of State in any
10 document required or permitted by this Act to be filed,
11 other than an annual report, interim annual report or final
12 transition annual report, itemized by classes and series,
13 if any, within a class.
14 (4) A statement, expressed in dollars, of the amount of
15 paid-in capital of the corporation as last reported to the
16 Secretary of State in any document required or permitted by
17 this Act to be filed, other than an annual report, interim
18 annual report or final transition annual report.
19 (5) A statement, if applicable, of the aggregate number
20 of shares issued by the corporation not theretofore
21 reported to the Secretary of State as having been issued,
22 and a statement, expressed in dollars, of the value of the
23 entire consideration received, less expenses, including
24 commissions, paid or incurred in connection with the
25 issuance, for, or on account of, the issuance of the
26 shares, itemized by classes, and series, if any, within a

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1 class; and in the case of shares issued as a share
2 dividend, the amount added or transferred to the paid-in
3 capital of the corporation for, or on account of, the
4 issuance of the shares; provided, however, that the report
5 shall also include the date of each issuance made prior to
6 the current reporting period, and the number of issued
7 shares and consideration received in each case.
8 (6) A statement, if applicable, expressed in dollars,
9 of the amount added or transferred to paid-in capital of
10 the corporation without the issuance of shares; provided,
11 however, that the report shall also include the date of
12 each increase made prior to the current reporting period,
13 and the consideration received in each case.
14 (7) In case of an exchange or reclassification of
15 issued shares resulting in an increase in the amount of
16 paid-in capital, a statement of the manner in which it was
17 effected, and a statement, expressed in dollars, of the
18 amount added or transferred to the paid-in capital of the
19 corporation as a result thereof, except any portion thereof
20 reported under any other subsection of this Section as a
21 part of the consideration received by the corporation for,
22 or on account of, its issued shares; provided, however,
23 that the report shall also include the date of each
24 exchange or reclassification made prior to the current
25 reporting period and the consideration received in each
26 case.

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1 (8) If the consideration received for the issuance of
2 any shares not theretofore reported as having been issued
3 consists of labor or services performed or of property,
4 other than cash, then a statement, expressed in dollars, of
5 the value of that consideration as fixed by the board of
6 directors.
7 (9) In the case of a cancellation of shares or a
8 reduction in paid-in capital made pursuant to Section 9.20,
9 the aggregate reduction in paid-in capital; provided,
10 however, that the report shall also include the date of
11 each reduction made prior to the current reporting period.
12 (10) A statement of the aggregate number of issued
13 shares itemized by classes and series, if any, within a
14 class, after giving effect to the changes reported.
15 (11) A statement, expressed in dollars, of the amount
16 of paid-in capital of the corporation after giving effect
17 to the changes reported.
18 (d) No additional license fees or franchise taxes shall be
19payable upon the filing of the report to the extent that
20license fees or franchise taxes shall have been previously paid
21by the corporation in respect of shares previously issued which
22are being exchanged for the shares the issuance of which is
23being reported, provided those facts are shown in the report.
24 (e) The report shall be made on forms prescribed and
25furnished by the Secretary of State.
26 (f) Until the report under this Section or a report under

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1Section 14.25 shall have been filed in the Office of the
2Secretary of State showing a reduction in paid-in capital, the
3basis of the annual franchise tax payable by the corporation
4shall not be reduced, provided, however, in no event shall the
5annual franchise tax for any taxable year be reduced if the
6report is not filed prior to the first day of the anniversary
7month or, in the case of a corporation which has established an
8extended filing month, the extended filing month of the
9corporation of that taxable year and before payment of its
10annual franchise tax.
11(Source: P.A. 90-421, eff. 1-1-98.)
12 (805 ILCS 5/15.35) (from Ch. 32, par. 15.35)
13 Sec. 15.35. Franchise taxes payable by domestic
14corporations. For the privilege of exercising its franchises in
15this State, each domestic corporation shall pay to the
16Secretary of State the following franchise taxes, computed on
17the basis, at the rates and for the periods prescribed in this
18Act:
19 (a) An initial franchise tax at the time of filing its
20first report of issuance of shares.
21 (b) An additional franchise tax at the time of filing (1) a
22report of the issuance of additional shares, or (2) a report of
23an increase in paid-in capital without the issuance of shares,
24or (3) an amendment to the articles of incorporation or a
25report of cumulative changes in paid-in capital, whenever any

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1amendment or such report discloses an increase in its paid-in
2capital over the amount thereof last reported in any document,
3other than an annual report, interim annual report or final
4transition annual report required by this Act to be filed in
5the office of the Secretary of State.
6 (c) An additional franchise tax at the time of filing a
7report of paid-in capital following a statutory merger or
8consolidation, which discloses that the paid-in capital of the
9surviving or new corporation immediately after the merger or
10consolidation is greater than the sum of the paid-in capital of
11all of the merged or consolidated corporations as last reported
12by them in any documents, other than annual reports, required
13by this Act to be filed in the office of the Secretary of
14State; and in addition, the surviving or new corporation shall
15be liable for a further additional franchise tax on the paid-in
16capital of each of the merged or consolidated corporations as
17last reported by them in any document, other than an annual
18report, required by this Act to be filed with the Secretary of
19State from their taxable year end to the next succeeding
20anniversary month or, in the case of a corporation which has
21established an extended filing month, the extended filing month
22of the surviving or new corporation; however if the taxable
23year ends within the 2 month period immediately preceding the
24anniversary month or, in the case of a corporation which has
25established an extended filing month, the extended filing month
26of the surviving or new corporation the tax will be computed to

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1the anniversary month or, in the case of a corporation which
2has established an extended filing month, the extended filing
3month of the surviving or new corporation in the next
4succeeding calendar year.
5 (d) An annual franchise tax payable each year with the
6annual report which the corporation is required by this Act to
7file.
8 (e) The provisions of this Section shall not apply to
9require the payment of any franchise tax that would otherwise
10have been due and payable on or after January 1, 2018. There
11shall be no refunds or proration of franchise tax for any taxes
12due and payable prior to January 1, 2018 on the basis that a
13portion of the corporation's taxable year extends beyond
14January 1, 2018. This amendatory Act of the 100th General
15Assembly shall not affect any right accrued or established, or
16any liability or penalty incurred prior to January 1, 2018.
17(Source: P.A. 86-985.)
18 (805 ILCS 5/15.65) (from Ch. 32, par. 15.65)
19 Sec. 15.65. Franchise taxes payable by foreign
20corporations. For the privilege of exercising its authority to
21transact such business in this State as set out in its
22application therefor or any amendment thereto, each foreign
23corporation shall pay to the Secretary of State the following
24franchise taxes, computed on the basis, at the rates and for
25the periods prescribed in this Act:

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1 (a) An initial franchise tax at the time of filing its
2application for authority to transact business in this State.
3 (b) An additional franchise tax at the time of filing (1) a
4report of the issuance of additional shares, or (2) a report of
5an increase in paid-in capital without the issuance of shares,
6or (3) a report of cumulative changes in paid-in capital or a
7report of an exchange or reclassification of shares, whenever
8any such report discloses an increase in its paid-in capital
9over the amount thereof last reported in any document, other
10than an annual report, interim annual report or final
11transition annual report, required by this Act to be filed in
12the office of the Secretary of State.
13 (c) Whenever the corporation shall be a party to a
14statutory merger and shall be the surviving corporation, an
15additional franchise tax at the time of filing its report
16following merger, if such report discloses that the amount
17represented in this State of its paid-in capital immediately
18after the merger is greater than the aggregate of the amounts
19represented in this State of the paid-in capital of such of the
20merged corporations as were authorized to transact business in
21this State at the time of the merger, as last reported by them
22in any documents, other than annual reports, required by this
23Act to be filed in the office of the Secretary of State; and in
24addition, the surviving corporation shall be liable for a
25further additional franchise tax on the paid-in capital of each
26of the merged corporations as last reported by them in any

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1document, other than an annual report, required by this Act to
2be filed with the Secretary of State, from their taxable year
3end to the next succeeding anniversary month or, in the case of
4a corporation which has established an extended filing month,
5the extended filing month of the surviving corporation; however
6if the taxable year ends within the 2 month period immediately
7preceding the anniversary month or the extended filing month of
8the surviving corporation, the tax will be computed to the
9anniversary or, extended filing month of the surviving
10corporation in the next succeeding calendar year.
11 (d) An annual franchise tax payable each year with any
12annual report which the corporation is required by this Act to
13file.
14 (e) The provisions of this Section shall not apply to
15require the payment of any franchise tax that would otherwise
16have been due and payable on or after January 1, 2018. There
17shall be no refunds or proration of franchise tax for any taxes
18due and payable prior to January 1, 2018 on the basis that a
19portion of the corporation's taxable year extends beyond
20January 1, 2018. This amendatory Act of the 100th General
21Assembly shall not affect any right accrued or established, or
22any liability or penalty incurred prior to January 1, 2018.
23(Source: P.A. 92-33, eff. 7-1-01.)
24 (805 ILCS 5/15.97) (from Ch. 32, par. 15.97)
25 Sec. 15.97. Corporate Franchise Tax Refund Fund.

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1 (a) Beginning July 1, 1993, a percentage of the amounts
2collected under Sections 15.35, 15.45, 15.65, and 15.75 of this
3Act shall be deposited into the Corporate Franchise Tax Refund
4Fund, a special Fund hereby created in the State treasury. From
5July 1, 1993, until December 31, 1994, there shall be deposited
6into the Fund 3% of the amounts received under those Sections.
7Beginning January 1, 1995, and for each fiscal year beginning
8thereafter, 2% of the amounts collected under those Sections
9during the preceding fiscal year shall be deposited into the
10Fund.
11 (b) Beginning July 1, 1993, moneys in the Fund shall be
12expended exclusively for the purpose of paying refunds payable
13because of overpayment of franchise taxes, penalties, or
14interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
1516.05 of this Act and making transfers authorized under this
16Section. Refunds in accordance with the provisions of
17subsections (f) and (g) of Section 1.15 and Section 1.17 of
18this Act may be made from the Fund only to the extent that
19amounts collected under Sections 15.35, 15.45, 15.65, and 15.75
20of this Act have been deposited in the Fund and remain
21available. On or before August 31 of each year, the balance in
22the Fund in excess of $100,000 shall be transferred to the
23General Revenue Fund. Notwithstanding the above, for the period
24commencing on the effective date of this amendatory Act of the
25100th General Assembly and continuing through December 31,
262020, amounts in the fund shall not be transferred to the

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1General Revenue Fund and shall be used to pay refunds in
2accordance with the provisions of this Act. Within a reasonable
3time after January 1, 2021, the Secretary of State shall direct
4and the Comptroller shall order transferred to the General
5Revenue Fund all amounts remaining in the fund.
6 (c) This Act shall constitute an irrevocable and continuing
7appropriation from the Corporate Franchise Tax Refund Fund for
8the purpose of paying refunds upon the order of the Secretary
9of State in accordance with the provisions of this Section.
10(Source: P.A. 99-620, eff. 1-1-17.)
11 (805 ILCS 5/16.05) (from Ch. 32, par. 16.05)
12 Sec. 16.05. Penalties and interest imposed upon
13corporations.
14 (a) Each corporation, domestic or foreign, that fails or
15refuses to file any annual report or report of cumulative
16changes in paid-in capital and pay any franchise tax due
17pursuant to the report prior to the first day of its
18anniversary month or, in the case of a corporation which has
19established an extended filing month, the extended filing month
20of the corporation shall pay a penalty of 10% of the amount of
21any delinquent franchise tax due for the report. From February
221, 2008 through March 15, 2008, no penalty shall be imposed
23with respect to any amount of delinquent franchise tax paid
24pursuant to the Franchise Tax and License Fee Amnesty Act of
252007. Notwithstanding the above, commencing on January 1, 2018,

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1each corporation, domestic or foreign, that fails or refuses to
2file any annual report prior to the first day of its
3anniversary month, or in the case of a corporation which has
4established an extended filing month, the extended filing month
5of the corporation, shall pay a penalty of $50 plus $10 for
6each calendar month or part of the month that it is delinquent.
7 (b) Each corporation, domestic or foreign, that fails or
8refuses to file a report of issuance of shares or increase in
9paid-in capital within the time prescribed by this Act is
10subject to a penalty on any obligation occurring prior to
11January 1, 1991, and interest on those obligations on or after
12January 1, 1991, for each calendar month or part of month that
13it is delinquent in the amount of 2% of the amount of license
14fees and franchise taxes provided by this Act to be paid on
15account of the issuance of shares or increase in paid-in
16capital. From February 1, 2008 through March 15, 2008, no
17penalty shall be imposed, or interest charged, with respect to
18any amount of delinquent license fees and franchise taxes paid
19pursuant to the Franchise Tax and License Fee Amnesty Act of
202007.
21 (c) Each corporation, domestic or foreign, that fails or
22refuses to file a report of cumulative changes in paid-in
23capital or report following merger within the time prescribed
24by this Act is subject to interest on or after January 1, 1992,
25for each calendar month or part of month that it is delinquent,
26in the amount of 2% of the amount of franchise taxes provided

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1by this Act to be paid on account of the issuance of shares or
2increase in paid-in capital disclosed on the report of
3cumulative changes in paid-in capital or report following
4merger, or $1, whichever is greater. From February 1, 2008
5through March 15, 2008, no interest shall be charged with
6respect to any amount of delinquent franchise tax paid pursuant
7to the Franchise Tax and License Fee Amnesty Act of 2007.
8Notwithstanding the above, commencing on January 1, 2018, each
9corporation, domestic or foreign, that fails or refuses to file
10any report following merger within the time prescribed by this
11Act, shall pay a penalty of $50 plus $10 for each calendar
12month or part of the month that it is delinquent.
13 (d) If the annual franchise tax, or the supplemental annual
14franchise tax for any 12-month period commencing July 1, 1968,
15or July 1 of any subsequent year through June 30, 1983,
16assessed in accordance with this Act, is not paid by July 31,
17it is delinquent, and there is added a penalty prior to January
181, 1991, and interest on and after January 1, 1991, of 2% for
19each month or part of month that it is delinquent commencing
20with the month of August, or $1, whichever is greater. From
21February 1, 2008 through March 15, 2008, no penalty shall be
22imposed, or interest charged, with respect to any amount of
23delinquent franchise taxes paid pursuant to the Franchise Tax
24and License Fee Amnesty Act of 2007.
25 (e) If the supplemental annual franchise tax assessed in
26accordance with the provisions of this Act for the 12-month

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1period commencing July 1, 1967, is not paid by September 30,
21967, it is delinquent, and there is added a penalty prior to
3January 1, 1991, and interest on and after January 1, 1991, of
42% for each month or part of month that it is delinquent
5commencing with the month of October, 1967. From February 1,
62008 through March 15, 2008, no penalty shall be imposed, or
7interest charged, with respect to any amount of delinquent
8franchise taxes paid pursuant to the Franchise Tax and License
9Fee Amnesty Act of 2007.
10 (f) If any annual franchise tax for any period beginning on
11or after July 1, 1983, is not paid by the time period herein
12prescribed, it is delinquent and there is added a penalty prior
13to January 1, 1991, and interest on and after January 1, 1991,
14of 2% for each month or part of a month that it is delinquent
15commencing with the anniversary month or in the case of a
16corporation that has established an extended filing month, the
17extended filing month, or $1, whichever is greater. From
18February 1, 2008 through March 15, 2008, no penalty shall be
19imposed, or interest charged, with respect to any amount of
20delinquent franchise taxes paid pursuant to the Franchise Tax
21and License Fee Amnesty Act of 2007.
22 (g) Any corporation, domestic or foreign, failing to pay
23the prescribed fee for assumed corporate name renewal when due
24and payable shall be given notice of nonpayment by the
25Secretary of State by regular mail; and if the fee together
26with a penalty fee of $5 is not paid within 90 days after the

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1notice is mailed, the right to use the assumed name shall
2cease.
3 (h) Any corporation which (i) puts forth any sign or
4advertisement, assuming any name other than that by which it is
5incorporated or otherwise authorized by law to act or (ii)
6violates Section 3.25, shall be guilty of a Class C misdemeanor
7and shall be deemed guilty of an additional offense for each
8day it shall continue to so offend.
9 (i) Each corporation, domestic or foreign, that fails or
10refuses (1) to answer truthfully and fully within the time
11prescribed by this Act interrogatories propounded by the
12Secretary of State in accordance with this Act or (2) to
13perform any other act required by this Act to be performed by
14the corporation, is guilty of a Class C misdemeanor.
15 (j) Each corporation that fails or refuses to file articles
16of revocation of dissolution within the time prescribed by this
17Act is subject to a penalty for each calendar month or part of
18the month that it is delinquent in the amount of $50.
19(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;
2096-1121, eff. 1-1-11.)
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