Bill Text: IL SB0174 | 2009-2010 | 96th General Assembly | Engrossed

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Bill Title: Amends the Limited Liability Company Act. Provides that a member of a manager-managed company is held to specified standards of conduct to the extent that the member exercises the managerial authority vested in a manager under the Act (rather than applying such standards to a member who pursuant to the operating agreement exercises some or all of the authority of a manager in the management and conduct of the company's business).

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Engrossed - Dead) 2010-03-24 - Added as Co-Sponsor Sen. Martin A. Sandoval [SB0174 Detail]

Download: Illinois-2009-SB0174-Engrossed.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Limited Liability Company Act is amended by
changing Section 15-3 as follows:
(805 ILCS 180/15-3)
Sec. 15-3. General standards of member and manager's
conduct.
(a) 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

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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) A member shall discharge his or her duties to a
member-managed company and its other members under this Act or
under the operating agreement and exercise any rights
consistent with the obligation of good faith and fair dealing.
(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

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prescribed for members in subsections (b), (c), (d), and
(e) of this Section;
(3) a member who pursuant to the operating agreement
exercises some or all of the authority of a manager in the
management and conduct of the company's business is held to
the standards of conduct in subsections (b), (c), (d), and
(e) of this Section to the extent that the member exercises
the managerial authority vested in a manager by this Act;
and
(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.
(Source: P.A. 95-331, eff. 8-21-07.)