Illinois Makes Sweeping Changes to Its LLC Act

August 11, 2017

Effective as of July 1, 2017, Illinois has enacted sweeping changes to its Limited Liability Company Act (“LLC Act”) through House Bill 4361.

Unlike several other states that have recently repealed statutes, Illinois has maintained the current LLC Act but in a substantially amended form.

The changes serve to conform Illinois law more closely to the model laws for LLCs drafted by the National Conference of Commissioners on Uniform State Laws and adopted by 15 other states.

10 of the key changes that may impact current LLCs or future ventures are as follows:

  1. Default Member Management

Under the revised law, unless expressly provided for in the operating agreement, an LLC is member-managed as a default rule. Similar to Delaware, when filing the Articles of Organization for an Illinois LLC, the organizer will no longer be required to specify whether the LLC will be member-managed or manager-managed, but instead will only be required to provide information regarding each manager and each member having such management authority.

  1. Oral Operating Agreements
  2. Operating Agreements may now be oral, in a record, implied, or in any combination of these options.
  3. Operating Agreements are now expressly exempted from the Statute of Frauds, meaning the operating agreement does not have to be signed by the party against whom enforcement is sought even if the party is not capable of performance within one year.
  1. Designating Specific Authority of Members and Managers

Illinois LLCs can now file a “Statement of Authority” with the Illinois Secretary of State that establishes or limits the authority of a member or manager to transfer real estate or enter into other transactions on behalf of the LLC. If the member or manager named in a Statement of Authority wishes to deny the authority granted to them, they can file a Statement of Denial with the Illinois Secretary of State.

  1. Waiver of Fiduciary Duties

With the exception of the duty of care, the operating agreement may now restrict or eliminate a fiduciary duty by including clear and unambiguous language. The operating agreement can now alter the duty of care so long as it does not authorize intentional misconduct or a knowing violation of law.

  1. Limitation of Member’s or Manager’s Liability

The operating agreement can eliminate or limit a member or manager’s liability to the LLC and the other members, unless the liability relates to a breach of certain specified fiduciary duties; a financial benefit to which such member or manager is not entitled; an intentional infliction of harm on the LLC or another member; or an intentional crime.

  1. Elimination of Assumed Agency Status

A member of an LLC is no longer considered an agent of the LLC solely as a result of being a member.

  1. Access to Books and Records

Upon substantial revision to this section, now within 10 days after receiving a demand for information, the LLC must provide the information or decline, stating its reasons in a record. A disassociated member may have access to information to which the individual was entitled while a member if the information is sought in good faith for a proper purpose.

  1. Authorized Signatories for State Filings

Documents to be filed with the Illinois Secretary of State may now be signed by any person authorized by the LLC, not just a manager or member, provided that both the name and title of the person signing the document is typed or printed where indicated on the applicable form.  In addition, digital signatures will now be accepted by the Illinois Secretary of State.

  1. Administrative Dissolution

When an LLC is administratively dissolved (i.e., for failure to file an annual report), no other entity may use the name of the dissolved LLC for a period of three years after the dissolution. If the LLC is reinstated within such three-year period, it will resume use of its name unless it changes its name as part of the reinstatement process.

  1. Statement of Termination

A statement of Termination, formally known as Articles of Dissolution, is now filed when a dissolved LLC has been wound up in order to terminate the LLC’s existence.

For more information and guidance on the recent changes to the Illinois LLC Act or Illinois business formation and planning, please email us at

ByrdAdatto attorney Alex Thiersch

Alex R. Thiersch

ByrdAdatto attorney Alex R. Thiersch’s entrepreneurial spirit has helped him create his own path in business and health care.

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