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Unlike several other states that have recently repealed statutes, Illinois has maintained the current LLC Act but in a substantially amended form.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:
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.
Oral Operating Agreements
Operating Agreements may now be oral, in a record, implied, or in any combination of these options.
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.