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Corporate Law DepartmentsThe newsletter of the ISBA’s Corporate Law Departments Section

November 2012, vol. 50, no. 3

Illinois General Assembly cleans up business organization statutes

Some of Illinois’ business organizations statutes got a touch-up recently when Senate Bill 1691, known as the Business Law Cleanup Bill (“Cleanup Bill”), became law. Illinois Public Act 97-0839. The Cleanup Bill amends the Limited Liability Company Act, the Uniform Partnership Act, and the Uniform Limited Partnership Act, making fees, filing, and procedures for reinstatement more consistent across the various types of entities.1 This article summarizes the changes to each statute affected by the Cleanup Bill to serve as a quick reference for businesses and their counsel.

Limited Liability Company Act, 805 ILCS 180/1-1 et seq.

The Cleanup Bill made only a few changes to the Limited Liability Company Act. First, it changes the definition of the term “articles of organization.” In addition to the original articles filed by the Secretary of State, “articles of organization” now includes all amendments to the original articles through articles of amendment, articles of merger, or a statement of correction affecting the articles.2 Second, it changes the heading of Article 37 to include “series” in addition to conversions and mergers, as Section 37-40 allows an LLC to establish a series of members, managers, or interests. Finally, the Cleanup Bill makes the following changes to the fees charged to LLCs:

 

• The filing fee for restated articles of organization in connection with a limited liability company with the “ability to establish” series under article 37-40 is $750. The change is that this provision not only applies to an LLC with series, but to an LLC with the ability to establish series.3

• The $150 filing fee for amendments now applies instead to “articles of amendment or an amended application for admission.”4

• The renewal fee for a reserved name is deleted and the fee to file a notice of a cancellation of a reserved name is set at $100.5

• The filing fee for an application to cancel an assumed name is $100.6

• The fee for filing an annual report of a domestic or foreign LLC with the ability to establish series is $250, plus $50 for each designated series that is active on the last day of the third month preceding the company’s anniversary month.7

• The fee for filing a certificate of designation of any LLC with the ability to establish series is $50.8

Uniform Partnership Act, 805 ILCS 206/100 et seq.

The Cleanup Bill makes more substantive changes to the Uniform Partnership Act. Before, any statement filed by the partnership had to be executed by 2 partners, but this provision now applies only to a “statement of qualification or foreign qualification.”9 In addition, a new section allows electronic filing.10 It requires that the documents being filed include the name of the person submitting them.11 In so doing, the person submitting the document affirms and acknowledges that the instrument is her act or deed, it is the act or deed of the partnership, and the facts stated are true.12

The Cleanup Bill tweaked the fee provisions as well. In addition to the existing fees, under the new version of the Uniform Partnership Act the Secretary of State will charge and collect:

 

• $25 for furnishing a copy or certified copy of any document related to a registered LLP, changing the provision that charged a minimum of $25 and $1 per page for more than 25 pages;

• $200 to file an application for reinstatement; and

• $25 to file any other document.13

 

To make the Uniform Partnership Act more consistent with other organization statutes, the legislature added a new section addressing reinstatement of a limited liability partnership. If the LLP status of a partnership expired as a result of a failure to file a renewal report required by section 1003, it may reinstate its status by filing an application for reinstatement with the Secretary of State; filing all reports that are due or are becoming due; and paying all fees owed to the Secretary of State.14 The application for reinstatement must be filed in duplicate and must include the name of the LLP at the time of expiration; the date of expiration; and the name and address of the agent of service of process, provided that any change to the agent has been properly reported.15 When the partnership has complied with these provisions, the Secretary of State must file the application for reinstatement.16 The new provision for reinstatement has a significant effect. First, the partnership’s status as an LLP will “be deemed to have continued without interruption from the date of expiration,” and it will go on as though it had never expired.17 Second, all actions by the partners during the period of expiration “that would have been legal and valid but for the expiration” will stand ratified and confirmed.18

The last change to the Uniform Partnership Act also deals with limited liability partnerships. Specifically, it adds new provisions dealing with the resignation of agents for service of process (often referred to as a “registered agent”). For both foreign and domestic LLPs, the agent for service of process can resign at any time by filing an executed written notice with the Secretary of State and mailing a copy of the notice to the LLP at its chief executive office 10 days before filing. The notice must include the name of the LLP; the name of the agent; the address, including street, number, city, and county, for the LLP’s outgoing agent; a statement that the agent is resigning; the effective date of the resignation, which must be at least 30 days after filing; the address of the LLP’s chief executive office; and a statement that copy of the notice has been sent by registered or certified mail in accordance with this section. Finally, a new agent for service of process must be placed on record within 60 days of the outgoing agent’s notice.19

Uniform Limited Partnership Act, 805 ILCS 215/0.01 et seq.

In keeping with the goal of consistency, the Cleanup Bill strikes the existing process for resignation of a registered agent and adds procedures identical to those just outlined for LLPs.20 It also adds a new section addressing those situations where the Secretary of State must serve as the limited partnership’s agent for service of process. As before, if a limited partnership does not appoint or maintain an agent for service of process, the Secretary of State is an agent of the limited partnership for service of process, notice, or demand.21 The Act strikes the old procedure for serving process on the Secretary of State as a limited partnership’s agent and adds the following provisions.22 First, the person must file a copy of the document she wishes to serve along with any other papers required by law and pay a $50 fee.23 The person bringing the action must also send notice of service on the Secretary of State along with a copy of the document being served and accompanying papers by registered or certified mail to two other addresses.24 One is the last recorded address of the limited partnership’s agent for service of process, and the other is the address that the person knows or has reason to believe is likely to result in actual notice.25 Finally, the person must attach an affidavit of compliance with this section using the form prescribed the Secretary of State.26

This section added a few minor changes to amendment and recertification process. Before, the ULPA allowed a limited partnership to amend its certificate at any time for any proper purpose. Now, this provision is subject to the limited partnership having properly filed its annual report and being in good standing with the Secretary of State. In addition, the Act adds a provision that makes clear that a restated certificate of limited partnership supersedes the original certificate of limited partnership and all amendments filed before the restated certificate.27

As with entities under the Uniform Partnership Act, limited partnerships may now file documents and reports electronically. Again, the documents being filed must include the name of the person submitting them. In so doing, the person submitting the document affirms and acknowledges that the instrument is her act or deed, it is the act or deed of the partnership, and the facts stated are true. This satisfies the signature provision of section 204 of the ULPA.28

The Cleanup Act contains some changes to the provisions for administrative dissolution. Unlike before, the Secretary of State may administratively dissolve a limited partnership if it fails to file its annual report (rather than deliver it) or if it fails to appoint and maintain an agent for service of process in Illinois after a previous registered agent’s notice of resignation. 805 ILCS 215/809(a). If a limited partnership has been administratively dissolved, it may be reinstated by the Secretary of State upon (1) filing of an application for reinstatement; (2) filing with the Secretary of State all reports that are due or becoming due; and (3) payment of all fees and penalties that are due or becoming due. 805 ILCS 215/810(a). Like reinstatement for LLP status, this new provision has two benefits. First, the partnership’s status as an LLP will “be deemed to have continued without interruption from the date of expiration,” and it will go on as though it had never expired. 805 ILCS 215/810(d)(i). Second, all actions by the partners during the period of expiration “that would have been legal and valid but for the expiration” will stand ratified and confirmed. 805 ILCS 215/810(d)(ii).

The Cleanup Act also adds a few new provisions solely applicable to foreign limited partnerships. To amend its certificate of authority, a foreign limited partnership must deliver an application to the Secretary of State with the name of the organization, provided the name complies with Illinois law; the date of filing; and the amendment itself. 805 ILCS 215/902.5(a). A foreign limited partnership must deliver an amendment any time it adds a new general partner or dissociates an existing one. 805 ILCS 215/902.5(b). If a general partner becomes aware of any falsehood or misstatement in the application for certificate of authority, she must amend the certificate or file a statement of correction. 805 ILCS 215/902.5(c).

Foreign limited partnerships should also be aware that the Secretary of State can revoke their certificate of authority to transact business in Illinois if they fail to file an annual report within 60 days of the due date or if they fail to renew or apply to change their alternate assumed name.29 If the Secretary of State determines that there are grounds for revocation, it will file a record of its determination and send a copy of the record to the foreign limited partnership.30 Then, if the foreign limited partnership does not correct its mistake within 60 days, the Secretary of State can file a declaration of revocation, and the organization’s authority to do business in Illinois will cease.31 To reinstate its authority to do business in the State, the foreign limited partnership must follow the same procedures as those outlined above for LLPs, and reinstatement will have the same effect: the entity’s limited partnership status will be deemed to have continued uninterrupted and all actions during the period of revocation will be ratified.

Finally, the Cleanup Bill tweaked a few of the fee provisions in the Uniform Limited Partnership Act.

 

• $150 for certificate of limited partnership for a domestic organization, certificate of authority for a foreign limited partnership, and a restated certificate of limited partnership.

• $50 for an amendment or certificate of amendment.

• $25 for a statement of cancellation or notice of termination.

 

In conclusion, the Cleanup Bill implements common-sense changes and serves to make Illinois’ business organizations statutes more consistent. There is no principled reason to have, for example, different reinstatement procedures among different business forms. In addition, the Cleanup Bill allows individual members of LLPs and limited partnerships to cover themselves for liabilities that arose during a period in which they were not in compliance with reporting requirements. Finally, the provisions on registered agents and fees are essential for businesses to know. ■

__________

 

Scott M. Metzger is a third year law student at the University of Illinois College of Law.

 

1. The Cleanup Bill also makes a technical change to the General Not-for-Profit Corporation Act of 1986, changing the fee that the Secretary of State charges for furnishing copies of any document, paper or certificate to $5.

2. 805 ILCS 180/1-5.

3. 805 ILCS 180/50-10(b)(1).

4. 805 ILCS 180/50-10(b)(2).

5. 805 ILCS 180/50-10(b)(4).

6. 805 ILCS 180/50-10(b)(10).

7. 805 ILCS 180/50-10(b)(11).

8. 805 ILCS 180/50-10(b)(18).

9. 805 ILCS 206/105(c).

10. 805 ILCS 206/105.5.

11. Id.

12. Id. This satisfied the signature requirement in section 105 of the Uniform Partnership Act.

13. 805 ILCS 206/108(b)(1), (15), (16).

14. 805 ILCS 206/1004(a).

15. 805 ILCS 206/1004(b).

16. 805 ILCS 206/1004(c).

17. 805 ILCS 206/1004(d)(i).

18. 805 ILCS 206/1004(d)(ii).

19. 805 ILCS 206/1005; 805 ILCS 206/1106.

20. Compare 805 ILCS 215/116 with 805 ILCS 206/1005.

21. 805 ILCS 215/117(b).

22. 805 ILCS 215/117(c).

23. 805 ILCS 215/117(c)(1).

24. 805 ILCS 215/117(c)(2).

25. Id.

26. Id.

27. 805 ILCS 215/202(d)-(e).

28. 805 ILCS 215/204.5.

29. 805 ILCS 215/906(a). This second ground for revocation only applies to those limited partnerships that must operate under an alternate assumed name, usually because their foreign name does not comply with section 108.

30. 805 ILCS 215/906(b).

31. 805 ILCS 215/906(c).


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