by Michael Castaldo, III (Spring 2019)
Since the significant revisions to the Limited Liability Company Act that took effect back in July 2017, the 100th Illinois General Assembly has made several smaller, albeit noteworthy amendments to said Act. Below is an exhaustive list of these amendments followed by a brief discussion of each.
Change in Prescribed Time Period for and Reduction of Late Fees
Upon the Secretary of States determination that a limited liability company (“LLC”) or a foreign limited liability company is delinquent and not in good standing for failure to satisfy the requirements set forth in 805 ILCS 180/50-15(a), an initial penalty of $300.00 was imposed if the delinquent company had not corrected the default within 60 days after the respective due date. Now, the time frame given to correct the delinquency is no longer a static 60 days. By requiring any needed correction “before the first day of the second month after the anniversary month”, the time frame could fluctuate a day or two depending on the number of days in the following two months after the relative anniversary month. In addition, the initial penalty for failure or refusal to comply with the requirements has been reduced to $100.00.
This amendment affects all LLCs alike, and although the time frame to correct any delinquency will generally remain around 60 days, it may make a difference for those LLCs with an anniversary month of December or January thanks to February’s 28-day duration. Of course, it is always recommended to file the annual report in a timely manner to avoid a delinquent status, let alone a late fee.
The Nature of Business
The amendments to the Act eliminate all exceptions to the lawful purposes for which an LLC may be formed, other than insurance, and instead now provides that “[a] limited liability company that intends to provide a professional service licensed by the Department of Financial and Professional Regulation must be formed in compliance with the Professional Limited Liability Act.” (805 ILCS 180/1-25(d).)
Cleaning up Conversion & Domestication
The recent amendments also created the Entity Omnibus Act, which modifies the Act to no longer specifically provide for the conversion or domestication of a limited liability company. Prior to the creation of the Entity Omnibus Act, the provisions for entity conversion and domestication were located in several separate acts, a side effect of the aforementioned July 2017 overhaul. The Entity Omnibus Act consolidated the applicable acts into more easily accessible location. It may also be worth noting that the Entity Omnibus Act includes business corporations within the definition of “entity”. This is significant because this change now provides for the possible conversion of a corporation to an LLC, which was previously impermissible by Illinois law.
Reduction of Filing Fees
Finally, the amendments operate to substantially reduce nearly all fees associated with the filing of any documents with the State for both limited liability companies and foreign limited liability companies. This amendment makes the processes involved in creating and operating any LLC much more affordable and accessible to all.
If you run an LLC, or are thinking of forming an LLC to operate a new business, you should contact Ottosen Britz. The member attorneys of the firm’s business law practice group can provide the necessary advice to assist you to navigate the Act and any issues you may encounter.