Article 12 - Dissolution And Remedies
(805 ILCS 5/Art. 12 heading) ARTICLE 12. DISSOLUTION AND REMEDIES
(805 ILCS 5/12.05) (from Ch. 32, par. 12.05)
Sec. 12.05. Voluntary dissolution by incorporators or by initial directors. Dissolution of a corporation may be authorized either by a majority of incorporators if initial directors were not named in the articles of incorporation or have not been elected, or by a majority of the directors if initial directors were named in the articles of incorporation or have been elected, provided that:
(a) None of the shares of the corporation have been issued.
(b) The amount, if any, actually paid in on the subscriptions to the shares of the corporation, less any part thereof disbursed for necessary expenses, has been returned to those entitled thereto.
(c) No debts of the corporation remain unpaid.
(d) Written notice of the election to dissolve the corporation has been given to all incorporators or all directors, as the case may be, not less than three days before the execution of articles of dissolution.
(Source: P.A. 83‑1025.) |
(805 ILCS 5/12.10) (from Ch. 32, par. 12.10)
Sec. 12.10. Voluntary dissolution by written consent of all shareholders. Dissolution of a corporation may be authorized by the unanimous consent in writing of the holders of all outstanding shares entitled to vote on dissolution.
Dissolution pursuant to this Section does not require any vote or action of the directors of the corporation.
(Source: P.A. 83‑1025.) |
(805 ILCS 5/12.15) (from Ch. 32, par. 12.15)
Sec. 12.15. Voluntary dissolution by vote of shareholders. Dissolution of a corporation may be authorized by a vote of shareholders, in the following manner:
(a) Either:
(1) The board of directors shall adopt a resolution, |
| which may be with or without their recommendation, proposing that the corporation be dissolved voluntarily, and directing that the question of such dissolution be submitted to a vote at a meeting of shareholders, which may be either an annual or special meeting, or | |
(2) Holders of not less than one‑fifth of the votes |
| of the shares entitled to vote on dissolution may, in writing, propose the dissolution of the corporation to the board of directors; if the directors fail or refuse to call a meeting of shareholders to consider such proposal for more than one year after delivery thereof, the shareholders proposing dissolution may call a meeting of the shareholders to consider such proposal. | |
(b) Written notice stating that the purpose, or one of the purposes, of the shareholders' meeting is to consider the voluntary dissolution of the corporation, shall be given to each shareholder whether or not entitled to vote at such meeting within the time and in the manner provided in this Act for the giving of notice of meetings of shareholders. If such meeting be an annual meeting, such purpose may be included in the notice of such annual meeting.
(c) At such meeting a vote of the shareholders entitled to vote on dissolution shall be taken on the resolution to dissolve voluntarily the corporation, which shall require for its adoption the affirmative votes of at least two‑thirds of the votes of the shares entitled to vote on dissolution, unless any class of shares is entitled to vote as a class in respect thereof, in which event the resolution shall require for its adoption the affirmative votes of at least two‑thirds of the votes of the shares of each class of shares entitled to vote as a class in respect thereof and of the votes of the total shares entitled to vote on dissolution.
(d) The articles of incorporation of any corporation may supersede the two thirds vote requirement of subsection (c) as to that corporation by specifying any smaller or larger vote requirement not less than a majority of the votes of the shares entitled to vote on dissolution and not less than a majority of the votes of the shares of any class entitled to vote as a class on dissolution.
(Source: P.A. 89‑48, eff. 6‑23‑95.) |
(805 ILCS 5/12.20) (from Ch. 32, par. 12.20)
Sec. 12.20. Articles of dissolution.
(a) When a voluntary dissolution has been authorized as provided by this Act, articles of dissolution shall be executed and filed in duplicate in accordance with Section 1.10 of this Act and shall set forth:
(1) The name of the corporation.
(2) The date dissolution was authorized.
(3) A post‑office address to which may be mailed a |
| copy of any process against the corporation that may be served on the Secretary of State. | |
(4) A statement of the aggregate number of issued |
| shares of the corporation itemized by classes and series, if any, within a class, as of the date of execution. | |
(5) A statement of the amount of paid‑in capital of |
| the corporation as of the date of execution. | |
(6) Such additional information as may be necessary |
| or appropriate in order to determine any unpaid fees or franchise taxes payable by such corporation as in this Act prescribed. | |
(7) Where dissolution is authorized pursuant to |
| Section 12.05, a statement that a majority of incorporators or majority of directors, as the case may be, have consented to the dissolution and that all provisions of Section 12.05 have been complied with. | |
(8) Where dissolution is authorized pursuant to |
| Section 12.10, a statement that the holders of all the outstanding shares entitled to vote on dissolution have consented thereto. | |
(9) Where dissolution is authorized pursuant to |
| Section 12.15, a statement that a resolution proposing dissolution has been adopted at a meeting of shareholders by the affirmative vote of the holders of outstanding shares having not less than the minimum number of votes necessary to adopt such resolution as provided by the articles of incorporation. | |
(b) When the provisions of this Section have been complied with, the Secretary of State shall file the articles of dissolution.
(c) The dissolution is effective on the date of the filing of the articles thereof by the Secretary of State.
(Source: P.A. 92‑33, eff. 7‑1‑01.) |
(805 ILCS 5/12.25) (from Ch. 32, par. 12.25)
Sec. 12.25. Revocation of Dissolution.
(a) A corporation may revoke its dissolution within 60 days of the effective date of dissolution if the corporation has not begun to distribute its assets or has not commenced a proceeding for court‑supervision of its winding up under Section 12.50.
(b) The corporation's board of directors, or its incorporators if shares have not been issued and the initial directors have not been designated, may revoke the dissolution without shareholder action.
(c) Within 60 days after the dissolution has been revoked by the corporation, articles of revocation of dissolution shall be executed and filed in duplicate in accordance with Section 1.10 of this Act and shall set forth:
(1) The name of the corporation.
(2) The effective date of the dissolution that was |
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(3) A statement that the corporation has not begun |
| to distribute its assets nor has it commenced a proceeding for court‑supervision of its winding up. | |
(4) The date the revocation of dissolution was |
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(5) A statement that the corporation's board of |
| directors (or incorporators) revoked the dissolution. | |
(d) When the provisions of this Section have been complied with, the Secretary of State shall file the articles of revocation of dissolution. Failure to file the revocation of dissolution as required in subsection (c) hereof shall not be grounds for the Secretary of State to reject the filing, but the corporation filing beyond the time period shall pay a penalty as prescribed by this Act.
(e) The revocation of dissolution is effective on the date of filing thereof by the Secretary of State and shall relate back and take effect as of the date of dissolution and the corporation may resume carrying on business as if dissolution had never occurred.
(Source: P.A. 92‑33, eff. 7‑1‑01.) |
(805 ILCS 5/12.30) (from Ch. 32, par. 12.30)
Sec. 12.30. Effect of dissolution. (a) Dissolution of a corporation terminates its corporate existence and a dissolved corporation shall not thereafter carry on any business except that necessary to wind up and liquidate its business and affairs, including:
(1) Collecting its assets;
(2) Disposing of its assets that will not be distributed in kind to its shareholders;
(3) Giving notice in accordance with Section 12.75 and discharging or making provision for discharging its liabilities;
(4) Distributing its remaining assets among its shareholders according to their interests; and
(5) Doing such other acts as are necessary to wind up and liquidate its business and affairs.
(b) After dissolution, a corporation may transfer good and merchantable title to its assets as authorized by its board of directors or in accordance with its by‑laws.
(c) Dissolution of a corporation does not:
(1) Transfer title to the corporation's assets;
(2) Prevent transfer of its shares or securities, provided, however, the authorization to dissolve may provide for closing the corporation's share transfer books;
(3) Effect any change in the by‑laws of the corporation or otherwise affect the regulation of the affairs of the corporation except that all action shall be directed to winding up the business and affairs of the corporation;
(4) Prevent suit by or against the corporation in its corporate name;
(5) Abate or suspend a criminal, civil or any other proceeding pending by or against the corporation on the effective date of dissolution.
(Source: P.A. 85‑1344.) |
(805 ILCS 5/12.35) (from Ch. 32, par. 12.35)
Sec. 12.35. Grounds for administrative dissolution. The Secretary of State may dissolve any corporation administratively if:
(a) It has failed to file its annual report or final transition annual report and pay its franchise tax as required by this Act before the first day of the anniversary month or, in the case of a corporation which has established an extended filing month, the extended filing month of the corporation of the year in which such annual report becomes due and such franchise tax becomes payable;
(b) it has failed to file in the office of the Secretary of State any report after the expiration of the period prescribed in this Act for filing such report;
(c) it has failed to pay any fees, franchise taxes, or charges prescribed by this Act;
(d) it has misrepresented any material matter in any application, report, affidavit, or other document filed by the corporation pursuant to this Act;
(e) it has failed to appoint and maintain a registered agent in this State;
(f) it has tendered payment to the Secretary of State which is returned due to insufficient funds, a closed account, or for any other reason, and acceptable payment has not been subsequently tendered;
(g) upon the failure of an officer or director to whom interrogatories have been propounded by the Secretary of State as provided in this Act, to answer the same fully and to file such answer in the office of the Secretary of State; or
(h) if the answer to such interrogatories discloses, or if the fact is otherwise ascertained, that the proportion of the sum of the paid‑in capital of such corporation represented in this State is greater than the amount on which such corporation has theretofore paid fees and franchise taxes, and the deficiency therein is not paid.
(Source: P.A. 92‑33, eff. 7‑1‑01; 93‑59, eff. 7‑1‑03.) |
(805 ILCS 5/12.40) (from Ch. 32, par. 12.40)
Sec. 12.40. Procedure for administrative dissolution.
(a) After the Secretary of State determines that one or more grounds exist under Section 12.35 for the administrative dissolution of a corporation, he or she shall send by regular mail to each delinquent corporation a Notice of Delinquency to its registered office, or, if the corporation has failed to maintain a registered office, then to the president or other principal officer at the last known office of said officer.
(b) If the corporation does not correct the default described in paragraphs (a) through (e) of Section 12.35 within 90 days following such notice, the Secretary of State shall thereupon dissolve the corporation by issuing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. If the corporation does not correct the default described in paragraphs (f) through (h) of Section 12.35, within 30 days following such notice, the Secretary of State shall thereupon dissolve the corporation by issuing a certificate of dissolution as herein prescribed. The Secretary of State shall file the original of the certificate in his or her office and mail one copy to the corporation at its registered office or, if the corporation has failed to maintain a registered office, then to the president or other principal officer at the last known office of said officer.
(c) The administrative dissolution of a corporation terminates its corporate existence and such a dissolved corporation shall not thereafter carry on any business, provided however, that such a dissolved corporation may take all action authorized under Section 12.75 or necessary to wind up and liquidate its business and affairs under Section 12.30.
(Source: P.A. 96‑1121, eff. 1‑1‑11.) |
(805 ILCS 5/12.43)
Sec. 12.43. Administrative dissolution; corporate name. The Secretary of State shall not allow another corporation to use the name of a domestic corporation that has been administratively dissolved until 3 years have elapsed following the date of issuance of the certificate of dissolution. If the domestic corporation that has been administratively dissolved is reinstated within 3 years after the date of issuance of the certificate of dissolution, the domestic corporation shall continue under its previous name without impacting its continuous legal status, unless the corporation petitions to change its name upon reinstatement.
(Source: P.A. 95‑507, eff. 8‑28‑07.)
(805 ILCS 5/12.45) (from Ch. 32, par. 12.45)
Sec. 12.45. Reinstatement following administrative dissolution.
(a) A domestic corporation administratively dissolved under Section 12.40 may be reinstated by the Secretary of State following the date of issuance of the certificate of dissolution upon:
(1) The filing of an application for reinstatement.
(2) The filing with the Secretary of State by the
| corporation of all reports then due and theretofore becoming due. | |
(3) The payment to the Secretary of State by the |
| corporation of all fees, franchise taxes, and penalties then due and theretofore becoming due. | |
(b) The application for reinstatement shall be executed and filed in duplicate in accordance with Section 1.10 of this Act and shall set forth:
(1) The name of the corporation at the time of the |
| issuance of the certificate of dissolution. | |
(2) If such name is not available for use as |
| determined by the Secretary of State at the time of filing the application for reinstatement, the name of the corporation as changed, provided however, and any change of name is properly effected pursuant to Section 10.05 and Section 10.30 of this Act. | |
(3) The date of the issuance of the certificate of |
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(4) The address, including street and number, or |
| rural route number of the registered office of the corporation upon reinstatement thereof, and the name of its registered agent at such address upon the reinstatement of the corporation, provided however, that any change from either the registered office or the registered agent at the time of dissolution is properly reported pursuant to Section 5.10 of this Act. | |
(c) When a dissolved corporation has complied with the provisions of this Section the Secretary of State shall file the application for reinstatement.
(d) Upon the filing of the application for reinstatement, the corporate existence shall be deemed to have continued without interruption from the date of the issuance of the certificate of dissolution, and the corporation shall stand revived with such powers, duties and obligations as if it had not been dissolved; and all acts and proceedings of its officers, directors and shareholders, acting or purporting to act as such, which would have been legal and valid but for such dissolution, shall stand ratified and confirmed.
(Source: P.A. 96‑328, eff. 8‑11‑09.) |
(805 ILCS 5/12.50) (from Ch. 32, par. 12.50)
Sec. 12.50. Grounds for judicial dissolution in actions by nonshareholders.
(a) A Circuit Court may dissolve a corporation:
(1) In an action by the Attorney General, if it is
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(i) The corporation filed its articles of |
| incorporation through fraud; or | |
(ii) The corporation has continued to exceed or |
| abuse the authority conferred upon it by law, or has continued to violate the law, after notice of the same has been given to such corporation, either personally or by registered mail; or | |
(iii) Any interrogatory propounded by the |
| Secretary of State to the corporation, its officers or directors, as provided in this Act, has been answered falsely or has not been answered fully within 30 days after the mailing of such interrogatories by the Secretary of State or within such extension of time as shall have been authorized by the Secretary of State. | |
(2) In an action by a creditor, if it is established |
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(i) The creditor's claim has been reduced to |
| judgment, a copy of the judgment has been returned unsatisfied, and the corporation is insolvent; or | |
(ii) The corporation has admitted in writing |
| that the creditor's claim is due and owing, and the corporation is insolvent. | |
(3) In an action by the corporation to dissolve |
| under court supervision, if it is established that dissolution is reasonably necessary because the business of the corporation can no longer be conducted to the general advantage of its shareholders. | |
(b) As an alternative to dissolution, the court may order any of the other remedies contained in subsection (b) of Section 12.55.
(Source: P.A. 96‑66, eff. 1‑1‑10.) |
(805 ILCS 5/12.55) (from Ch. 32, par. 12.55)
Sec. 12.55. Shareholder remedies: public corporations.
(a) In an action by a shareholder of a corporation that has shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association, the Circuit Court may order one or more of the remedies listed in subsection (b) if it is established that:
(1) The directors are deadlocked, whether because of |
| even division in the number of directors or because of greater than majority voting requirements in the articles of incorporation or the by‑laws, in the management of the corporate affairs; the shareholders are unable to break the deadlock; and either irreparable injury to the corporation is thereby caused or threatened or the business of the corporation can no longer be conducted to the general advantage of the shareholders; or | |
(2) The directors or those in control of the |
| corporation have acted, are acting, or will act in a manner that is illegal, oppressive or fraudulent with respect to the petitioning shareholder; or | |
(3) The corporate assets are being misapplied or |
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(b) In an action under subsection (a), the court may order the following relief:
(1) The appointment of a custodian to manage the |
| business and affairs of the corporation to serve for the term and under the conditions prescribed by the court; | |
(2) The appointment of a provisional director to |
| serve for the term and under the conditions prescribed by the court; or | |
(3) The dissolution of the corporation.
(c) The court, at any time during the pendency of the action and upon the motion of the complaining shareholder, may order the corporation to purchase the shares of the petitioning shareholder at a fair price determined by the court, with or without the assistance of appraisers, and payable in cash or in installments and with or without such security other than personal commitments of other shareholders as the court may direct.
(d) Either the corporation or any shareholder or group of shareholders may, any time after the filing of an action for dissolution pursuant to subdivision (b)(3), petition the court to purchase the shares of a complaining shareholder and, unless the court finds such procedure to be inequitable, the court shall determine the fair value of the shares as of such date as the court finds equitable. In so doing, the court shall follow the procedures set forth for appraisal of shares under Section 11.70 and shall thereafter dismiss the action.
(e) Nothing in this Section limits the equitable powers of the court to order other relief.
(Source: P.A. 89‑169; eff. 7‑19‑95; 89‑364, eff. 8‑18‑95; 89‑626, eff. 8‑9‑96.) |
(805 ILCS 5/12.56)
Sec. 12.56. Shareholder remedies: non‑public corporations.
(a) In an action by a shareholder in a corporation that has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association, the Circuit Court may order one or more of the remedies listed in subsection (b) if it is established that:
(1) The directors are deadlocked, whether because of
| even division in the number of directors or because of greater than majority voting requirements in the articles of incorporation or the by‑laws or otherwise, in the management of the corporate affairs; the shareholders are unable to break the deadlock; and either irreparable injury to the corporation is thereby caused or threatened or the business of the corporation can no longer be conducted to the general advantage of the shareholders; or | |
(2) The shareholders are deadlocked in voting power |
| and have failed, for a period that includes at least 2 consecutive annual meeting dates, to elect successors to directors whose terms have expired and either irreparable injury to the corporation is thereby caused or threatened or the business of the corporation can no longer be conducted to the general advantage of the shareholders; or | |
(3) The directors or those in control of the |
| corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent with respect to the petitioning shareholder whether in his or her capacity as a shareholder, director, or officer; or | |
(4) The corporation assets are being misapplied or |
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