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Article 6 - Shares

      (805 ILCS 5/Art. 6 heading)ARTICLE 6. SHARES

(805 ILCS 5/6.05) (from Ch. 32, par. 6.05)     Sec. 6.05. Authorized shares. Each corporation shall have power to create and issue the number of shares stated in its articles of incorporation. Such shares may be divided into one or more classes, including classes of common shares, any or all of which classes may consist of shares with such designations, preferences, qualifications, limitations, restrictions, and such special or relative rights as shall be stated in the articles of incorporation; provided, however, that common shares may have no preference over any other shares with respect to distribution of assets upon liquidation or with respect to payment of dividends. Subject to the provisions of Section 7.40 of this Act, the articles of incorporation may limit or deny the voting rights of or provide special voting rights for the shares of any and all classes or of any series of a class.     Without limiting the authority herein contained, a corporation, if so authorized in its articles of incorporation, may issue shares of preferred or special classes subject to one or more of the following conditions:         (a) Subject to the right of the corporation to

redeem any of such shares at not exceeding the price fixed by the articles of incorporation for the redemption thereof.

(b) Entitling the holders thereof to dividends which

are cumulative or partially cumulative, or which are non‑cumulative.

(c) Having preference over any other class or

classes of shares as to the payment of dividends.

(d) Having preference as to the assets of the

corporation over any other class or classes of shares upon the voluntary or involuntary liquidation of the corporation.

(e) Convertible into shares of any other class, or

into shares of any series of the same or any other class.

(f) The dividend rate on which may be determined

upon the basis of any facts ascertainable outside the articles of incorporation, but only if the manner in which such facts are to operate upon the dividend rate of any such preferred or special class shall be clearly and expressly set forth in the articles of incorporation.

Notwithstanding anything contained in Sections 6.10 and 7.40 of this Act, except as otherwise provided in the articles of incorporation, a corporation may create and issue, whether or not in connection with the issue and sale of its shares or bonds, rights or options entitling the holders thereof to purchase from the corporation, upon such consideration, terms and conditions as may be fixed by the board, shares of any class or series, whether authorized but unissued shares, treasury shares or shares to be purchased or acquired, notes of the corporation or assets of the corporation. The terms and conditions of such rights or options may include, without limitation, restrictions or conditions that preclude or limit the exercise, transfer or receipt of such rights or options by any person or persons owning or offering to acquire a specified number or percentage of the outstanding common shares or other securities of the corporation, or any transferee or transferees of any such person or persons, or that invalidate or void such rights or options held by any such person or persons or any such transferee or transferees. Any such rights or options heretofore created or issued prior to the effective date of this amendatory Act of 1989 which are in conformity with this Section 6.05 and are not otherwise in conflict with other provisions of this Act, are hereby ratified. Nothing in this Section 6.05 shall affect the rights and fiduciary obligations of the board of directors of a corporation in the creation and issuance of such rights or options, or in the taking or failing to take any action with respect to such rights or options. (Source: P.A. 87‑516; 88‑151.)

(805 ILCS 5/6.10) (from Ch. 32, par. 6.10)     Sec. 6.10. Issuance of shares of preferred or special classes in series. (a) If the articles of incorporation so provide, the shares of any preferred or special class may be divided into and issued in series. If the shares of any such class are to be issued in series, then each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. Any or all of the series of any such class and the variations in the relative rights and preferences as between different series may be fixed and determined by the articles of incorporation or by resolution of the board of directors pursuant to authority contained in the articles of incorporation, subject to the provisions of Section 7.40, provided that all shares of the same class shall be identical except as to the following relative rights and preferences, in respect of any or all of which there may be variations between different series:     (1) The rate of dividend, or the facts ascertainable outside the articles of incorporation, or the resolution of the board of directors pursuant to authority contained in the articles of incorporation, providing the basis for determining such rate of dividend, but only if the manner in which such facts are to operate upon the dividend rate of any such series shall be clearly and expressly set forth in the articles of incorporation or in such resolution.     (2) The price at and the terms and conditions on which shares may be redeemed.     (3) The amount payable upon shares in event of involuntary liquidation.     (4) The amount payable upon shares in event of voluntary liquidation.     (5) Sinking fund provisions for the redemption or purchase of shares.     (6) The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion.     (7) The limitation or denial of voting rights, or the grant of special voting rights.     (b) Prior to the issue of any shares of a series established by resolution adopted by the board of directors, the corporation shall execute and file in duplicate, in accordance with Section 1.10 of this Act, a statement setting forth:     (1) The name of the corporation.     (2) A copy of the resolution establishing and designating the series, and fixing and determining the relative rights and preferences thereof.     (3) The date of adoption of such resolution.     (4) That such resolution was duly adopted by the board of directors.     (c) Upon the filing of such statement by the Secretary of State, the resolution establishing and designating the series and fixing and determining the relative rights and preferences thereof shall become effective. (Source: P.A. 86‑464.)

    (805 ILCS 5/6.15)(from Ch. 32, par. 6.15)
    Sec. 6.15. Issuance of fractional shares or scrip. A corporation may, but shall not be obliged to, issue a certificate for a fractional share, and, by action of its board of directors, may in lieu thereof, pay cash equal to the fair value of said fractional share, or issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share. A certificate for a fractional share shall, but scrip shall not unless otherwise provided therein, entitle the holder to exercise fractional voting rights, to receive dividends thereon and to participate in any of the assets of the corporation in the event of liquidation. The board of directors may cause such scrip to be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which such scrip is exchangeable may be sold by the corporation or by an agent on behalf of the holder thereof and the proceeds thereof distributed to the holders of such scrip or subject to any other conditions which the board of directors may deem advisable.
    For purposes of this Section, "fair value", with respect to the cashout of a fractional share, means the proportionate interest of the fractional share in the corporation, without any discount for minority status or, absent extraordinary circumstance, lack of marketability.
(Source: P.A. 94‑889, eff. 1‑1‑07.)

(805 ILCS 5/6.20) (from Ch. 32, par. 6.20)     Sec. 6.20. Subscriptions for shares. A subscription for shares of a corporation to be organized shall be irrevocable for a period of six months unless otherwise provided by the terms of the subscription agreement, or unless all of the subscribers consent to the revocation of such subscription. The filing of the articles of incorporation by the Secretary of State shall constitute acceptance by the corporation of all existing subscriptions to its shares, and thereupon subscribers for shares, or their assigns, shall be deemed to be the shareholders of the corporation, and the corporation shall have the right to enforce such subscriptions in its own name.     Unless otherwise provided in the subscription agreement, subscriptions for shares, whether made before or after the organization of a corporation, shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series, as the case may be. In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation. The by‑laws may prescribe other penalties for failure to pay installments or calls that may become due, but no penalty working a forfeiture of the shares, or of the amounts paid thereon, shall be declared as against the estate of any decedent before distribution shall have been made of the estate, or against any subscriber unless the amount due thereon shall remain unpaid for a period of twenty days after written demand has been made therefor. If mailed, such written demand shall be deemed to be made when deposited in the United States mail in a sealed envelope addressed to the subscriber at his or her last known post office address, with the postage thereon prepaid. In the event of the sale of any shares by reason of any forfeiture, the excess of proceeds realized over the amount due and unpaid on such shares shall be paid to the delinquent subscriber or to his or her legal representative. (Source: P.A. 83‑1025.)

(805 ILCS 5/6.25) (from Ch. 32, par. 6.25)     Sec. 6.25. Consideration for shares. (a) Shares may be issued for such consideration as shall be authorized from time to time by the board of directors through action which establishes a price in cash or other consideration, or both, or a minimum price or a general formula or method by which the price can be determined.     (b) Upon authorization by the board of directors, the corporation may issue its own shares in exchange for or in conversion of its outstanding shares, or may distribute its own shares pro rata to its shareholders or the shareholders of one or more classes or series to effectuate dividends or splits provided, that the value fixed by the board of directors in connection with such dividend or split shall be transferred to paid‑in capital of the corporation and; provided, that no such issuance of shares of any class or series shall be made to the holders of shares of any other class or series unless it is either expressly provided for in the articles of incorporation or authorized by an affirmative vote of the holders of at least a majority of the outstanding shares of the class or series in which the distribution is to be made. (Source: P.A. 84‑1412.)

(805 ILCS 5/6.30) (from Ch. 32, par. 6.30)     Sec. 6.30. Payment for shares. The consideration for the issuance of shares may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the corporation. When payment of the consideration for which shares are to be issued shall have been received by the corporation, such shares shall be deemed to be full paid and non‑assessable. In the absence of actual fraud in the transaction, and subject to the provisions of Section 8.60, the judgment of the board of directors or the shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive. (Source: P.A. 83‑1025.)

(805 ILCS 5/6.35) (from Ch. 32, par. 6.35)     Sec. 6.35. Shares represented by certificates and uncertificated shares. The issued shares of a corporation shall be represented by certificates or shall be uncertificated shares. Certificates shall be signed by the appropriate corporate officers and may be sealed with the seal, or a facsimile of the seal, of the corporation, if the corporation uses a seal. In case the seal of the corporation is changed after the certificate is sealed with the seal or a facsimile of the seal of the corporation, but before it is issued, the certificate may be issued by the corporation with the same effect as if the seal had not been changed. If a certificate is countersigned by a transfer agent or registrar, other than the corporation itself or its employee, any other signatures or countersignature on the certificate may be facsimiles. In case any officer of the corporation, or any officer or employee of the transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate ceases to be an officer of the corporation, or an officer or employee of the transfer agent or registrar before such certificate is issued, the certificate may be issued by the corporation with the same effect as if the officer of the corporation, or the officer or employee of the transfer agent or registrar had not ceased to be such at the date of its issue.     Every certificate representing shares issued by a corporation which is authorized to issue shares of more than one class shall set forth upon the face or back of the certificate a full summary or statement of all of the designations, preferences, qualifications, limitations, restrictions, and special or relative rights of the shares of each class authorized to be issued, and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series. Such statement may be omitted from the certificate if it shall be set forth upon the face or back of the certificate that such statement, in full, will be furnished by the corporation to any shareholder upon request and without charge.     Each certificate representing shares shall also state:     (a) That the corporation is organized under the laws of this State.     (b) The name of the person to whom issued.     (c) The number and class of shares, and the designation of the series, if any, which such certificate represents.     No certificate shall be issued for any share until such share is fully paid.     Unless otherwise provided by the articles of incorporation or by‑laws, the board of directors of a corporation may provide by resolution that some or all of any or all classes and series of its shares shall be uncertificated shares, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and rights and obligations of the holders of certificates representing shares of the same class and series shall be identical. (Source: P.A. 83‑1025.)

(805 ILCS 5/6.40) (from Ch. 32, par. 6.40)     Sec. 6.40. Liability of subscribers, shareholders, personal representatives and pledgees. A holder of or subscriber to shares of a corporation shall be under no obligation to the corporation or its creditors with respect to such shares other than the obligation to pay to the corporation the full consideration for which the shares were issued or to be issued. Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration therefor has not been paid shall not be personally liable to the corporation or its creditors for any unpaid portion of such consideration.     No person holding shares as executor, administrator, guardian, trustee, assignee for the benefit of creditors, or receiver shall be personally liable as a shareholder, but the beneficial owner thereof and the estate and funds in the custody of the executor, administrator, guardian, trustee, assignee, or receiver shall be liable for any unpaid portion of the full consideration for which such shares were issued or to be issued. No pledgee or other holder of shares as collateral security shall be personally liable as a shareholder. (Source: P.A. 83‑1025.)

(805 ILCS 5/6.45) (from Ch. 32, par. 6.45)     Sec. 6.45. Expenses of organization, reorganization, and financing. The reasonable charges and expenses of organization or reorganization of a corporation and reasonable compensation for the sale or underwriting of its shares, may be paid or allowed by such corporation out of the consideration received by it in payment for its shares without thereby rendering such shares not full paid and non‑assessable. (Source: P.A. 83‑1025.)

(805 ILCS 5/6.50) (from Ch. 32, par. 6.50)     Sec. 6.50. Shareholders' preemptive rights.     (a) The shareholders of a corporation organized on or after January 1, 1982, shall have no preemptive rights to acquire unissued shares of the corporation, or securities of the corporation convertible into or carrying a right to subscribe to or acquire shares, except to the extent, if any, that such right is provided in the articles of incorporation.     (b) The preemptive right of a shareholder to acquire unissued or treasury shares, whether then or thereafter authorized, of a corporation organized prior to January 1, 1982 may be limited or denied to the extent provided in the articles of incorporation.     (c) Unless otherwise provided by its articles of incorporation, any corporation having preemptive rights may issue and sell its shares to its employees or to the employees of any subsidiary corporation, without first offering the same to its shareholders, for such consideration and upon such terms and conditions as shall be approved by the holders of two‑thirds of its shares entitled to vote with respect thereto or by its board of directors pursuant to like approval of the shareholders.     (d) Unless otherwise provided in the articles of incorporation of a corporation having preemptive rights, shareholders have a preemptive right to acquire treasury shares to the same extent that they have a preemptive right to acquire unissued shares. (Source: P.A. 88‑151.)

(805 ILCS 5/6.55) (from Ch. 32, par. 6.55)     Sec. 6.55. Restriction on transfer of securities.     (a) A written restriction on the transfer or registration of transfer of a security of a corporation, if permitted by this Section 6.55 and noted conspicuously on the certificate representing the security or, in the case of an uncertificated security, contained in the notice sent pursuant to Section 6.35 of this Act, may be enforced against the holder of the restricted security or any successor or transferee of the holder including an executor, administrator, trustee, guardian or other fiduciary entrusted with like responsibility for the person or estate of the holder. Unless noted conspicuously as required herein, a restriction, even though permitted by this Section is ineffective except against a shareholder with actual knowledge of the restriction at the time of becoming a shareholder.     (b) A restriction on the transfer or registration of transfer of securities of a corporation may be imposed either by the certificate of incorporation or by the by‑laws or by an agreement among any number of security holders or among such holders and the corporation. No restriction so imposed shall be binding with respect to securities issued prior to the adoption of the restriction unless the holders of the securities are parties to an agreement or voted in favor of the restriction.     (c) A restriction on the transfer of securities of a corporation is permitted by this Section if it:         (1) obligates the holder of the restricted

securities to offer to the corporation or to any other holders of securities of the corporation or to any other person or to any combination of the foregoing, a prior opportunity, to be exercised within a reasonable time, to acquire the restricted securities; or

(2) obligates the corporation or any holder of

securities of the corporation or any other person or any combination of the foregoing, to purchase the securities which are the subject of an agreement respecting the purchase and sale of the restricted securities; or

(3) requires the corporation or the holders of any

class of securities of the corporation to consent to any proposed transfer of the restricted securities or to approve the proposed transferee of the restricted securities; or

(4) prohibits the transfer of the restricted

securities to designated persons or classes of persons, and such designation is not manifestly unreasonable.

(d) Any restriction on the transfer of the shares of a corporation for the purpose of maintaining its status as an electing small business corporation under subchapter S of the United States Internal Revenue Code of 1986, as amended, or of maintaining any other tax advantage to the corporation is conclusively presumed to be for a reasonable purpose.     (e) Any other lawful restriction on transfer or registration of transfer of securities is permitted by this Section. (Source: P.A. 86‑1328.)