Illinois § 15-3

§ 15-3.

General standards of member and manager's conduct. (a) Without limiting any fiduciary duties owed at common law, the fiduciary duties a member owes to a member-managed company and its other members include the duty of loyalty and the duty of care referred to in subsections (b) and (c) of this Section. (b) A member's duty of loyalty to a member-managed company and its other members includes the following: (1) to account to the company and to hold as trustee for it any property, profit, or benefit derived by the member in the conduct or winding up of the company's business or derived from a use by the member of the company's property, including the appropriation of a company's opportunity; (2) to act fairly when a member deals with the company in the conduct or winding up of the company's business as or on behalf of a party having an interest adverse to the company; and (3) to refrain from competing with the company in the conduct of the company's business before the dissolution of the company. (c) A member's duty of care to a member-managed company and its other members in the conduct of and winding up of the company's business is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. (d) The implied contractual covenant of good faith and fair dealing applies to the operating agreement and members of a member-managed company in the same manner and to the same extent that it applies at law to other contracts and parties to the contracts. (e) A member of a member-managed company does not violate a duty or obligation under this Act or under the operating agreement merely because the member's conduct furthers the member's own interest. (f) This Section applies to a person winding up the limited liability company's business as the personal or legal representative of the last surviving member as if the person were a member. (g) In a manager-managed company: (1) a member who is not also a manager owes no duties to the company or to the other members solely by reason of being a member; (2) a manager is held to the same standards of conduct prescribed for members in subsections (b), (c), (d), and (e) of this Section; (3) a member who exercises some or all of the authority of a manager in the conduct of the company's business is held to the standards of conduct in subsections (b), (c), (d), and (e) of this Section; (4) a manager is relieved of liability imposed by law for violations of the standards prescribed by subsections (b), (c), (d), and (e) to the extent of the managerial authority delegated to the members by the operating agreement; and (5) subsection (d) of this Section applies to the operating agreement and members and managers of the company. (Source: P.A. 102-230, eff. 1-1-22.)