Illinois § 15-5

§ 15-5.

Operating agreement. (a) All members of a limited liability company may enter into an operating agreement to regulate the affairs of the company and the conduct of its business and to govern relations among the members, managers, and company. The operating agreement may establish that a limited liability company is a manager-managed limited liability company and the rights and duties under this Act of a person in the capacity of a manager. To the extent the operating agreement does not otherwise provide, this Act governs relations among the members, managers, and company. Except as provided in subsections (b), (c), (d), and (e) of this Section, an operating agreement may modify any provision or provisions of this Act governing relations among the members, managers, and company. (b) The operating agreement may not: (1) unreasonably restrict a right to information or access to records under Section 1-40 or Section 10-15; (2) vary the right to expel a member in an event specified in subdivision (6) of Section 35-45; (3) vary the requirement to wind up the limited liability company's business in a case specified in subdivision (4), (5), or (6) of subsection (a) of Section 35-1; (4) restrict rights of a person, other than a manager, member, and transferee of a member's distributional interest, under this Act; (5) restrict the power of a member to dissociate under Section 35-50, although an operating agreement may determine whether a dissociation is wrongful under Section 35-50; (6) (blank); (6.5) eliminate or reduce the obligations or purposes a low-profit limited liability company undertakes when organized under Section 1-26; (7) eliminate or reduce the implied contractual covenant of good faith and fair dealing under subsection (d) of Section 15-3, but the operating agreement may determine the standards by which the performance of the member's or manager's duties or the exercise of the member's or manager's rights is to be measured; (8) eliminate, vary, or restrict the priority of a statement of authority over provisions in the articles of organization as provided in subsection (h) of Section 13-15; (9) vary the law applicable under Section 1-65; (10) vary the power of the court under Section 5-50; or (11) restrict the right to approve a merger, conversion, or domestication under Article 37 or the Entity Omnibus Act of a member that will have personal liability with respect to a surviving, converted, or domesticated organization. (c) In addition, with respect to fiduciary duties, the operating agreement: (1) may not restrict or eliminate a fiduciary duty owed at common law or under this Act, unless the restriction or elimination in the operating agreement is clear and unambiguous; (2) may not restrict or eliminate the fiduciary duty described in paragraph (2) of subsection (b) of Section 15-3, except in the manner described in paragraph (4) of this subsection (c); (3) may not alter the duty of care to authorize intentional misconduct or knowing violation of law; and (4) may identify, subject to paragraph (1), specific types or categories of activities or provide one or more examples of activities that do not violate any fiduciary duty described in subsection (b) of Section 15-3 or any fiduciary duty owed at common law and may determine standards by which the performance of the fiduciary duty is to be measured. The changes made to paragraphs (2) and (4) of this subsection by this amendatory Act of the 102nd General Assembly apply to: (i) any operating agreement entered into before the effective date of this amendatory Act of the 102nd General Assembly if the fiduciary duties of the members or managers of the company described in paragraph (2) of subsection (b) of Section 15-3 are modified in any respect on or after the effective date of this amendatory Act of the 102nd General Assembly; and (ii) any operating agreement entered into on or after the effective date of this amendatory Act of the 102nd General Assembly. (d) The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by all the members or by one or more disinterested and independent members or persons after full disclosure of all material facts. (e) The operating agreement may alter or eliminate the right to payment or reimbursement for a member or manager provided by Section 15-7 and may eliminate or limit a member or manager's liability to the limited liability company and members for money damages, except for: (1) subject to subsections (c) and (d) of this Section, breach of the duties as required in subdivisions (1), (2), and (3) of subsection (b) of Section 15-3 and subsection (g) of Section 15-3; (2) a financial benefit received by the member or manager to which the member or manager is not entitled; (3) a breach of a duty under Section 25-35; (4) intentional infliction of harm on the company or a member; or (5) an intentional violation of criminal law. (f) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement. (g) A person that becomes a member of a limited liability company is deemed to assent to the operating agreement. (h) An operating agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of the filing, may be made effective as of the time of formation of the limited liability company or as of the time or date provided in the operating agreement. (Source: P.A. 102-230, eff. 1-1-22.)