Legislative updates

Senate Bill 2992, effective January 1, 2020, amends the business corporation, not for profit corporation, LLC, LLP, and LP laws regarding the Secretary of State’s duties to inform the state Commerce Commission of those entities that were administratively dissolved or revoked.
House Bill 2528, effective January 1, 2020, amends the Assumed Business Name Act regarding a person conducting business under an assumed name at his or her personal residence.
House Bill 3663, effective January 1, 2020, enacts the Limited Worker Cooperative Association Act, authorizing the formation of a limited cooperative association, which may be formed for any purpose, whether or not for profit. An association may elect to be a worker cooperative. A limited cooperative is formed by filing articles of organization. It is managed by a board of directors.

Case summaries

Service of Process
Commonwealth Edison Co. v. Carlisle Utility Contractors, Inc., 2020 IL App. 200178-U, decided September 18, 2020. The Illinois Appellate Court upheld the default judgment entered against an Indiana corporation who appointed its president as its registered agent in Illinois and an Illinois address as the registered office. The plaintiff’s process server made numerous attempts to serve the registered agent at the Illinois address but each time was told he was not there. The plaintiff then obtained substituted service on the Secretary of State. In upholding service of process the court ruled that the plaintiff complied with the service provisions of the Illinois corporation law by mailing a copy of process to the Illinois registered office and was not required to also mail copies to addresses for the corporation in Indiana that it was aware of.
Foreign Corporation’s Liability for Franchise Taxes and Failure to Qualify
Global Mail, Inc. v. White, 2019 IL App (1st) 181778, decided December 6, 2019. The Illinois Appellate Court affirmed the trial court’s ruling that where a Delaware corporation, qualified to do business in Illinois, merged into an Ohio corporation, which continued doing business, the Illinois Secretary of State was only entitled to franchise taxes from the Ohio corporation. Although the Delaware corporation did not withdraw as required by the corporation act and the Ohio corporation’s annual report continued to list Delaware as the state of incorporation, the Delaware corporation ceased to exist and did not owe franchise taxes. The court also ruled that a statement of correction could be filed to correct the state of incorporation on the annual reports, and that the penalty imposed on the Ohio corporation for doing business without authority did not include an interest charge on a late franchise tax payment as that was not provided for by the business corporation act.
LLC Member Liability
Fifth Third Mortgage Company v. Kaufman, No. 18-3295, decided August 9, 2019 The US Court of Appeals, 7th Circuit held that a member of an Illinois LLC was not shielded from personal liability in a suit arising out of a mortgage fraud scheme where he participated in the fraud for his own gain and was sued in his individual capacity and not as a member of the LLC which was also held liable.

State notices

August, 2020 — The Illinois Secretary of State has posted a notice on its website about a “non-governmental firm” contacting Illinois businesses in an attempt to collect a fee for a form entitled a "Certificate of Status" which, according to the notice business organizations are not required to obtain. The entire notice can be read on the SOS’s website.