PocketLaw | Illinois Compiled Statutes

Accountability

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(805 ILCS 40/Art. 4 heading)

Article 4. Accountability

(805 ILCS 40/4.01)

Sec. 4.01. Standard of Conduct for Directors.

(a) Without regard to whether the benefit corporation is subject to Section 8.85 of the Business Corporation Act of 1983, in discharging the duties of their respective positions, the board of directors, committees of the board, and individual directors of a benefit corporation in considering the best interests of the benefit corporation:

(1) shall consider the effects of any action upon:

(A) the shareholders of the benefit corporation;
(B) the employees and work force of the benefit corporation, its subsidiaries, and its suppliers;
(C) the interests of customers as beneficiaries of the general public benefit or specific public benefit purposes of the benefit corporation;
(D) community and societal considerations, including those of each community in which offices or facilities of the benefit corporation, its subsidiaries or its suppliers are located;
(E) the local and global environment;
(F) the short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by the continued independence of the benefit corporation; and
(G) the ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purpose; and

(2) may consider:

(A) considerations listed in Section 8.85 of the Business Corporation Act of 1983; and
(B) any other pertinent factors or the interests of any other group that they deem appropriate; but

(3) need not give priority to the interests of a particular person or group referred to in paragraphs (1) or (2) over the interests of another person or group unless the benefit corporation has stated in its articles of incorporation its intention to give priority to certain interests related to its accomplishment of its general public benefit purpose or a specific public benefit purpose identified in its articles of incorporation.

(b) The consideration of interests and factors in the manner required by subsection (a) is in addition to the ability of directors to consider interests and factors as provided in Section 8.85 of the Business Corporation Act of 1983.

(1) any action taken as a director if the director performed the duties of office in compliance with Article 8 of the Business Corporation Act of 1983 and this Section; or
(2) a failure of the benefit corporation to pursue or create general public benefit or a specific public benefit.

(d) A director does not have a duty to a person that is a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the status of the person as a beneficiary.

(Source: P.A. 97-885, eff. 1-1-13.)

(805 ILCS 40/4.05)

Sec. 4.05. Benefit director.

(a) The board of directors of a benefit corporation shall include a director, who:

(1) is designated as the benefit director; and
(2) has, in addition to the powers, duties, rights, and immunities of the other directors of the benefit corporation, the powers, duties, rights, and immunities provided in this Section.

(b) The benefit director shall be elected, and may be removed, in the manner provided by Article 8 of the Business Corporation Act of 1983 and shall be an individual who is independent, as defined in Section 1.10. The benefit director may serve as the benefit officer at the same time as serving as the benefit director. The articles of incorporation or bylaws of a benefit corporation may prescribe additional qualifications of the benefit director not inconsistent with this Section.

(c) The benefit director shall prepare, and the benefit corporation shall include in the annual benefit report to shareholders required by Section 5.01 of this Act, the opinion of the benefit director on:

(1) whether the benefit corporation acted in accordance with its general public benefit purpose and any specific public benefit purpose in all material respects during the period covered by the report; and
(2) whether the directors and officers complied with subsection (a) of Section 4.01 and subsection (a) of Section 4.10, respectively, and if, in the opinion of the benefit director, the directors and officers did not so comply, a description of the failure to comply.

(d) The acts of an individual in the capacity of a benefit director shall constitute, for all purposes, acts of that individual in the capacity of a director of the benefit corporation.

(e) If the bylaws of a benefit corporation provide that the powers and duties conferred or imposed upon the board of directors shall be exercised or performed by a person or persons other than the directors, in contrast to subsection (a) of Section 8.05 of the Business Corporation Act of 1983, or if the bylaws of a close corporation that is a benefit corporation provide that the business and affairs of the corporation shall be managed by or under the director of the shareholders, then the bylaws of the benefit corporation must provide that the person, persons, or shareholders who perform the duties of a board of directors shall include a person with the powers, duties, rights, and immunities of a benefit director.

A person who exercises one or more of the powers, duties, or rights of a benefit director pursuant to this subsection:

(i) does not need to be independent of the benefit corporation;
(ii) shall have the immunities of a benefit director;
(iii) may share the powers, duties, and rights of a benefit director with one or more other persons; and
(iv) shall not be subject to the procedures for election or removal of directors in Article 8 of the Business Corporation Act of 1983 unless the person is also a director of the benefit corporation or the bylaws make those procedures applicable.

(f) Regardless of whether the bylaws of a benefit corporation include a provision eliminating or limiting the personal liability of directors authorized by paragraph (3) of subsection (b) of Section 2.10 of the Business Corporation Act of 1983, a benefit director shall not be personally liable for an act or omission in the capacity of a benefit director unless the act or omission constitutes self-dealing, willful misconduct, or a knowing violation of law.

(Source: P.A. 97-885, eff. 1-1-13.)

(805 ILCS 40/4.10)

Sec. 4.10. Standard of conduct for officers.

(a) Each officer of a benefit corporation shall consider the interests and factors described in subsection (a) of Section 4.01 in the manner provided in that subsection if:

(1) the officer has discretion to act with respect to a matter; and
(2) it reasonably appears to the officer that the matter may have a material effect on the creation by the benefit corporation of general public benefit or a specific public benefit identified in the articles of incorporation by the benefit corporation.

(b) Exoneration from personal liability. An officer is not personally liable for monetary damages for:

(1) action taken as an officer if the officer performed the duties of the position in compliance with this Section; or
(2) failure of the benefit corporation to pursue or create general public benefit or specific public benefit.

(c) Limitation on standing. An officer does not have a duty to a person that is a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the status of the person as a beneficiary.

(Source: P.A. 97-885, eff. 1-1-13.)

(805 ILCS 40/4.15)

Sec. 4.15. Benefit officer.

(a) A benefit corporation may have an officer designated as the benefit officer.

(b) A benefit officer shall have:

(1) powers and duties relating to the purpose of the benefit corporation to create general public benefit or specific public benefit provided:

(A) by the bylaws of the benefit corporation; or
(B) absent controlling provisions in the bylaws, by resolutions or orders of the board of directors; and

(2) the duty to prepare the benefit report required by Section 5.01 of this Act.

(Source: P.A. 97-885, eff. 1-1-13.)

(805 ILCS 40/4.20)

Sec. 4.20. Right of action; benefit enforcement proceeding.

(a) No person may bring an action or assert a claim against a benefit corporation or its directors or officers with respect to failure to pursue or create general public benefit or a specific public benefit set forth in its articles of incorporation or violation of a duty or standard of conduct under this Act except in a benefit enforcement proceeding.

(b) A benefit enforcement proceeding may be commenced or maintained only:

(1) directly by the benefit corporation; or
(2) derivatively by:

(A) a shareholder;
(B) a director;
(C) a person or group of persons that owns beneficially or of record 5% or more of the equity interests in an entity of which the benefit corporation is a subsidiary; or
(D) other persons as specified in the articles of incorporation or bylaws of the benefit corporation.

(c) A benefit corporation shall not be liable for monetary damages under this Act for any failure of the benefit corporation to pursue or create general public benefit or a specific public benefit.

(Source: P.A. 97-885, eff. 1-1-13.)

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