Illinois Corporation Act: Everything You Need to Know
Illinois corporation acts include the Business Corporation Act of 1983, the General Not for Profit Corporation Act of 1986, and the Benefit Corporation Act.3 min read
Illinois corporation acts include the Business Corporation Act of 1983, the General Not for Profit Corporation Act of 1986, and the Benefit Corporation Act. These laws govern the formation, maintenance, and dissolution of corporations in the state of Illinois.
Illinois Corporations Laws: Formation of Corporations
The formation of corporations in Illinois is governed by the Business Corporation Act while the formation and management of nonprofits is governed by the General Not for Profit Corporation Act. Formation of corporations in Illinois follows the following steps:
Name reservation is the first step toward the formation of a corporation. The name you choose must meet all the requirements of the Illinois secretary of state.
You can reserve a name for 90 days at a fee of $300. Foreign corporations likewise reserve their corporation's name if it is available. If it is not, they can get a “doing business as” name for an additional fee of $25.
Appoint a Registered Agent
Corporations are required to appoint a registered agent for service process in Illinois. The agent receives legal papers on the corporation's behalf.
File the Articles of Incorporation
For a corporation to be registered, you need to file the Articles of Incorporation with the state. The Articles of Incorporation must have the following details:
- The name of the corporation
- The number of shares the corporation can issue
- The name of the corporation's registered agent
- The names and addresses of the incorporators
- The purpose of the corporation
Filing costs $150. The state also charges new corporations an initial franchise tax at a rate of $1.5 for each $1,000 of paid-in capital. The minimum franchise tax is $25. The corporation is said to have been formed when the Articles of Incorporation have been accepted by the state.
Foreign corporations register in Illinois using the Application for Authority to Transact Business in Illinois form and pay a filing fee of $150.
The incorporator must appoint initial directors to hold the first board of directors meeting. The board of directors then meets to appoint officers, adopt bylaws, and initiate issuance of stock. After the meeting, the corporation can issue stock and get permits and licenses.
How to Form a Benefit Corporation in Illinois
Benefit corporations differ from traditional corporations in that their purpose is not just to maximize profits, but also to do good for society and the environment. Because of the Benefit Corporation Act, corporations that seek to incorporate as benefit corporations need to declare their commitment to benefiting the public and the environment.
Incorporating a benefit corporation in Illinois is similar to incorporating a traditional corporation. The key difference is that the statement of purpose for a benefit corporation must declare that the corporation will act in accordance with the Benefit Corporation Act and may state the particular benefit the corporation will give.
Converting a Corporation to a Benefit Corporation
A normal corporation can convert to a benefit corporation and vice versa. In each case, a two-thirds majority vote by all classes of shareholders is needed. The conversion is effected by amending the Articles of Incorporation and filing a BCA 10.03 to the Illinois secretary of state.
Maintaining a Corporation in Illinois
The Business Corporation Act sets a number of requirements for keeping a corporation in good standing with the state. One of the most important maintenance requirements is filing annual reports. For this purpose, domestic corporations use Form C289 while foreign corporations use Form C288. The filing fee is $75.
Benefit corporations are also required to file an annual benefit report. The report is assessed by a qualified independent authority and shared with the shareholders, the state, and the public.
Dissolution of a Corporation in Illinois
An Illinois corporation may be involuntarily dissolved if the company neglects to file annual reports or fails to pay tax. Corporations that no longer want to do business in Illinois should dissolve formally to avoid racking up unnecessary fines. The Illinois Business Corporation Act (BCA) gives the proper procedure of dissolution.
- The board of directors should give a 10-day notice to each shareholder about a vote for dissolution.
- The dissolution must be approved by a two-thirds majority vote by each class of shareholders unless the corporation's Articles of Incorporation state otherwise.
- The dissolution is communicated to the state by filing the Articles of Dissolution (BCA 12.20) with the Illinois secretary of state. A filing fee of five dollars applies.
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