Illinois Compiled Statutes
805 ILCS 5/ - Business Corporation Act of 1983.
Article 8 - Directors And Officers

(805 ILCS 5/Art. 8 heading)

 
(805 ILCS 5/8.05) (from Ch. 32, par. 8.05)
Sec. 8.05.
Board of directors.
(a) Except as provided in Article 2A of
this Act, each corporation
shall have a board of directors and the
business and affairs of the corporation shall be managed by or under the
direction of the board of directors.
(b) The articles of incorporation or by-laws may prescribe qualifications
for directors. A director need not be a resident of this State or a
shareholder
of the corporation unless the articles of incorporation or by-laws so
prescribe.
(c) Unless otherwise provided in the articles of incorporation
or by-laws, the board of directors, by the affirmative vote of a majority
of the directors then in office, and irrespective of any personal interest
of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise, notwithstanding the provisions of Section 8.60.

(Source: P.A. 88-151.)
 
(805 ILCS 5/8.10) (from Ch. 32, par. 8.10)
Sec. 8.10.
Number, election and resignation of directors.
(a) The
board of directors of a corporation shall consist of one or more members.
The number of directors shall be fixed by the by-laws, except the number
of initial directors shall be fixed by the incorporators in the articles
of incorporation or at the organizational meeting. In the absence of a
by-law fixing the number of directors, the number shall be the same as that
fixed in the articles of incorporation or at the organizational meeting.
The number of directors may be increased or decreased from time to time by amendment
to the by-laws.
(b) The by-laws may establish a variable range for the size of the board
by prescribing a minimum and maximum (which may not exceed the minimum by
more than five) number of directors. If a variable range is established,
the number of directors may be fixed or changed from time to time, within
the minimum and maximum, by the directors or the shareholders without further
amendment to the by-laws.
(c) The terms of all directors expire at the next annual shareholders'
meeting following their election unless their terms are staggered under
subsection (e). The term of a director elected to fill a vacancy expires
at the next annual shareholders' meeting at which his or her predecessor's
term would have
expired. The term of a director elected as a result of an increase in the
number of directors expires at the next annual shareholders' meeting unless
the term is staggered under subsection (e).
(d) Despite the expiration of a director's term, he or she continues to
serve until the next meeting of shareholders at which directors are elected.
A decrease in the number of directors does not shorten an incumbent director's term.
(e) If the board of directors consists of six or more members, in lieu
of electing the membership of the whole board of directors annually, the
articles of incorporation or by-laws may provide that the directors shall
be divided into either two or three classes, each class to be as nearly
equal in number as is possible. The term of office of directors of the
first class shall expire at the first annual meeting of shareholders after
their election, that of the second class shall expire at the second annual
meeting after their election, and that of the third class, if any, shall expire at the
third annual meeting after their election. At each annual meeting after
such classification, the number of directors equal to the number of the
class whose terms expire at the time of such meeting shall be elected to
hold office until the second succeeding annual meeting, if there be two
classes, or until the third succeeding annual meeting, if there be three classes.
(f) If the articles of incorporation authorize dividing the shares into
classes or series, the articles may also authorize the election of all or a specified
number or percentage of directors by the holders of one or more authorized
classes or series of shares.
(g) A director may resign at any time by giving written notice to the
board of directors, its chairman, or to the president or secretary of the
corporation. A resignation is effective when the notice is given unless
the notice specifies a future date. The pending vacancy may be filled before
the effective date, but the successor shall not take office until the effective date.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.12)
Sec. 8.12. Female, minority, and LGBTQ directors.
(a) Findings and purpose. The General Assembly finds that women, minorities, and LGBTQ people are still largely underrepresented nationally in positions of corporate authority, such as serving as a director on a corporation's board of directors. This low representation could be contributing to the disparity seen in wages made by females and minorities versus their white male counterparts. Increased representation of these individuals as directors on boards of directors for corporations may boost the Illinois economy, improve opportunities for women, minorities, and LGBTQ people in the workplace, and foster an environment in Illinois where the business community is representative of our residents. Therefore, it is the intent of the General Assembly to gather more data and study this issue within the State so that effective policy changes may be implemented to eliminate this disparity.
(b) As used in this Section:
"Annual report" means the report submitted annually to the Secretary of State pursuant to this Act.
"Female" means a person who is a citizen or
lawful permanent resident of the United States and who self-identifies as a woman, without regard to the individual's designated sex at birth.
"Minority person" means a person who is a
citizen or lawful permanent resident of the United States and who is any of the following races or ethnicities:
(c) Reporting to the Secretary of State. As soon as practical after August 27, 2019 (the effective date of Public Act 101-589), but no later than January 1, 2021, the following information shall be provided in a corporation's annual report submitted to the Secretary of State under this Act and made available by the Secretary of State to the public online as it is received:
Information reported under this subsection shall be updated in each annual report filed with the Secretary of State thereafter.
(d) Beginning no later than March 1, 2021, and every March 1 thereafter, the University of Illinois Systems shall review the information reported and published under subsection (c) and shall publish on its website a report that provides aggregate data on the demographic characteristics of the boards of directors and executive officers of corporations filing an annual report for the preceding year along with an individualized rating for each corporation. The report shall also identify strategies for promoting diversity and inclusion among boards of directors and corporate executive officers.
(e) The University of Illinois System shall establish a rating system assessing the representation of women, minorities, and LGBTQ people on corporate boards of directors of those corporations that are publicly held domestic or foreign corporations with their principal executive office located in Illinois based on the information gathered under this Section. The rating system shall consider, among other things: compliance with the demographic reporting obligations in subsection (c); the corporation's policies and practices for encouraging diversity in recruitment, board membership, and executive appointments; and the demographic diversity of board seats and executive positions.

(Source: P.A. 101-589, eff. 8-27-19; 102-223, eff. 1-1-22; 102-813, eff. 5-13-22.)
 
(805 ILCS 5/8.15) (from Ch. 32, par. 8.15)
Sec. 8.15.
Quorum of directors.
(a) A majority of the number of directors
fixed by the by-laws, or in the absence of a by-law fixing the number of
directors, the number stated in the articles of incorporation or named by
the incorporators, shall constitute a quorum for the transaction of business
unless a greater number is
specified by the articles of incorporation or the by-laws.
(b) If a corporation has a variable range board of directors, a quorum
shall consist of a majority of the directors then in office, but not less
than a majority of the minimum number of directors specified for the variable
range of the board unless the articles of incorporation or by-laws specify
a greater number.
(c) The act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the board of directors, unless the
act of a greater number is required by the articles of incorporation or the by-laws.
(d) Unless specifically prohibited by the articles of incorporation or
by-laws, members of the board of directors or of any committee of the board
of directors may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can
hear each other.
Participation in such meeting shall constitute attendance and
presence in person at the meeting of the person or persons so
participating.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.20) (from Ch. 32, par. 8.20)
Sec. 8.20.
Place of directors' meetings.
Regular or special
meetings of the board of directors may be held
either within or without this State.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.25) (from Ch. 32, par. 8.25)
Sec. 8.25.
Notice of directors' meetings.
Meetings of the board of directors shall be held upon such notice as the
by-laws may prescribe. Attendance of a director at any meeting shall
constitute a waiver of notice of such meeting except where a director
attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.30) (from Ch. 32, par. 8.30)
Sec. 8.30.
Vacancies.
Any vacancy occurring in the board of directors
and any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual meeting or at a special
meeting of shareholders called for that purpose; provided, however, the
by-laws may provide a method for filling
vacancies arising between meetings of shareholders by reason of an increase
in the number of directors or otherwise, by director or shareholder action
and, in the absence of such a provision, the board of directors may fill
the vacancy. A director elected by the shareholders to fill a vacancy shall
hold office for the balance of the term for which he or she was elected. A director
appointed to fill a vacancy shall serve until the next meeting of shareholders
at which directors are to be elected.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.35) (from Ch. 32, par. 8.35)
Sec. 8.35.
Removal of directors.
(a) One or more of the directors
may be removed, with or without cause, at a meeting of shareholders by the
affirmative vote of the holders of a majority of the outstanding shares
then entitled to vote at an election of directors, except as follows:
(1) No director shall be removed at a meeting of shareholders unless the
notice of such meeting shall state that a purpose of the meeting is to vote
upon the removal of one or more directors named in the notice. Only the
named director or directors may be removed at such meeting.
(2) In the case of a corporation having cumulative voting, if less than
the entire board is to be removed, no director may be removed, with or without
cause, if the votes cast against his or her removal would be sufficient to
elect him or her if then cumulatively voted at an election of the entire
board of directors.
(3) If a director is elected by a class or series of shares, he or she may
be removed only by the shareholders of that class or series.
(4) In the case of a corporation whose board is classified as provided
in subsection (e) of Section 8.10, the articles of incorporation may
provide that directors may be removed only for cause.
(b) The provisions of subsection (a) shall not preclude the circuit court
of the county in which the corporation's registered office is located from
removing a director of the corporation from office in a proceeding commenced
either by corporation or by shareholders of the corporation holding at least
10 percent of the outstanding shares of any class if the court finds (1)
the director is engaged in fraudulent or dishonest conduct or has grossly abused
his or her position to the detriment of the corporation, and (2) removal is in
the best interest of the corporation. If the court removes a director,
it may bar the director from reelection for a period prescribed by the court.
If such a proceeding is commenced by the shareholders, they shall make the
corporation a party defendant.

(Source: P.A. 84-924.)
 
(805 ILCS 5/8.40) (from Ch. 32, par. 8.40)
Sec. 8.40.
Committees.
(a) If the articles of incorporation or by-laws
so provide, a majority of the directors may create one or more committees,
each to have one or more members, and
appoint members of the board to serve on the committee or committees.
A committee's members
shall serve at the pleasure of the
board.
(b) Unless the appointment by the board of directors requires a greater
number, a majority of any committee shall constitute a quorum and a majority
of a quorum is necessary for committee action. A committee may act by
unanimous
consent in writing without a meeting and, subject to the provisions of the
by-laws
or action by the board of directors, the committee by majority vote of its
members shall determine the time and place of meetings and the notice required
therefor.
(c) To the extent specified by the board of directors or in the articles
of incorporation or by-laws, each committee may exercise the authority of
the board of directors under Section 8.05; provided, however, a committee may
not:
(Source: P.A. 91-464, eff. 1-1-00.)
 
(805 ILCS 5/8.45) (from Ch. 32, par. 8.45)
Sec. 8.45.
Informal action by directors.
(a) Unless specifically prohibited by the articles of incorporation or
by-laws, any action required by this Act to be taken at a meeting of the
board of directors of a corporation, or any other action which may be taken
at a meeting of the board of directors or a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof, or by all the members of such
committee, as the case may be.
(b) The consent shall be evidenced by one or more written approvals, each
of which sets forth the action taken and bears the signature of one or more
directors. All the approvals evidencing the consent shall be delivered
to the secretary to be filed in the corporate records. The action taken
shall be effective when all the directors have approved the consent unless
the consent specifies a different effective date.
(c) Any such consent signed by all the directors or all the members of
a committee shall have the same effect as a unanimous vote, and may
be stated as such in any document filed with the Secretary of State under
this Act.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.50) (from Ch. 32, par. 8.50)
Sec. 8.50.
Officers.
A corporation shall have such officers as shall
be provided in the by-laws, each of whom shall be elected by the board
of directors at such time and in such manner as may be prescribed by the
by-laws. Officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the board of directors
or chosen in such other manner as may be prescribed by the by-laws. If
the by-laws so provide, any two or more offices may be held by the same
person. One officer, in this Act generally referred to as the secretary,
shall have the authority to certify the by-laws, resolutions of the shareholders
and board of directors and committees thereof, and other documents of the
corporation as true and correct copies thereof.
All officers and agents of the corporation, as between themselves and
the corporation, shall have such express authority and perform such duties in
the management of the property and affairs of the corporation as may be
provided in the by-laws, or as may be determined by resolution of the
board of directors not inconsistent with the by-laws and such implied authority
as recognized by the common law from time to time.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.55) (from Ch. 32, par. 8.55)
Sec. 8.55.
Removal of officers.
Any officer or agent may be removed by the board of directors whenever
in its judgment the best interests of the corporation will be served
thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights.

(Source: P.A. 83-1025.)
 
(805 ILCS 5/8.60) (from Ch. 32, par. 8.60)
Sec. 8.60.
Director conflict of interest.
(a) If a transaction is
fair to a corporation at the time it is authorized, approved, or ratified,
the fact that a director of the corporation is directly or indirectly a
party to the transaction is not grounds for invalidating the transaction or
the director's vote regarding the transaction; provided, however, that in a
proceeding contesting the validity of such a transaction, the person asserting
validity has the burden of proving
fairness unless:
(b) For purposes of this Section, a director is "indirectly" a party to
a
transaction
if the other party to the transaction is an entity in which the director
has a material financial interest or of which the director is an officer,
director or general partner.

(Source: P.A. 90-421, eff. 1-1-98.)
 
(805 ILCS 5/8.65) (from Ch. 32, par. 8.65)
Sec. 8.65. Liability of directors in certain cases.
(a) In addition
to any other liabilities imposed by law upon directors of a corporation,
they are liable as follows:
(b) A director of a corporation who is present at a meeting of its board of
directors at which action on any corporate matter is taken is conclusively
presumed to have assented to the action taken unless his or her dissent
is entered in the minutes of the meeting or unless he or she files his or
her written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or forwards such dissent by
registered or certified mail to the
secretary of the corporation immediately after the adjournment of the
meeting. Such right to dissent does not apply to a director who voted in
favor of such action.
(c) A director shall not be liable for a
distribution of assets to the shareholders of a corporation in excess of
the amount authorized by Section 9.10 of this Act if he or she relied and
acted in good faith
upon a balance sheet and profit and loss statement of the corporation
represented to him or her to be correct by the president or the officer of such
corporation having charge of its books of account, or certified by an
independent public or certified public accountant or firm of such
accountants to fairly reflect the financial condition of such corporation,
nor shall he or she be so liable if in good faith in determining the amount
available for any such dividend or distribution he or she considered the
assets to be of their book value.
(d) Any director against whom a claim is asserted under this
Section and who is held liable thereon, is
entitled to contribution from the other directors who are likewise liable
thereon.
Any director against whom a claim is asserted
for the improper
distribution of assets of a corporation and who is held
liable thereon, is entitled to contribution from the shareholders who
knowingly accepted or received any such distribution in proportion
to the amounts received by them respectively.

(Source: P.A. 98-776, eff. 1-1-15.)
 
(805 ILCS 5/8.70) (from Ch. 32, par. 8.70)
Sec. 8.70. Kickbacks, bribes, etc. -Liability of officers or directors.
Any Corporate director or officer who commits commercial bribery or commercial bribe
receiving as defined in Article 29A of the Criminal Code of 2012, shall
be liable to the corporation which he or she serves as officer or director for
treble damages, based on the aggregate amount given or received plus attorneys'
fees. A conviction in a criminal proceeding for a commercial bribery or
commercial bribe receiving shall be deemed prima facie evidence of the convicted
director's or officer's liability under this Section.

(Source: P.A. 97-1150, eff. 1-25-13.)
 
(805 ILCS 5/8.75) (from Ch. 32, par. 8.75)
Sec. 8.75. Indemnification of officers, directors, employees and agents;
insurance.
(a) A corporation may indemnify any person who was or is a party,
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation, or who is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, if such person acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the best
interests of the corporation or, with respect to any criminal action or
proceeding, that the person had reasonable cause to believe that his or her
conduct was unlawful.
(b) A corporation may indemnify any person who was or is
a party, or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason
of the fact that such person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense
or settlement of such action or suit, if such person acted in good faith
and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation, provided that no
indemnification shall be made with respect to any claim, issue, or matter as to
which such person has been adjudged to have been liable to the corporation,
unless, and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court
shall deem proper.
(c) To the extent that a present or former director, officer or employee
of a corporation has been successful, on the merits or otherwise,
in the defense of any action, suit or proceeding referred to in
subsections (a) and (b), or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith, if the person acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation.
(d) Any indemnification under subsections (a), (b), or (c) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case, upon a determination that indemnification of the present or former
director, officer,
employee or agent is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in subsections (a), (b), or (c). Such
determination shall be made with respect to a person who is a director or
officer of the corporation at the time of the determination: (1) by the majority vote of the
directors who are not parties to such action, suit or
proceeding, even though less than a quorum, (2) by a committee of such
directors, even though less than a quorum, designated by a majority vote of such directors,
(3) if there are no such directors, or if such directors so
direct, by independent legal
counsel
in a written opinion, or (4) by the shareholders.
(e) Expenses (including attorney's fees) incurred by an officer or
director of the corporation in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay
such amount if it
shall ultimately be determined that such person is not
entitled to be indemnified
by the corporation as authorized in this Section.
Such expenses (including attorney's fees) incurred by former directors and
officers or other employees and agents of the corporation or by persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise may be so paid on such terms and
conditions, if any, as the corporation deems appropriate.
(f) The indemnification and advancement of expenses provided by or
granted under the other subsections of this Section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action
in another capacity while holding such office. A right to
indemnification or to advancement of expenses arising under a provision of the articles of
incorporation or a by-law shall not be eliminated or impaired by an amendment to such provision
after the occurrence of the act or omission that is the subject of the civil, criminal, administrative
or investigative action, suit or proceeding for which indemnification or advancement of expenses
is sought, unless the provision in effect at the time of such act or omission explicitly authorizes
such elimination or impairment after such act or omission has occurred.
(g) A corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify such person against such liability under the
provisions of this Section.
(h) If a corporation indemnifies or advances expenses to a
director or officer under subsection (b) of this Section, the corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders meeting.
(i) For purposes of this Section, references to "the corporation" shall
include, in addition to the surviving corporation, any merging corporation
(including any corporation having merged with a merging corporation) absorbed
in a merger which, if its separate existence had continued, would have had
the power and authority to indemnify its directors, officers, and employees
or agents, so that any person who was a director, officer, employee or agent
of such merging corporation, or was serving at the request of such merging
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the
same position under the provisions of this Section with respect to
the surviving corporation as such person would have with respect to such
merging corporation if its separate existence had continued.
(j) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by such director, officer,
employee, or agent with respect to an employee benefit plan, its participants,
or beneficiaries. A person who acted in good faith and in a manner he or
she reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interest of the corporation" as referred
to in this Section.
(k) The indemnification and advancement of expenses provided by or granted
under this Section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of that person.
(l) The changes to this Section made by this amendatory Act of the 92nd
General Assembly apply only to actions commenced on or after the
effective date of this amendatory Act of the 92nd General Assembly.

(Source: P.A. 97-881, eff. 8-2-12.)
 
(805 ILCS 5/8.85) (from Ch. 32, par. 8.85)
Sec. 8.85.

In discharging the duties of their respective positions,
the board of directors, committees of the board, individual directors and
individual officers may, in considering the best long term and short
term interests of the
corporation, consider the effects of any action (including without
limitation, action which may involve or relate to a change or potential
change in control of the corporation) upon employees, suppliers
and customers of the corporation or its subsidiaries, communities in
which offices or other
establishments of the corporation or its subsidiaries are located,
and all other pertinent factors.

(Source: P.A. 86-126.)

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