The amended act includes changes to sections 101.80, 103.12,
107.10, 107.40, 107.50, 107.75, 108.05, 108.10, 108.35,
108.45, 108.60, 108.70 and 110.30. You can find a copy of
SB 1390 reflecting all revisions to the act at http://www.ilga.gov
(search SB 1390).
REVISIONS EXPLAINED
The following explains each revision to the act and a brief
overview of its impact:
Section 101.80(g)( 4). Definitions. The definition of “
delivered” has been revised to clarify that notice required by the
act will be effective if it is “transmitted by electronic means”
to an e-mail address, fax number or any other type of contact
information appearing on the records of the corporation that
may be approved in the articles of incorporation or bylaws. The
revisions to this section clarify that e-mail and fax are acceptable methods of delivery (without the need for the corporation
to specifically approve such methods of communication),
while specifically providing the necessary statutory flexibility to
address potential future, currently unknown methods of communication (as may be authorized or approved in the articles
of incorporation or bylaws).
Section 101.80(p). Definitions. Actions required to be
“written,” to be “in writing,” to have “written approval” and
the like by or of members, directors or committee members
will now include any communication transmitted or received
by electronic means unless specifically prohibited by the corporation’s articles of incorporation or the bylaws. Before the
act was amended, communications transmitted or received
electronically could not be accepted as “writings” unless specifically permitted in the corporation’s articles of incorporation
or bylaws. Electronic communications will now be the statutory
default provision in Illinois, automatically allowing not-for-profits to benefit from the electronic communication provisions
without the need to specifically amend their articles of incorporation or bylaws.
Section 103.12. Private foundations. This section updates
an outdated reference to the Internal Revenue Code of 1954
to reflect the 1986 amendment of the Internal Revenue Code.
Section 107.10. Informal action by members entitled to
vote. In what will be an enormous benefit to not-for-profits,
the revisions to this section make it much easier for members
to take action without a meeting (referred to as “informal
action”). Specifically, not-for-profits will now be able to conduct mail and e-mail ballots in a transparent and straightforward manner.
Unlike mail ballots for elections (see §107.50 of the current act), and unlike any matter that might come before a
meeting of members, §107.10 of the current act states that a
vote without a meeting requires consent by all of the members
(not likely achievable) or by “the minimum number of votes
that would be necessary to authorize or take such action at a
meeting at which all members entitled to vote thereon were
present and voting.” Essentially, §107.10 currently requires
that any member action taken by mail ballot (other than elections) requires a majority vote (or such other vote as required
by the bylaws) of the entire membership. For example, a
1,000-member organization could take action at a meeting if
a simple majority of a quorum approved it. That also would
apply to an election conducted by mail ballot. However, under
the current act, if that organization wanted to take any other
action by mail ballot, §107.10 of the current act would require
that no less than 501 of those 1,000 members actually return
ballots and that at least 501 vote in favor. This is a very high
and prohibitive threshold that makes action by mail ballots
impractical.
WHILE THE FORUM BELIEVES
THAT THE ACT AND ITS
AMENDMENTS PROVIDE AN
EXCELLENT SET OF STATUTORY
PROVISIONS UNDER WHICH
TO ORGANIZE AND OPERATE A
NOT-FOR-PROFIT CORPORATION,
THE FORUM ALSO FELT THAT
A NUMBER OF THE ACT’S PRO-
VISIONS COULD BE IMPROVED
BY PROVIDING ADDITIONAL
CLARITY AND FLEXIBILITY, OR
SIMPLIFICATION.
Under the revised act, informal actions (taken by mail or
electronic ballot) must be approved by the same number of
members as would be necessary to approve such action at a
member meeting. For example, if the bylaws require a majority of the members present at a meeting at which a quorum
is present to take action at a member meeting, then a vote
taken via mail or electronic ballot would pass if it received the
same number of votes as would have been required had the
vote been taken at a meeting. If the quorum requirement is
100, and 200 members return ballots, the required vote for
approval of the informal action would be 101.
The changes to §107.10 allow membership organizations
to more easily conduct business by mail or electronically and
organizations no longer will need to conduct “proxy meetings”
in order to circumvent the constraints of §107.10 of the current act. The changes to the act recognize the convenience,
efficiency and cost savings that electronic communications
and voting provide to membership organizations, and encourage greater ease of participation through the greater use of
electronic voting.
The revisions also impose the following restrictions on informal action by members:
(i) Voting must remain open for no less than five days from
the date the ballot is delivered; however, in the case of a
removal of one or more directors, a merger, consolidation,
dissolution or sale, lease or exchange of assets, the voting
must remain open for no less than 20 days from the date
the ballot is delivered.
