The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.20, addresses the dissolution of a nonprofit corporation. Voluntary dissolution requires a resolution approved by the board of directors, followed by a vote of the members. For corporations without members, or where the articles of incorporation or bylaws do not specify a member vote, the board of directors alone can approve dissolution. However, if the articles or bylaws require member approval, then such approval is necessary. The process typically involves filing a statement of intent to dissolve with the Illinois Secretary of State, followed by winding up affairs, and finally, filing articles of dissolution. The question hinges on the scenario where the articles of incorporation are silent on member voting for dissolution. In such cases, the Act provides default provisions. The Act mandates that if the articles of incorporation do not specify the manner of dissolution or the vote required, the dissolution must be approved by the board of directors and, if the corporation has members, by the members. The Act further clarifies that if the articles are silent on the matter of member voting, the default is that members must approve dissolution, unless the articles grant the board the sole authority. The critical element here is the absence of a specific provision in the articles. Without such a provision, the default statutory requirement for member approval, if members exist, applies. Therefore, if the articles are silent, and members exist, member approval is a prerequisite for voluntary dissolution.

In Illinois, a nonprofit corporation’s ability to engage in lobbying activities is primarily governed by the Illinois Lobbyist Registration Act. This act requires individuals who engage in lobbying on behalf of a nonprofit to register with the Secretary of State if their expenditures exceed certain thresholds or if they communicate directly with designated public officials on specific matters. The Illinois General Not For Profit Corporation Act of 1986 outlines the general governance of nonprofits, including their powers and responsibilities, but the specifics of lobbying are detailed in separate legislation. While a nonprofit’s mission might involve advocacy, the act of lobbying itself triggers registration and reporting requirements. Failure to comply can result in penalties. Therefore, understanding the thresholds and definitions within the Lobbyist Registration Act is crucial for any Illinois nonprofit engaging in such activities. The question hinges on identifying the specific Illinois statute that governs the registration and reporting obligations for lobbying activities undertaken by nonprofit organizations.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.26, addresses the dissolution of a nonprofit corporation. When a nonprofit corporation is dissolved, its assets must be distributed for an exempt purpose. This means that after paying all debts and liabilities, the remaining assets are to be distributed to one or more organizations that are themselves exempt under Section 501(c)(3) of the Internal Revenue Code, or to the federal government, a state, or a political subdivision thereof, for a public purpose. The Act requires that the dissolution plan specify the recipient of these assets. If the plan does not specify a recipient, or if the specified recipient is unable or unwilling to accept the assets, the circuit court of the county where the corporation’s principal office is located may direct the distribution of the remaining assets to a charitable organization or organizations as the court deems appropriate. This ensures that the assets continue to serve a public or charitable purpose, aligning with the original intent of the nonprofit’s existence and preventing private inurement. The process is designed to safeguard charitable assets from being diverted for private gain.

The scenario describes a situation where a nonprofit corporation in Illinois is considering a significant change to its corporate purpose as stated in its Articles of Incorporation. Under the Illinois General Not For Profit Corporation Act of 1986, specifically Section 105.15 (Amendments), a change to the fundamental purpose of the corporation requires a resolution adopted by the board of directors and then submitted to the members for a vote. The Act generally requires a two-thirds vote of the members entitled to vote thereon, unless the articles of incorporation specify a different proportion. However, for amendments that alter the purpose or name, a more stringent approach is often taken to ensure broad consensus and adherence to the original charitable intent. The question probes the procedural requirements for such a fundamental change. The correct path involves the board proposing the amendment, followed by member approval. Member approval is the critical step that validates the change to the corporate purpose, as this directly impacts the mission and the public trust placed in the organization. Failure to obtain the requisite member approval would render the amendment invalid. The explanation focuses on the legal framework governing amendments to articles of incorporation for Illinois not-for-profit corporations, emphasizing the role of both the board and the membership in approving fundamental changes to the organization’s stated purpose. It highlights that the Illinois General Not For Profit Corporation Act of 1986 dictates these procedures to ensure proper governance and adherence to the organization’s foundational mission.

The Illinois Not-For-Profit Corporation Act of 1986 (805 ILCS 105/) governs the formation, operation, and dissolution of not-for-profit corporations in Illinois. A key aspect of this Act relates to the powers and duties of the board of directors. Specifically, Section 705 outlines the duties of directors. Directors are fiduciaries and must discharge their duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the directors reasonably believe to be in the best interests of the corporation. This includes the duty of loyalty, which requires directors to act in the corporation’s best interest and avoid self-dealing or conflicts of interest. When a director has a material financial interest in a contract or transaction, the director must disclose their interest and the material facts to the board. The contract or transaction can still be approved if it is fair to the corporation or if the interested director’s interest is disclosed and the contract is approved by a majority of the disinterested directors. Failure to adhere to these fiduciary duties can lead to personal liability for the directors. The scenario presented involves a director voting on a contract where they have a personal financial interest. Illinois law, as codified in the Not-For-Profit Corporation Act, requires that such an interest be disclosed and that the interested director abstain from voting unless the transaction is fair to the corporation and approved by disinterested directors. If the director votes and the transaction is later deemed unfair or harmful to the corporation, the director may face consequences for breaching their fiduciary duty. The Act does not automatically invalidate the contract solely due to the director’s interest, but it scrutinizes such transactions for fairness and proper disclosure. The director’s continued participation in the vote, without proper disclosure and abstention or a finding of fairness, creates a potential breach of duty.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 107.120, addresses the dissolution of a nonprofit corporation. When a corporation’s existence is terminated by proclamation of the Secretary of State due to failure to file annual reports or pay franchise taxes, this is considered an administrative dissolution. Following such a dissolution, the corporation’s affairs are to be wound up by its directors or by a receiver appointed by the court. The Act outlines the process for winding up, which includes ceasing to carry on its activities except as necessary for the orderly liquidation of its affairs, collecting its assets, paying or making provision for the payment of all its liabilities, and distributing any remaining assets. A key aspect of this process is that the directors, acting in their capacity to wind up the corporation’s affairs, have the authority to continue the corporation’s existence for the purpose of winding up, which includes the power to sue and be sued. This continuation is for a specific purpose and duration, not to resume normal operations. Therefore, the directors can take actions necessary for liquidation, such as settling claims and distributing assets, even after the administrative dissolution. The Illinois Secretary of State’s office maintains records of such dissolutions, and while reinstatement is possible under certain conditions, the immediate consequence of administrative dissolution is the cessation of normal operations and the commencement of the winding-up process under the direction of the board.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically addressing the dissolution of a nonprofit corporation, outlines a procedure for voluntary dissolution. For a corporation that has not transacted any business and has no debts or liabilities, the process is simplified. Section 107.10 of the Act permits the board of directors to adopt a resolution recommending dissolution. This resolution must then be submitted to the members for approval. If there are no members, or if the articles of incorporation or bylaws do not provide for member voting on dissolution, the board’s resolution alone is sufficient for approval. Following approval, the corporation must file Articles of Dissolution with the Illinois Secretary of State. This filing officially terminates the corporation’s legal existence. The scenario describes a nonprofit corporation that has been incorporated but has not commenced operations, has no assets, and no liabilities. Therefore, the board of directors can initiate the dissolution process by adopting a resolution, and since there are no members, this resolution does not require member approval. The subsequent step is to file Articles of Dissolution with the Secretary of State.

The Illinois General Not For Profit Corporation Act of 1986, as amended, outlines the requirements for the dissolution of a nonprofit corporation. When a nonprofit corporation decides to dissolve voluntarily, it must follow a specific procedure. First, the board of directors adopts a resolution recommending dissolution, which is then submitted to the members for approval. For a dissolution to be effective, it generally requires the affirmative vote of two-thirds of the voting members, unless the articles of incorporation or bylaws specify a different voting threshold. After the members approve the dissolution, the corporation must file a Statement of Dissolution with the Illinois Secretary of State. Prior to filing this statement, the corporation must cease conducting its business, except as necessary for winding up its affairs. This winding up process involves collecting assets, paying debts and obligations, and distributing remaining assets. Importantly, the Act specifies that any assets remaining after all debts and obligations have been paid must be distributed to one or more domestic or foreign corporations or not-for-profit corporations, societies, or organizations engaged in activities substantially similar to those of the dissolving corporation, or to a public agency or fund for public use, as specified in the articles of incorporation or bylaws. If the articles of incorporation or bylaws do not specify a recipient for remaining assets, the Act provides default provisions for distribution, often requiring a court order for such distributions to ensure compliance with the corporation’s charitable purpose and to prevent private inurement. Therefore, the distribution of remaining assets is a critical final step in the dissolution process, governed by the corporation’s own governing documents and state law.

In Illinois, a nonprofit corporation’s ability to amend its articles of incorporation is governed by the Illinois General Not-For-Profit Corporation Act of 1986. Specifically, Section 107/10.15 outlines the procedures for such amendments. Generally, amendments require a resolution approved by the board of directors and then adoption by a majority vote of the members entitled to vote thereon, or if there are no members, by a majority vote of the directors. However, if the articles of incorporation require a greater proportion of votes for adoption, that higher threshold must be met. The filing of the amendment with the Illinois Secretary of State is the final step that makes the amendment legally effective. This process ensures that significant changes to the foundational documents of a nonprofit are subject to appropriate corporate governance oversight and member or director approval, depending on the nonprofit’s structure. The Act also specifies that certain amendments, such as those affecting the name or registered agent, must adhere to particular filing requirements. The core principle is that amendments must be formally adopted and then documented with the state to be legally binding.

The Illinois Not-for-Profit Corporation Act of 1986, specifically referencing the provisions for director duties and liabilities, outlines the standard of care expected from directors. Section 8.75 of the Act addresses director liability. Directors are generally protected from personal liability for actions taken in their capacity as directors, provided they act in good faith and in a manner they reasonably believe to be in the best interests of the corporation, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. This protection is often referred to as the “business judgment rule” in corporate law, which also applies to not-for-profit entities. When a director engages in self-dealing transactions, however, the protection is diminished unless specific procedural safeguards are met, such as full disclosure and approval by disinterested directors or members. The question hinges on the director’s knowledge and participation in the unauthorized use of corporate funds. If a director knowingly permits or actively participates in the diversion of funds for personal use, this constitutes a breach of their fiduciary duties of loyalty and care, making them personally liable for the losses incurred by the corporation. The Act does not shield directors from liability for intentional misconduct, fraud, or knowing violations of law. Therefore, the director’s active knowledge and participation in the unauthorized use of funds directly violates the standard of care and loyalty, leading to personal liability for the misappropriated amount.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.75 concerning the dissolution of a nonprofit corporation, outlines the procedures for winding up affairs. When a nonprofit corporation has ceased to conduct its activities, the board of directors has the authority to initiate dissolution proceedings. This process involves adopting a resolution to dissolve, which must then be filed with the Illinois Secretary of State. Following the adoption of the resolution, the corporation must cease conducting its business except as necessary for winding up its affairs. This includes collecting its assets, paying or making provision for the payment of all its liabilities, and distributing any remaining assets in accordance with the Act. Section 105/107.75(c) mandates that after the dissolution resolution is adopted, the corporation shall proceed to wind up its affairs. This winding up process involves the orderly liquidation of assets, settlement of debts, and distribution of remaining property. The Act does not require a separate court order for voluntary dissolution if all statutory requirements are met, nor does it mandate the appointment of a receiver unless there is a dispute or failure to comply with the Act. The key is the board’s resolution and the subsequent filing and execution of the winding-up process as prescribed by statute.

The Illinois General Not For Profit Corporation Act of 1986, specifically concerning the dissolution of a nonprofit corporation, outlines procedures for winding up affairs. When a nonprofit corporation voluntarily dissolves, its directors are responsible for overseeing the process. This includes ceasing business operations, collecting assets, paying liabilities, and distributing any remaining assets. Section 107.80 of the Act details the distribution of assets upon dissolution. It mandates that after all liabilities and obligations have been paid or provided for, any remaining assets shall be distributed to one or more domestic or foreign corporations or organizations qualifying as exempt organizations under the federal Internal Revenue Code Section 501(c)(3) or its equivalent, or to the extent permitted by law, to the members of the corporation in proportion to their respective interests, if the corporation was not organized exclusively for charitable, religious, or educational purposes. In this scenario, the corporation was established for educational purposes, making a distribution to another 501(c)(3) educational organization the legally prescribed method for asset distribution after settling all debts and obligations. The directors’ fiduciary duty extends to ensuring this distribution complies with Illinois law and the corporation’s own articles of incorporation and bylaws.

The Illinois General Not For Profit Corporation Act of 1986, as amended, outlines specific procedures for the dissolution of a nonprofit corporation. When a corporation voluntarily dissolves, it must follow a multi-step process. First, a resolution to dissolve must be adopted by the board of directors. This resolution then typically requires approval by the members of the corporation, often by a specific majority as defined in the articles of incorporation or bylaws, or by statute if not specified. Following member approval, the corporation must file a Statement of Dissolution with the Illinois Secretary of State. Crucially, before or concurrently with filing the Statement of Dissolution, the corporation must cease conducting its business except as necessary to wind up its affairs. This winding up process involves collecting assets, paying liabilities, and distributing any remaining assets. Section 107/115.15 of the Act mandates that a dissolved corporation shall proceed to wind up its affairs with reasonable promptness. This includes notifying creditors of the dissolution and providing them with a reasonable period to present claims. The Illinois Not For Profit Corporation Act of 1986 is the primary governing statute for such entities in Illinois. The question assesses understanding of the procedural requirements for voluntary dissolution under this Act, specifically focusing on the initial steps after a resolution is passed by the board and the subsequent actions required for winding up affairs, emphasizing the cessation of business activities not related to dissolution.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 105/107.75, addresses the dissolution of a nonprofit corporation. When a nonprofit voluntarily dissolves, the Act mandates a specific order for the distribution of assets. First, all liabilities and obligations of the corporation must be paid or provided for. This includes debts, contractual obligations, and any other claims against the corporation. Following the satisfaction of liabilities, the remaining assets must be distributed to one or more qualified organizations that are described in Section 501(c)(3) of the Internal Revenue Code, or to a governmental entity for a public purpose, or to any other person or entity that is engaged in activities substantially similar to those of the dissolving corporation and that is not organized for profit. This ensures that the assets are used for charitable or public benefit purposes, aligning with the original mission of the nonprofit. The Act does not permit the distribution of assets to the members, directors, or officers of the corporation, unless such individuals are also members of a qualified recipient organization and the distribution is consistent with the organization’s exempt purpose. Therefore, any distribution to a director who is not a member of a qualifying 501(c)(3) entity or for a non-public purpose would be a violation of the dissolution provisions.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 107.05-35 concerning “Dissolution,” outlines the procedures for voluntary dissolution. When a not-for-profit corporation has ceased to conduct its affairs, it may initiate dissolution. The process requires a resolution to be adopted by the board of directors, which then must be submitted to the members for a vote. For a resolution to dissolve the corporation to be adopted, it generally requires the affirmative vote of two-thirds of the votes cast by members entitled to vote thereon, or if there are no members or no provision for voting by members, by the affirmative vote of two-thirds of the directors. This ensures that significant member or director consensus is obtained before winding up the corporation’s existence. Following the adoption of the dissolution resolution, the corporation must file a Statement of Dissolution with the Illinois Secretary of State. The Act mandates that after filing the statement, the corporation shall proceed to wind up its affairs, which includes collecting its assets, paying or providing for all its liabilities, and distributing any remaining assets in accordance with the Act and its articles of incorporation or bylaws. The critical element here is the requirement for a specific voting threshold by members or directors to authorize the dissolution, reflecting a governance principle of supermajority approval for such a fundamental corporate action.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically addressing the dissolution of a nonprofit corporation, outlines procedures for voluntary dissolution. When a corporation is dissolved voluntarily, its assets must be distributed according to the Act. Section 107.70 of the Act mandates that after paying or making provision for all liabilities and obligations, any remaining assets shall be distributed to one or more domestic or foreign corporations or organizations organized and operated exclusively for charitable, educational, religious, or scientific purposes, as permitted by the Act, or to the extent permitted by the Act, to members of the corporation, if the corporation was not organized for profit. The key is that these remaining assets cannot inure to the benefit of any private individual, officer, director, or member, unless that member is also a recipient of the organization’s charitable services or the distribution is in accordance with the corporation’s articles of incorporation or bylaws, provided such distribution is consistent with the Act’s provisions for dissolution. In this scenario, the remaining surplus funds are designated for distribution to other qualified charitable organizations, aligning with the statutory requirement to prevent private inurement upon dissolution. This ensures that the nonprofit’s mission continues to be served by similar entities.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 107.05, outlines the requirements for a nonprofit corporation to amend its articles of incorporation. For amendments that materially alter the rights or preferences of members, or that change the designated class of members, or that alter the voting rights of members, or that change the name or purpose of the corporation, or that change the registered agent or registered office, the amendment must be adopted by the members. The Act specifies that such amendments require approval by a majority of the votes cast by the members entitled to vote thereon, or such greater percentage as may be provided in the articles of incorporation or bylaws. In the absence of a specific provision for member approval of amendments in the bylaws or articles, the default is a majority of votes cast by members entitled to vote. Therefore, for an amendment to the articles of incorporation that alters the corporation’s stated purpose, member approval is mandatory and must meet the statutory voting threshold unless a higher threshold is established in the governing documents.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.75 concerning dissolution, outlines the procedures for winding up a nonprofit corporation. When a nonprofit corporation’s certificate of incorporation is revoked by the Illinois Secretary of State due to non-compliance, such as failure to file annual reports or pay fees, the corporation enters a state of administrative dissolution. Following administrative dissolution, the corporation’s affairs must be wound up. This process involves ceasing to conduct its activities except as necessary for winding up, collecting its assets, and distributing them. Crucially, the Act mandates that after paying or making provision for all liabilities and obligations, any remaining assets must be distributed to one or more domestic or foreign corporations or organizations formed for purposes similar to those of the dissolved corporation, or to the federal government, a state, or any political subdivision thereof, for a public purpose. This ensures that the nonprofit’s assets continue to serve a public benefit rather than reverting to private individuals, even in cases of administrative dissolution. The Illinois Not for Profit Corporation Act of 1986 does not permit the distribution of assets to members, directors, or officers upon dissolution, as this would violate the fundamental principle of nonprofit status. Therefore, the appropriate action for the remaining assets after liabilities are settled is to transfer them to another qualified entity.

The Illinois Not-for-Profit Corporation Act of 1986, specifically addressing the powers and duties of directors, mandates that directors must act in good faith and with the care that an ordinarily prudent person in a like position would exercise under similar circumstances. This standard of conduct, often referred to as the “duty of care,” requires directors to be informed and to make decisions based on reasonable diligence. When a director is considering a transaction where they have a material financial interest, the Act, along with common law principles of fiduciary duty, requires adherence to specific procedures to ensure the transaction is fair to the corporation and not a result of self-dealing. Such a transaction is generally permissible if the director discloses their interest and the transaction is approved by a majority of the disinterested directors or by a majority of the voting members, provided that the material facts of the transaction and the director’s interest are fully disclosed. Failure to follow these procedures can lead to personal liability for the director. The scenario presented involves a director proposing a lease agreement for property they own to the nonprofit. This is a classic conflict of interest situation. For the lease to be valid and protect the director from liability, it must undergo a rigorous approval process. The Illinois Act emphasizes transparency and independent review. Simply having the board approve it without proper disclosure and a majority of disinterested directors or members would be insufficient. The key is the fairness and the process, not just the presence of a board vote. The requirement for a majority of disinterested directors or members, after full disclosure, is the critical safeguard against abusive self-dealing, ensuring that decisions are made in the best interest of the corporation.

The Illinois Not-For-Profit Corporation Act of 1986, specifically Section 105/107.75 concerning amendments to articles of incorporation, outlines the process for a not-for-profit corporation to alter its fundamental governing documents. For amendments that alter the corporation’s name, purpose, or the way it is dissolved, a supermajority vote of the directors is typically required, in addition to a majority vote of the members if the corporation has members. However, amendments that do not fundamentally alter these core aspects, such as changing the registered agent or address, may be accomplished with a simpler majority vote of the directors. The question posits a scenario where a board of directors wishes to change the corporation’s registered agent and its principal office address in Illinois. These are administrative changes that do not affect the corporation’s legal name, its stated purpose, or its dissolution provisions. Therefore, the Act permits such amendments to be adopted by a vote of a majority of the directors then in office, assuming no specific bylaws provision dictates a higher threshold for these particular types of amendments. The key is that the Illinois Not-For-Profit Corporation Act of 1986 allows for less stringent voting requirements for amendments that do not go to the core identity or structure of the corporation.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically addressing the duties of directors, outlines a standard of care that directors must exercise. This standard is generally understood to be that of a reasonably prudent person in a like position under similar circumstances. This encompasses both the duty of care and the duty of loyalty. The duty of care requires directors to act with the diligence and prudence that a reasonable person would exercise in managing their own affairs, which includes staying informed about the organization’s activities and making decisions based on adequate information. The duty of loyalty mandates that directors must act in the best interests of the corporation and its members, avoiding self-dealing or conflicts of interest. When a director is also a party to a transaction with the corporation, the Illinois Act provides a framework for approving such transactions to ensure they are fair and do not breach the duty of loyalty. This typically involves disclosure of the director’s interest and a vote by disinterested directors or, in some cases, by the members, provided the transaction is fair to the corporation. The Act aims to balance the need for directors to engage with the corporation in various capacities while safeguarding the corporation from potential abuses of power or conflicts. A director’s personal interest in a contract with the nonprofit does not automatically invalidate the contract, but it triggers a higher scrutiny to ensure the transaction is fair and properly authorized, thereby upholding the fiduciary duties owed to the organization.

The scenario describes a situation where a nonprofit corporation in Illinois is considering a significant change to its mission statement, which is a fundamental governing document. Under the Illinois General Not For Profit Corporation Act (805 ILCS 105/), amendments to the articles of incorporation, which typically contain the mission statement, require a specific procedure. This procedure generally involves a resolution by the board of directors and approval by the members. The Act outlines that the board of directors may adopt a resolution proposing an amendment, which must then be submitted to the members for a vote. The specific voting threshold for member approval of amendments to the articles of incorporation is typically a majority of the votes cast by members entitled to vote thereon, unless the articles of incorporation or bylaws specify a higher quorum or voting requirement. In this case, the board of directors has approved the amendment, and it is now being presented to the membership. The question asks about the necessary step for the amendment to become effective. The correct procedure mandates member approval, as outlined by the Act. The options presented test the understanding of this procedural requirement, distinguishing between board action alone and the necessity of member ratification for such a core change. The Illinois General Not For Profit Corporation Act, specifically Article 10, addresses amendments to articles of incorporation. Section 105/105.15 details the procedure for amending articles, requiring adoption by the board and then submission to the members for a vote. The minimum requirement for member approval is generally a majority of votes cast, assuming a quorum is present. Therefore, member approval is the critical next step.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 105.45, addresses the conditions under which a director may be removed from office. A director can be removed by a majority vote of the members, provided that the articles of incorporation or bylaws do not specify a greater proportion. However, this removal power is subject to certain limitations. A director elected by a specific class of members cannot be removed by a vote of the members of another class. Furthermore, if a director was elected to fill a vacancy, that director may only be removed by the same authority that elected them. The question asks about the removal of a director who was appointed by the board to fill a vacancy. According to the Act, such a director can only be removed by the board of directors. This is a critical distinction in governance, ensuring that the appointing authority retains control over its appointed representatives unless otherwise specified in the governing documents. The Illinois Not-For-Profit Corporation Act of 1986 governs the internal affairs of not-for-profit corporations in Illinois, including director removal. Understanding these provisions is essential for proper corporate governance.

The Illinois General Not-For-Profit Corporation Act of 1986 governs the formation and operation of not-for-profit corporations in Illinois. When a director resigns from a not-for-profit corporation, the Act outlines specific procedures and implications. Section 108/108.60 of the Act addresses resignation of directors. It states that a director may resign at any time by giving written notice to the corporation. The resignation is effective upon the date of the notice, unless the notice specifies a future date. If the resignation is effective at a future date, the board of directors may fill the vacancy before the effective date. Importantly, the Act does not mandate that the board must accept a resignation; it becomes effective upon delivery of the written notice. Furthermore, a director’s resignation does not affect any rights or liabilities of the director incurred prior to the effective date of the resignation. The Act also specifies that a director’s resignation does not automatically mean the corporation must immediately elect a replacement; the board can decide on the timing of filling the vacancy, subject to quorum requirements and bylaws. The resignation does not require board approval to be effective, only proper written notification.

The Illinois General Not For Profit Corporation Act of 1986, specifically concerning the rights and responsibilities of directors, outlines procedures for addressing conflicts of interest. When a director has a material financial interest in a transaction or contract with the corporation, that director must disclose the nature and extent of their interest and any related financial interests to the board of directors. Following disclosure, the interested director is generally prohibited from voting on the transaction. The transaction can still be approved if it is fair and reasonable to the corporation at the time it is authorized or if the interested director’s participation is deemed necessary for the corporation’s best interests. However, the Act emphasizes transparency and good faith. A director who fails to disclose a conflict of interest and participates in a transaction where they have a material financial interest may be subject to liability for any damages caused to the corporation. The core principle is that decisions affecting the corporation must be made in its best interest, free from undue personal influence. The disclosure and abstention from voting are key safeguards. The Act does not mandate that the interested director must resign from the board in all such situations, nor does it automatically invalidate the transaction if the interested director votes. The fairness of the transaction and the proper disclosure are critical factors.

The Illinois Not-for-Profit Corporation Act of 1986, specifically addressing the dissolution of a nonprofit corporation, outlines a process that requires careful adherence to statutory requirements. When a nonprofit corporation in Illinois decides to voluntarily dissolve, the process generally involves a resolution by the board of directors, followed by a vote of the members. For a dissolution to be effective, the Act mandates that specific steps be taken to wind up the affairs of the corporation, which includes satisfying liabilities and distributing assets. A critical aspect of this winding-up process is the proper distribution of remaining assets. Illinois law, like federal tax law, requires that upon dissolution, assets must be distributed for one or more exempt purposes specified in Section 501(c)(3) of the Internal Revenue Code or to the federal government or a state or local government for a public purpose. This ensures that the charitable or public benefit purpose for which the nonprofit was established continues to be served, even after its dissolution. Failure to comply with these asset distribution requirements can lead to legal challenges and potential penalties. Therefore, the distribution of remaining assets to another organization that itself is a qualified 501(c)(3) entity or for a public purpose is a fundamental requirement for lawful dissolution in Illinois.

The Illinois General Not-For-Profit Corporation Act of 1986, specifically Section 107.05, outlines the requirements for annual reports. A not-for-profit corporation must file an annual report with the Illinois Secretary of State. This report serves to keep the state’s records current regarding the corporation’s status, registered agent, and principal office. Failure to file the annual report can lead to administrative dissolution of the corporation by the Secretary of State. The Act mandates this filing to ensure transparency and accountability for organizations operating under its provisions. The filing is a procedural requirement for maintaining good standing and legal existence within Illinois. The concept of administrative dissolution is a key consequence of non-compliance with such reporting mandates, emphasizing the importance of adhering to statutory filing deadlines.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105.20 (Dissolution), outlines the procedures for voluntary dissolution initiated by the corporation itself. A key aspect of this process involves the distribution of assets. Upon dissolution, after all debts and liabilities have been paid or adequately provided for, any remaining assets must be distributed to one or more domestic or foreign corporations or not-for-profit corporations that are organized and operated exclusively for charitable, religious, eleemosynary, benevolent, educational, or similar purposes, as permitted by the corporation’s articles of incorporation or bylaws, and as further specified by Illinois law. This ensures that the assets continue to serve public or charitable purposes, aligning with the original intent of the nonprofit entity. If the articles of incorporation or bylaws do not specify a recipient, or if the designated recipients cannot be ascertained or do not accept the distribution, the assets are to be distributed to such other organization or organizations as may be determined by a court of competent jurisdiction within Illinois, which is often guided by the principles of cy pres if the original purpose can no longer be fulfilled. The crucial point is that assets cannot revert to members, directors, or officers, as this would violate the fundamental principle of nonprofit status, which prohibits private inurement.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.30, outlines the requirements for amending articles of incorporation. For a not-for-profit corporation to amend its articles of incorporation, the amendment must be adopted by the board of directors and then submitted to the members for approval. The Act specifies that adoption by the board requires the affirmative vote of a majority of directors then in office, unless the articles or bylaws require a greater number. Following board approval, the proposed amendment must be submitted to the members. The Act mandates that the amendment is adopted by the members if it receives the affirmative vote of two-thirds of the votes cast by members entitled to vote thereon, or such greater proportion as the articles or bylaws may require. Therefore, the process involves both board and member approval, with specific voting thresholds defined by state law and potentially further clarified in the corporation’s governing documents. The question describes a scenario where a proposed amendment to the articles of incorporation of an Illinois not-for-profit corporation was approved by the board but only received a 60% affirmative vote from the members. Since the Illinois General Not For Profit Corporation Act of 1986 requires a two-thirds (approximately 66.7%) vote of members for such amendments, and the received vote of 60% falls short of this statutory minimum, the amendment is not adopted. The board’s approval alone is insufficient without the requisite member ratification. The explanation emphasizes the dual approval mechanism and the specific voting threshold required by Illinois law for amending articles of incorporation.

The Illinois General Not For Profit Corporation Act of 1986, specifically Section 105/107.75, outlines the requirements for director liability. This section establishes that a director is not liable for actions taken or omitted in their capacity as a director unless their conduct constitutes willful misconduct or gross negligence. This standard protects directors from liability for ordinary negligence or errors in judgment, provided they act in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. Willful misconduct implies an intentional disregard for one’s duties or a deliberate breach of law or fiduciary duty. Gross negligence, on the other hand, signifies a severe departure from the standard of care, a reckless disregard for the consequences of one’s actions or omissions. Therefore, for a director of an Illinois nonprofit to be held personally liable for a decision that results in financial loss to the organization, the plaintiff must demonstrate that the director’s actions or inactions rose to the level of willful misconduct or gross negligence, not merely ordinary negligence.