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Chapter 1 — Governance Issues in Closely Held Entities - I. [1.1] Introduction
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II. [1.2] Overview of Common Entity Types - III. [1.8] Common Issues in Business Entity Governance
- [1.9] Governing Law and the Internal Affairs Doctrine
- [1.10] Articles of Incorporation and Articles of Organization
- [1.11] Voting
- [1.12] Preemptive Rights
- [1.13] Exculpation and Indemnification
- [1.14] Bylaws
- [1.15] Procedures for Calling Meetings
- [1.16] Procedures for Conduct of Meetings
- [1.17] Quorum
- [1.18] Approval Requirements
- [1.19] Informal Board or Shareholder Action
- [1.20] Amendments
- [1.21] Indemnification
- [1.22] Governing Agreements
- [1.23] Indemnification and Advancement for Managers, Officers, and Directors
- [1.24] Interested Directors
- [1.25] Proxy Solicitations
- Chapter 2 — Personal Liability in Closely Held Entities
- Chapter 3 — Fiduciary Duties of Shareholders in Closely Held Corporations and Members of Limited Liability Companies
- I. [3.1] Introduction
- II. Fiduciary Duties of Shareholders in Closely Held Corporations
- [3.2] Basic Principles of When Duties Are Owed to Other Shareholders
- [3.3] What Makes a Corporation “Closely Held”
- [3.4] Factors That Determine Whether a Duty Is Owed
- Duties Owed by Minority Shareholders
- [3.5] Cases Holding That Minority Shareholders Owe Duties
- [3.6] Cases Holding That More than Mere Minority Shareholder Status Is Required To Impose Fiduciary Duties
- [3.7] Types of Conduct That May Constitute Breaches of Fiduciary Duty
- [3.8] Statutory Procedure for Avoiding Shareholder Fiduciary Duties
- III. Fiduciary Duties Owed by Members of Limited Liability Companies
- [3.9] Overview
- [3.10] Fiduciary Duties of Members in Member-Managed Limited Liability Companies
- [3.11] Duty of Loyalty
- [3.12] Duty of Care
- [3.13] Implied Contractual Covenant of Good Faith and Fair Dealing
- [3.14] Exception for Merely Furthering a Member’s Own Interest
- [3.15] Ability To Limit Certain Duties by Operating Agreement Provision
- [3.16] Fiduciary Duties of Members in Manager-Managed Limited Liability Companies
- [3.17] Pleading Breach of Fiduciary Duty in Claims Brought by Limited Liability Company Members Against Other Members
- Chapter 4 — Minority Stakeholder Rights and Remedies
- I. [4.1] What Constitutes a “Minority Interest”
- II. [4.2] General Stakeholder Rights and Obligations in Close Corporations, Partnerships, and Limited Liability Companies
- Close Corporations
- Agreements Concerning Management and Other Corporate Affairs
- [4.3] Close Corporations Under Illinois Law: Statutory Close Corporations and Common-Law Close Corporations
- [4.4] Statutory Close Corporations Under Article 2A of the Business Corporation Act
- [4.5] Common-Law Close Corporations
- [4.6] Shareholder Agreements under Galler v. Galler and Business Corporation Act §7.71
- [4.7] Galler v. Galler
- [4.8] Business Corporation Act §7.71
- Voting and Shareholder Meetings
- [4.9] Notice and Voting
- [4.10] Default Supermajority Approval Requirements for Certain “Major” Corporate Events
- [4.11] Notice of Shareholder Action by Written Consent in Lieu of Shareholder Meeting; Unanimous Written Consent for Dissolution Under Business Corporation Act §12.10
- [4.12] Inspectors of Meetings
- [4.13] Calling of Meeting by the Shareholders
- Access to Business Information
- [4.14] Voting Lists
- [4.15] Inspection of Books and Records
- [4.16] Distributions, Dividends, and Redemptions
- Limited Liability Companies
- [4.17] Critical Importance of the Operating Agreement
- [4.18] Admission of New Members — Default Rules
- [4.19] Management and Voting Rights — Default Rules
- [4.20] Fiduciary Duties
- [4.21] Right to Business Records — Default Rules
- [4.22] Distributions — Default Rules
- Partnerships
- [4.23] Effect of a Partnership Agreement
- [4.24] Admission of New Partners
- [4.25] Management, Voting Rights, and Liability to Third Parties
- [4.26] Fiduciary Duties
- [4.27] Right to Business Records
- [4.28] Profits, Liabilities, and Winding Up
- [4.29] Dissociation
- III. [4.30] Minority Stakeholder Remedies
- Close Corporations
- [4.31] Remedies for Minority Shareholder Oppression
- [4.32] Shareholder’s Right of Dissent
- [4.33] Derivative Actions
- Limited Liability Companies
- [4.34] Direct Actions by Members
- [4.35] Derivative Actions
- Partnerships
- [4.36] Direct Actions
- [4.37] Violations of Partners’ Fiduciary Duties
- [4.38] Derivative Action for Limited Partnership
- Chapter 5 — Rights To Inspect Company Records
- I. [5.1] Introduction
- II. Statutory Provisions
- III. Commonly Litigated Issues
- Who Is Entitled To Inspect Company Records
- [5.6] Corporations and General Partnerships
- [5.7] Limited Partnerships and Limited Liability Companies
- [5.8] How Specific Does the Inspection Request Need To Be
- [5.9] What Is a “Proper Purpose”
- [5.10] “Proper Purpose” Cases
- [5.11] Procedural Issues in “Proper Purpose” Cases
- [5.12] Scope of Inspection Permitted
- [5.13] Other Issues
- Chapter 6 — Valuation of Minority Interests in Closely Held Illinois Businesses
- Chapter 7 — Closely Held Entity Civil Procedure Issues
- I. [7.1] Overview
- II. [7.2] Closely Held Entities Can Sue in Their Own Names
- III. Bringing a Derivative Claim on Behalf of a Closely Held Entity
- [7.3] Derivative vs. Direct Actions Generally
- [7.4] Injury to the Entity vs. Injury to the Individual
- [7.5] The Parties to a Derivative Suit
- Derivative Actions Based on Type of Entity
- [7.6] Corporations
- [7.7] Limited Liability Companies
- [7.8] Limited Partnerships
- [7.9] Voluntary Unincorporated Associations
- [7.10] Summary
- IV. Federal Court “Citizenship” of a Closely Held Entity for Purposes of Diversity Jurisdiction
- V. [7.13] Enforceability of an Arbitration Provision Contained in a Limited Liability Company Operating Agreement Against the Respective Limited Liability Company
- Chapter 8 — Recurring Ethical Issues When Representing Closely Held Entities
- Chidinma O. Ahukanna
Chidinma O. Ahukanna
Chidinma O. Ahukanna is an associate at Aronberg Goldgehn Davis & Garmisa in Chicago, where she concentrates her practice in business litigation and family law. She is a member of the City Year Chicago Associate Board and the Chicago Volunteer Legal Services Board and Cochair (2023 – 2024) of the Chicago Bar Association’s Alliance for Women committee. In 2023, she was recognized as a Rising Star by Super Lawyers. Ms. Ahukanna received her B.S. from Drexel University, her M.A. in forensic psychology from the Chicago School of Professional Psychology, and her J.D. from the DePaul University College of Law.
- Alexandra R. Benigni
Alexandra R. Benigni
Alexandra R. Benigni is an associate at Aronberg Goldgehn Davis & Garmisa in Chicago, where she focuses her practice on business litigation and trust and estate litigation. She is a member of the Chicago and Illinois State Bar Associations. Ms. Benigni received her B.A. from Indiana University — Bloomington and her J.D. from the Loyola University School of Law.
- Benjamin E. Haskin
Benjamin E. Haskin
Benjamin E. Haskin is a Member at Aronberg Goldgehn Davis & Garmisa in Chicago and Cochair of the firm’s commercial litigation practice He assists small- and medium-sized companies in resolving business disputes involving contracts, shareholders/members, employees, trademarks, fraud, and other instances of alleged wrongdoing. Mr. Haskin is active in the legal community and serves on the Ambassadors Board of Legal Aid Chicago, an organization that provides free legal services to people in need. He has been recognized by Illinois Leading Lawyers on its Emerging Lawyers list and by Illinois Super Lawyers since 2019 on its Super Lawyer and Rising Stars lists. Mr. Haskin received his undergraduate degree from the University of Wisconsin — Madison and his J.D. magna cum laude from Loyola University Chicago School of Law.
- Richard L. Miller II
Richard L. Miller II
Richard L. Miller II is a Partner at Miller PC, in Chicago, where he focuses on commercial litigation, labor law, and class actions. He is an adjunct professor at Northwestern College of Law, where he has served as an instructor for Trial Advocacy since 2005 and Advanced Trial Advocacy since 2013. Miller is an American Arbitration Association arbitrator and has served as an arbitrator for the Cook County Mandatory Arbitration Program and FINRA. He was named one of the 40 Illinois Attorneys Under Forty To Watch by the Law Bulletin Publishing Company, publishers of the Chicago Lawyer and Chicago Daily Law Bulletin. Miller is a member of the IICLE® Board of Directors. He graduated magna cum laude from the University of Illinois College of Business and graduated cum laude from the University of Illinois College of Law.
- Amy M. Rapoport Gibson
Amy M. Rapoport Gibson
Amy M. Rapoport Gibson is a Partner at Aronberg Goldgehn Davis & Garmisa in Chicago, where her practice is focused on commercial litigation and employment law. Ms. Rapoport Gibson is the Co-Chair of Aronberg Goldgehn’s DEI Committee and a member of the firm’s Executive Management Committee. She is a member of the Chicago Bar Association and has been recognized by Law Bulletin Media’s 40 Under 40 Attorneys To Watch. Ms. Rapoport Gibson received her B.S. with honors in finance from DePaul University and her J.D. from the Chicago-Kent College of Law.
- Emma E. Sander
Emma E. Sander
Emma E. Sander is an associate at Aronberg Goldgehn David & Garmisa in Chicago, where her practice focuses on commercial litigation. She represents clients, from individuals to large businesses, in breach of contract cases, fraud cases, regulatory matters, and other disputes. She received her undergraduate degree from the University of Illinois at Urbana-Champaign and her J.D. cum laude from the Loyola University Chicago School of Law.
- Steven M. Scholl
Steven M. Scholl
Steven M. Scholl is a Member at Aronberg Goldgehn Davis & Garmisa in Chicago. His practice is focused on business law and transactions and business divorce. He is a member of the Chicago Bar Association and has been recognized annually (2005 – 2021) as an Illinois Leading Lawyer in closely and privately held business law and tax law. Mr. Scholl received his B.A. from the University of Illinois at Urbana-Champaign and his J.D. from the Loyola University Chicago School of Law.
- John C. Sciaccotta
John C. Sciaccotta
John C. Sciaccotta is a Member of the Executive Management Committee at Aronberg Goldgehn Davis & Garmisa in Chicago, where his practice is focused on business litigation and business divorce. He is a member and officer of the Chicago Bar Association, currently service as First Vice President, and has served on many of its committees, including the Business Divorce & Complex Ownership Disputes Committee (Cofounder and Cochair, 2019 – 2024), Mediation Program (Cofounder), Board of Managers (2017 – 2024), CLE Committee (Vice Chair 2019 – 2022), and Bench & Bar Committee (past Chair). Mr. Sciaccotta is also a member of the DePaul University College of Law Dean’s Council (2018 – 2021) and a past member of DePaul’s Public Interest Law Board. He is on the Commercial Panel of the American Arbitration Association’s National Roster of Arbitrators and Mediators. Mr. Sciaccotta received his B.S.B.A. from Creighton University and his J.D. from DePaul University College of Law.
- Jordan L. Sharp
Jordan L. Sharp
Jordan L. Sharp is an associate at Aronberg Goldgehn Davis & Garmisa in Chicago, where she focuses her practice on corporate law. Ms. Sharp received her B.S. from Purdue University and her J.D. from the University of Illinois.
Disputes Involving Closely Held Companies 2023 Edition
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