Illinois LLC governance: the equal-shares default, and the election that moved

Fund $90,000 of an Illinois LLC. Bring in a partner who funds $10,000. Say nothing about it in writing. Illinois law now pays you both the same.

That is 805 ILCS 180/25-1, and it is the default that surprises more Illinois owners than any other provision in the act. There is a second, quieter trap alongside it, and it catches people using forms that are only a few years out of date.

Illinois splits distributions equally when you say nothing, and the fix is one sentence you have to write yourself.

What the statute decides when you say nothing

Distributions are equal, not proportional

Under 805 ILCS 180/25-1, any distribution made before dissolution must be paid in equal shares to each member, not in proportion to capital contributed, unless the operating agreement provides otherwise.

A member who funded ten percent of an Illinois LLC collects the same distribution as the member who funded ninety.

No default ties money out to money in. The clause that fixes it, distributions in proportion to ownership percentages or contributed capital, is the most consequential line in a multi-member Illinois operating agreement. Illinois shares this default with Wyoming, South Dakota, Florida, and New Jersey. Texas, Nevada, Alaska, and California all do the opposite and allocate by contributed value.

The management election moved out of the articles

This one is a documentation trap rather than a money trap, and it is easy to get wrong.

Since 2017, an Illinois LLC becomes manager-managed through its operating agreement, not through its articles of organization.

Illinois LLCs are member-managed by default under 805 ILCS 180/15-1. A 2017 revision changed where the manager-managed election is made: it belongs in the operating agreement, and it is no longer made by a statement in the articles of organization. Anyone working from an older template, or reasoning from an older filing, can end up with articles that say one thing and a statute that looks elsewhere. If your company is meant to be manager-managed, the operating agreement has to say so.

Duties can be narrowed, not deleted

Illinois sits in the uniform-act family, which means it keeps a floor.

Illinois lets you narrow the duties of loyalty and care. It does not let you erase them.

Under 805 ILCS 180/15-3, members and managers owe duties of loyalty and care, including accounting for benefits derived from company business and refraining from grossly negligent, reckless, or intentional misconduct. The operating agreement may narrow those duties, within limits, but may not eliminate them. Illinois also protects information rights: the agreement may not unreasonably restrict a member’s right to information or access to records. That places Illinois closer to California and the uniform states than to Delaware or Nevada, and it means a passive Illinois investor retains a floor that a Delaware agreement could remove entirely. The freedom of contract page explains why that trade reads differently depending on which chair you occupy.

How far you can contract around it

Far enough to fix the defaults that matter, and not far enough to strip the protections the act reserves. The agreement can set the distribution split, elect manager management, structure voting, restrict transfers, and build an exit. It cannot eliminate loyalty and care or unreasonably cut off information rights.

The practical Illinois drafting list is short. State ownership percentages and tie distributions to them, because the equal-shares default is the statute’s answer and it is almost never anyone’s intention. Make the management election in the operating agreement. And name the buyout right that lets the company or the other members take over a charging order, which the protection page explains is a real statutory tool that works far better when it is already written down.

The bottom line

Illinois defaults to equal shares among members under 805 ILCS 180/25-1, regardless of who contributed the capital.

Illinois LLCs are member-managed by default, and since a 2017 revision the manager-managed election is made in the operating agreement rather than the articles.

The duties of loyalty and care may be narrowed by agreement but not eliminated.

The operating agreement may not unreasonably restrict a member’s right to information or records.

Illinois sits in the uniform-act family, so a passive investor keeps a floor that Delaware would let a drafter remove.

Tie distributions to ownership percentages in writing, or the statute will split them evenly.

What this page does not cover

This page is about what Illinois law lets your operating agreement do. How creditors reach you, including foreclosure inside the exclusive remedy, is on the protection page. Series pricing, the replacement tax, and transfer taxes are on the structure and cost page. Fees and deadlines are on the filing page.

Last verified July 2026.