Hurley Stanners & Matsko, LLC
Chicago, Illinois, United States
Illinois is the fifth largest state in the United States. It is a vibrant state with major cities with dense populations but also contains farmland, forests, parks, and many lakes. Illinois contains seven cities over the population of 100,000. It is a state where over 50 Fortune 1000 businesses are located. Major industries in the past have included stockyards and steel plants. Currently, the major industries are manufacturing, finance, technology, warehousing and distribution, and agriculture. Major banks maintain facilities in Illinois, including Bank of America, US Bank, and Chase Bank.
Chicago is the largest city in Illinois with a population of 2.8 million. It is located on Lake Michigan and has over 17 miles of beaches and parks on the lake. The Greater Metropolitan Chicago Area has a population of over 10 million and covers seven counties. The population in the Greater Metropolitan Chicago Area is extremely diverse. People have immigrated to the United States and to Chicago from all over the world and all over the United States. Chicagoans include people from Mexico, Poland, Central America, England, Ireland, South American, Italy, Africa, and China. The age of the population is also diverse. Census figures show that Chicago’s population is broken down by age as follows; 15¬–24 (15 per cent); 25–34 (16.6 per cent); 35¬–44 (15.3 per cent); 45–54 (13.1 per cent); and 55 and over (19.7 per cent).
Education is important to any area’s success. High school students in Illinois are ranked sixth highest in the country. There is also an extensive university system in Illinois. Major universities include University of Illinois, Northwestern University, University of Chicago, Columbia College, Illinois Institute of Design, Loyola University, and De Paul University.
Transportation is extremely good, with a well-developed highway system. Illinois towns outside of Chicago can be reached by major highway systems, trains, and often buses. A national and metropolitan train system allows residents to live in the cities or in rural areas and be able to reach employers’ factories and offices alike. The Chicago Transit Authority provides trains and buses throughout the Greater Metropolitan Chicago Area. This means that the labor force is available for most types of business ventures. Commercial trains carry products across the State and the nation. Numerous rivers allow for barges to travel throughout the Great Lakes area. Indeed, Chicago was built on Lake Michigan, the third largest of the five lake waterways upon which many of the cities in the Midwest were built.
Cultural institutions in Illinois include the Chicago Symphony, Chicago Art Museum, Chicago Museum of Contemporary Art, Chicago Opera House, Joffrey Ballet, Field Museum, Museum of Science and Industry, Brookfield Zoo, Spertus Museum, and the Shedd Aquarium. Sports are also a serious part of life in Illinois. Illinois’ professional sports teams include two baseball teams, two hockey teams, a basketball team, a football team, and two soccer teams. Many recent Olympians originate from Illinois, including many gymnasts, track and field athletes, and skaters.
In summary, Illinois has a viable commercial atmosphere with a mobile, experienced workforce to support it. On the other hand, there are enough outdoor areas and sports for its residents to enjoy family and personal time in non-work hours.
Establishment of Enterprises
There are various types of business organizations recognized in Illinois. Business organizations are first divided into not for profit organizations and for profit. The Illinois General Not for Profit Corporation Act of 1986 governs not for profit companies as described briefly below. The major for profit organizations are divided into sole proprietorships, partnerships, limited partnerships, corporations, and limited liability companies. All but sole proprietorships are governed by Illinois statute. These types of business structures are used for most types of business. However, other entities are used for specialized types of businesses. These are numerous but include the Medical Corporation Act for doctors, the Religious Corporation Act for church and religious-oriented businesses, and the Gas Company Property Act , which sets out various restrictions for the natural gas industry. The Illinois business entity statutes are administered by the Illinois state governmental department named the Secretary of State’s Office. The Secretary of State’s website has helpful forms and information for businesses.
The decision on what type of entity to create for a particular situation must be based on a clear understanding of the proposed business plan, including a definite understanding of whether the business is intended as a short-term or a long-term business. It is a decision best made by an attorney and accountant working in conjunction with the owners of the European entity or individual foreign owners. They are better equipped to conduct a review of special business entity statutes to see if any such statute applies to the proposed business. At this time, an analysis of licensing requirements for a business should also be made. Doctors, lawyers, real estate brokers, and other professions are licensed in Illinois. Such licensing may effect the selection of entity, officers, directors, and other issues.
Many of the issues of what type of entity to use for a new business are tax driven and so controlled by accounting and tax considerations. Working with a sophisticated accounting firm is a necessity.
From the accountant’s perspective, the issue is to minimize the tax that will accrue by maximizing flexibility for the client in the accounting and tax process. The accountant should be advised of the personal and business background of the individual proposed owners in order to strategize effectively.
Obviously, if a business entity will be an owner in a new venture, then the details of that entity must be closely analyzed. The attorney is concerned that an entity is created so that certain liabilities are minimized. This would include contractual liability and/or potential liability for damage to personal property or to people related to the operation of the business.
In Illinois many businesses are operated as sole proprietorships. This means that a single owner operates a business without creating a formal business entity. Most small businesses and some mid-sized businesses are operated on this informal basis. The main advantage to this type of business format is that no formalities exist that must be maintained and no attendant costs, therefore, exist. The disadvantage to this type of business is that any liabilities of the business can be collected by a creditor from the personal assets of the owner.
This can put the owner’s home and personal assets at risk if a problem with the business occurs that is not adequately covered by insurance. Obviously, most businesses benefit from the creation of a business entity to take advantage of the liability protection aspect of most business entities.
Of note, if a business is not operated under the name of its owner, then the business must file an assumed name registration with the county in which the business operates in Illinois. Assumed name registrations insure that the public will be able to discover the identity of the owners of any business. This means that the true name of a landlord, business partner, or a business being used by a consumer can be learned in the event of a dispute or problem. When using an assumed name, the business entity is described as “John Smith, doing business as Newton Technology”, for instance.
A corporation (also referred to generically as a company) is the operation of a business by one or more individuals or business entities for any purpose that is lawful under the laws of the State of Illinois. The intrinsic characteristics of a corporation are: a) centralized management through a board of directors, b) perpetual existence even if some of the owners change, and c) the limited liability of the owners, called shareholders, for the corporation’s debts. Corporations are governed by state law under the Illinois Business Corporation Act of 1983. The foreign attorney and investor looking to create a business in Illinois will want to familiarize themselves with the laws of the State of Illinois to make sure that no statutory or other regulations exist which would negatively affect the business’s operation in Illinois.
Once incorporated, the rules regarding the operation of a corporation are set out in the corporation’s Articles of Incorporation with the Secretary of State’s Office as well as in the Corporation’s By Laws. These should be custom developed for each company to make sure that the businesses’ long- and short-term goals are considered. The Secretary of State, a governmental agency, handles the incorporation of a corporation as well as issues throughout the life of the corporation. In order to maintain a corporation, the foreigner must understand basic maintenance and compliance requirements that exist in most states. The State of Illinois also taxes the corporation through an annual franchise tax. This tax is paid through the filing of a document known as an Annual Report. An Annual Report lists the name of the president, treasurer, and secretary of the corporation as well the directors and registered agent. A registered agent is the liaison between the business and the Secretary of State’s Office for receipt of notices. Usually, the corporation’s attorney serves as the registered agent. Records of all companies incorporated in Illinois are kept by the State and are available online through the Illinois Secretary of State’s database or by contacting the Secretary of State’s office directly.
The Illinois Secretary of State’s Department is charged with administering domestically organized corporations as well as foreign (incorporated under the laws of another state) companies authorized to do business in Illinois. The taxation of corporations is governed by federal law under the Internal Revenue Code. Corporations also will incur State of Illinois tax (filing and tax) obligations. This chapter is not the place for a full discussion of the Internal Revenue Code’s provisions, but one should inquire of the business’ accountant whether the corporation, one is planning should be taxed as a “C” corporation or as an “S” corporation. This decision should predate the filing of the Articles of Incorporation with the Secretary of State because the filing of Form 2253, “Election by a Small Business Corporation”, with the Internal Revenue Service (IRS) to elect to be treated as an S corporation must be made shortly after the corporation’s date of registration.
A corporation is created to avoid personal liability for the owners/shareholders. In this way the personal assets of the owners are protected from the debts of the corporation, if the economy falters and/or the business suffers for other reasons. This protection can be theoretical if the owners are required subsequent to incorporation to guarantee a lease, a bank loan, or other corporate debt must be secured by the personal home or other assets of an owner unless certain practical requirements are met.
If the owners of a corporation comply with all Illinois statutory requirements (i.e., Annual Report filings,), maintain a separate bank account for the corporation and capitalize the business initially with sufficient funds initially, then a creditor will not be able to attack the personal assets of a shareholder. However, the failure or to be undercapitalized at the onset of business can expose the personal assets of owner-shareholders to be reached by the corporation’s creditors. This is called “piercing the corporate veil”. While no statutory limited liability protection is afforded to shareholders in a corporation, unlike the limited liability protection afforded to the members of limited liability companies, as noted herein, an educated owner may safely protect its assets from the creditors of his corporation.
In this day of domain names and worldwide marketing, the selection of a company name is more complicated than it was even just a few years ago. The availability of a domain name does not mean that the name is available for other purposes, including for use as a name for a new business entity. Today, many business people check to see if a domain name is available but do not check the availability of a name with the State of Illinois before undertaking to purchase the domain name and start using the name. Therefore, no major outlays of money should be spent for a new business without making sure that a name is actually available for usage. A name reservation can be made to reserve a name or to check with the Secretary of State’s Office to insure that a desired name is available once Articles of Incorporation are ready to be filed.
Names are also used as part of a logo for a business, product, or service. It is important for a business, which will be operated nationally in the United States and/or internationally, to make sure that the proposed name can be protected with a United States trademark and/or a foreign trademark before the name selection is finalized.
By statute, it is important to note that a corporation must use a permitted designation in its name to make it clear to those dealing with the business what type of entity it is. In Illinois this means the use of one of the following words must be part of the corporate name: Corporation, Corp., Incorporated, Inc., Limited, Ltd., Company, and Co. The use of the words “LLC” or “limited liability company” are not permitted when filing for the incorporation of a corporation.
When the formal company name is not the trading name, then an assumed name registration must be obtained from the Secretary of State. This process occurs, unlike that used for sole proprietorships, at the state instead of county level.
For a corporation, the shareholders or stockholders own stock to evidence their ownership interest in a business and elect the board of directors. The board of directors develop the strategy for the corporation and elect the individuals who will be involved in the day to day operation of the business.
These are known as officers. Most corporations require the election of a president, secretary, and treasurer, although other operational officer positions may also be used.
Shareholders are required, under Illinois law, to meet annually, to elect new directors. Shareholders elect a board of directors, which can be composed of from one director (for a single shareholder entity) to an unlimited number of directors.
The board of directors creates the operational plan for the business. In addition, shareholders can meet periodically during the year to discuss and vote on any issue which they have a right to vote on, as designated in the Articles of Incorporation or the By-Laws. Shareholder meetings can occur by a physical meeting of the shareholders or by a written document setting forth certain resolutions or acts that the shareholders have decided to take. This document is called a Shareholder Consent or Shareholder Minutes and is signed by all of the shareholders with the right to vote.
Board of Directors
The directors of the corporation elect the officers of the corporation. In small businesses, the shareholders, directors, and officers will usually be one or several individuals or businesses.
In larger corporations, there will undoubtedly be more of a separation between the owners and the officers. The board of directors meets annually or more often, as determined in the By-Laws, and, like shareholder meetings in Illinois, they can be held in person or be affected through a meeting evidenced in a writing.
Supervisory (Advisory) Boards of Directors
Advisory Boards of Directors are created when a corporation can benefit from the input of experienced business people, but the shareholders do not want to lose control of the operation of the business to these professionals outside of the company by bringing them onto the Board of Directors.
In Illinois the officers required by the By-Laws are generally the president, secretary, and treasurer as well as other more operational officers like the chief operating officer (COO), chief economic officer (CEO), and chief financial officer (CFO) as well as vice president, managers, and divisional heads.
If the By-Laws provide, then two or more offices are allowed to be held by a single individual. This is common in small, closely held companies. Officers can be residents of foreign countries unless restricted by the By-Laws.
Limited Liability Company
Illinois began to recognize a new type of entity called a limited liability company (LLC) in January 1994, when the Illinois Limited Liability Company Act was enacted under the model of the Uniform Limited Liability Company Act. The Illinois Limited Liability Company Act was amended effective 1 January 1998. The original LLC Act was substantially amended and so caution should be used to refer solely to the revised statute.
Under the LLC Act, one or more individuals can organize a business called a limited liability company to operate a business. An LLC’s major characteristic is its flexibility in how it will be treated for tax purposes and its limited liability. The LLC can be taxed as a C corporation, an S corporation, a Partnership or, for a single member LLC, as a “disregarded entity”. In addition, key to the LLC’s popularity as a business entity is that the owners, called members, face no risk of liability for the debts of the LLC. While this result can be obtained practically by owners of corporations, the LLC statute clearly provides this liability protection even if the LLC fails to file annual reports.
This allows an accountant to pick the most advantageous and favorable tax and accounting practices. Advantageous tax considerations combined with a perpetual nature of the limited liability of the owners for the debts of the entity are seen as more desirable than a corporate structure for some entities.
Originally, the flexibility of the LLC structure was favored only for certain businesses, including real estate holdings, but, today, after the revision of the LLC Act effective 1 January 1998, the LLC is also favored for other businesses because of its clear limited liability to its owners, called members. LLCs may be manager managed or member managed. A clear understanding of the duty of loyalty and care owed by managers should be explored before a decision is made on which format to choose. Manager-managed LLCs resemble a board of directors, while member-managed LLC’s resemble partnerships.
A bank, vendor, or individual conducting business with an LLC who wants confirmation that the LLC has the authority to act can get this confirmation. A copy of the Articles of Organization filed with the state plus a Manager or Member Consent (also called a “Resolution”) and often the LLC’s Operating Agreement will provide evidence of which member or manager has the right to act, including to sign documents, for the LLC, and a Resolution made after a meeting will evidence the scope of the actions approved by the manager(s) or members on an issue, as the case may be. It is important to note that an LLC, like a corporation, must also file an Annual Report and pay franchise tax to the Secretary of State’s office.
Similar to corporations, limited liability companies are required to use certain words in their names. They are: Limited Liability Company, L.L.C., or LLC. The LLC may not use any of the name designators for a corporation like Inc., Corporation, or Company. Like a corporation, the name desired for an LLC can be reserved for a fee. An LLC can also use an assumed name by filing a request for an assumed name with the Secretary of State.
A limited liability company has extensive powers like a corporation to operate its business, including the right to purchase real and personal property, incur liabilities, lend money, and become an owner of a partnership, limited partnership, or joint venture. Also, like a corporation, its contact with the Secretary of State, the governmental entity which enforces the LLC Act, is through a registered agent. An LLC does not have shareholders. Nor does it generally have directors or officers. Rather, the owners of an LLC are called members. The interest of a member may be purchased and paid to the new entity by cash, property, services rendered, or a promissory note promising to pay cash, property, or services.
When incorporating the LLC, a choice is made by the members on whether to have the LLC centrally managed by managers, similar in function to a board of directors, or whether the members will manage the business. A manager may be a member but need not be. The decision on whether to have a centralized management of the LLC by the use of managers or a decentralized management by the members is an important one. The rights of managers and members are complex and a thorough analysis of the nature of the business and those who will be involved in the business must be made.
In member-managed LLCs, members have equal rights in the management of the business which can be difficult in practice. In either type of LLC, the relationship between the parties must be clearly set out. Any individual over the age of 18 years may be a member of an LLC, and no restriction exists in Illinois against a member being a citizen of a foreign country. Further, the LLC Act is clear that a corporation, partnership, or other entity may be a member of an LLC. An LLC will operate consistent with its Articles of Organization and Operating Agreement. The Operating Agreement controls how the LLC will be managed and the rights of the members and the managers, if any. It also covers tax and accounting distribution issues. The Operating Agreement can also be customized to reflect the needs of the particular business, except as to certain issues which cannot be altered by the Operating Agreement.
Issues which cannot be altered by terms of the Operating Agreement are important to note: (i) no unreasonable restriction on the right to records or information for a member; (ii) no right to vary the right to expel members; (iii) no right to vary the right to wind up the business; (iv) no right to restrict the rights of a member to dissociate from the LLC, or eliminate or reduce a member’s fiduciary duties (although the duties can be clarified and non-violating conduct can be set forth in the Operating Agreement); (v) no right to eliminate the obligation of good faith and fair dealing by members or managers, and (vi) no right to affect the rights of any party except a manager, member, or transferee of a member.
Management of LLCs
An LLC has no board of directors but, as already noted, either the members or managers manage the business. In a member-managed LLC, each member is an agent of the LLC and has the authority to conduct business and sign contracts on behalf of the LLC. The issue surrounding who has what authority to act solely is critical to the smooth functioning of a business. Therefore, clear rights and obligations should be set out in the Articles of Organization or in the Operating Agreement.
Otherwise, a single member or manager may take unwanted action and leave an equal co-owner member with a lesser level of control and input into decision-making than should be allowed. Each member in a member-managed LLC has a duty of loyalty and a duty of care to the other members. The duty of loyalty requires a member to hold the LLC property in trust for the benefit of the other members and not to personally take advantage of the members or to compete against the LLC. An obligation of acting fairly toward the other members also exists. The duty of care specifically requires members to refrain from taking any negligent or reckless actions or from intentional misconduct, or taking or from refraining from taking any action which they know violates applicable laws while a business is being liquidated.
When managers manage the business, their meetings resemble a board of directors. For manager-managed LLCs, the managers govern every aspect of the business which has not been reserved in the Articles of Organization or Operating Agreement for the members to govern. The Operating Agreement should confirm if any single manager can make decisions for the LLC or whether only the unanimous or majority vote of the managers is required to take action. In a manager-managed LLC, a member is not an agent of the LLC and, therefore, has no authority to act unless the Articles of Organization or the Operating Agreement makes clear that the members have the right to decide a certain issue.
Therefore, only a manager or the managers will have the authority to act in the normal course of business. A member in a manager-managed LLC has none of the duties of loyalty or care that a member in a member-managed LLC has unless the Operating Agreement delegates authority to the members. A manager in a manager-managed LLC, on the other hand, is bound to the same standards of conduct that a member in a member-managed LLC has, except to the extent that a member exercises authority over an action.
Officers are not required by an LLC, but can be created. Most smaller LLC’s operate without officers, but members of the LLC may feel that they would like to use the term “president” instead of “manager” or “member”.
If so, then the Operating Agreement may be modified to explain the rights and obligations of such positions. Operational titles, like COO and CFO, can be used as with any business.
Limited liability companies, by statute in some states, and now in Illinois, are afforded clear statutory protection for the members’ personal assets for company debt. A member’s liability for the debts of an LLC is limited to the amount of his/her capital contributions unless a provision of the Articles of Organization states otherwise and a member has consented to such provision in the Operating Agreement or the member has signed a guaranty.
The LLC Act, as revised, made it very clear in 1998 that even if an LLC did not abide by normal company formalities (eg, including the filing of an Annual Report and keeping a separate bank account for the business, and the like) that this would not negatively affect the member’s limitation of liability.
This is important because a shareholder in a corporation which does not abide by these same corporate formalities can find him/herself personally liable for the corporation’s debts.
As noted earlier, this is called “piercing the corporate veil”. This absolute protection from the business’ liabilities is a major benefit to the owner of a business and is why a substantial number of newer businesses in the last 10 to 15 years have been incorporated as LLC’s. This limitation of liability issue can be vital in saving the small business owner from liability due to failures to observe certain formalities.
The flexibility of the LLC as to tax benefits is why this type of business entity is preferred by the more sophisticated business owner. For a foreign group coming into the United States to operate without a background in US business practices, both aspects of an LLC will be attractive.
Acquisition of Enterprises
The most common types of acquisitions of a business in Illinois are made by either buying 100 per cent of the stock (corporation) or membership interests (limited liability company) of the business or all or a majority of the assets of the business.
Tax issues control which type of sale is advantageous to the seller and the buyer and so the starting point for any acquisition is making sure that the accountant the business works with is well versed in United States tax and accounting issues.
Finding the Buyer
Depending on the industry, a buyer and seller may find each other through a number of resources. First, a buyer or seller may advertise on a business website or in a business newspaper. Second, a seller may, through its understanding of its industry, determine what competitors would be able to leverage their own business if they acquired the seller’s business. A discreet phone call or letter to the company may determine interest. Third, an existing vendor or agent relationship may provide opportunities. Fourth, a business broker may be an effective tool in some industries. Franchises present unique issues, opportunities, and challenges.
Crain’s Chicago Business Magazine, the premier Illinois business periodical, and now online as well, provides a resource for online or print marketing of the sale of a business. The major Chicago newspapers, The Chicago Tribune or the Chicago Sun Times, or the major newspapers of other Illinois towns also provide an avenue for advertising business opportunities. An advertisement in The Wall Street Journal, a national business periodical, may also be a useful tool. Craigslist and other online directories also provide an avenue for attracting buyers via the internet.
International companies often look to small successful companies to provide an inroad into the United States market. The small company is often happy to sell and have its principals stay employed and involved in the operation for a short period or even a more extended period as the larger foreign company’s financial wherewithal can help take the smaller company to the next level of business. Also, a company with certain product lines may find that a competitor may be an interesting purchase target because of the ability of the acquisition to add new products in the same marketing channels or in new marketing channels to its operation. Knowing the market is key to this approach.
Vendors, like competitors, are often able to see opportunities and how they could leverage the business of another company with whom they have an existing business relationship. A vendor starting in one product line may find that a vendor with another product line is an ideal company to acquire. Further, having done business with the company in the past, they are better judges of the strength of the management and whether the management would fit into the purchaser’s business climate or not.
A business broker is often used in some industries, including the restaurant industry. Business brokers should be chosen carefully. Referrals are probably the best way to identify a business broker who has a proven track record of being able to find a buyer. The Midwest Business Brokers and Intermediaries Association can provide a list of its members to assist in the search process.
Where a business is part of a franchise, the franchisor often participates in the process of finding a buyer as a part of its normal franchisee search process. Most Franchise Agreements specifically provide that a franchisor’s approval of the buyer is essential. Make sure that you review the Franchise Agreement very carefully as well as the statutorily required Disclosure Statement. We would also caution buyers to make sure that they research licensing issues and have a clear understanding of any major legal issues in the industry before moving forward. Also, make sure that the franchisor has kept up with these issues in its requirements. While franchises offer a good opportunity in some markets, they can also be an expensive situation in a poor economic environment.
Due Diligence: Valuing the Business
From the seller’s position, the first stop in determining what the value of the business should be is for the company’s accountant to value the business. While a formal business valuation may be desirable, its cost, usually in the tens of thousands of dollars, may not be desirable for small transactions. The business’ accountant, who best knows the business, can look at the company’s financial records and tax returns and consider other sales in the industry in arriving at a recommendation for its fair valuation.
The buyer will want to review financial and other documents. This process is called the buyer’s “due diligence”. From the buyer’s position, their accountant will want to review three to five years of financials and tax returns, a list of company assets, accounts receivable, major client list, and accounts payable. Depending on the nature of the business, a fuller due diligence list will also need to be developed and provided to the seller after a price is agreed upon to make sure that the buyer gets what it expects in the business with no surprises. A Confidentiality Agreement should be used to require the buyer to keep confidential the seller’s financial and other business information received from the seller and his accountant during the due diligence process.
Making the Business Deal—The Contract
Once each side has engaged in its due diligence and has an idea of for what price they are willing to sell or buy the business, then the parties need to negotiate the deal. This process does not substantially differ from country to country. The biggest mistake that a buyer or seller makes at this point is to negotiate the terms of a deal without legal counsel. The parties’ thinking appears logical. They will wait to bring in legal counsel until they have a deal in hand. However, this approach, except for the most experienced business seller or buyer, can cost them in money and may ultimately cost them the deal.
In Illinois, when an attorney is involved for the buyer before a deal is finalized, the buyer’s attorney usually drafts a Letter of Intent (LOI), which sets forth the main terms of the offer. The setting down on paper the terms that the business people have negotiated assists the parties in evaluating the logic of the proposed transaction. Often, an LOI can be drafted and negotiated over a matter of days or weeks. An LOI is a good way of making sure that the business people are in full agreement as far as the terms of the deal. The LOI sets out the proposed terms of the purchase. While an LOI is a non-binding agreement, the agreement does require the parties to negotiate the final agreement in good faith based on the terms of the written LOI.
A comprehensive Purchase Agreement may take much longer to draft and negotiate. Many times a deal goes directly to a Purchase Agreement only to find out that the business people did not understand an issue or did not address a significant issue. The deal can be lost if a particular term becomes a “deal breaker” after the buyer has expended a good amount in legal fees in having its attorney draft the Purchase Agreement. The drafting of an LOI takes significantly less time and, therefore, can be a cost-effective method of making sure that the parties have reached an agreement on all significant terms. Further, business lawyers, who have worked on a number of sales or purchases, often raise a number of questions on the deal that the business persons would not have considered. Working with an attorney before the Letter of Intent instead of once one has been signed could result in a much better, well thought out purchase or sale.
These issues could affect the price that the seller or buyer is willing to accept for the business. Moreover, once the terms of the deal have been agreed, even at the LOI stage, it is hard for the attorney subsequently coming into the deal to change the terms. Due diligence is often completed before an offer is made although, in some instances, confidentiality concerns promote the major part of the due diligence occurring after an LOI or Purchase Agreement is signed.
A buyer often prefers to buy the assets of the business because they then are not responsible for any contingent liabilities of the business. If a stock purchase is to occur, which may be critical to the seller to avoid huge tax liability, the buyer will need to make sure that certain protections can be negotiated into the Purchase Agreement. These protections include warranties about the status of every aspect of the business.
This allows the buyer to understand the known risks in the business. In order to minimize the buyer’s risk, the buyer may seek indemnification from the seller if the information provided by the seller during due diligence and/or the contract negotiation stage incorrectly states or omits to state known risks. Indemnification is also sought to protect the buyer against unexpected liabilities not reflected on the seller’s financial statements as of the closing date.
In the event that all or a substantial part of a business or its assets are sold, certain governmental notices are required in Illinois under the Illinois Revenue Act and the Unemployment Insurance Act. The buyer must comply with these statutes or any existing tax liability due from the seller to the governmental agencies can be passed on to the buyer with the purchase of the seller’s assets. Upon request, both departments search their records to determine the outstanding tax liability of the seller, if any.
If any exists, the Department of Revenue or Employment Security Department provides a Bulk Sales Stop Order to the buyer which provides information about the seller’s existing tax liability. Then the buyer is required by the governmental authority to hold back a portion of the purchase price in order to insure that the taxes are paid. A release of the buyer’s hold-back reserve is paid to the seller upon the buyer’s receipt of confirmation from the governmental agency, called a Tax Clearance Letter.
The Tax Clearance Letter confirms that the governmental agency has received payment of the tax amount claimed by the governmental agency. The attorney for the buyer usually holds purchase price hold-back funds in a client escrow at the firm’s bank until receipt of the Tax Clearance Letter. The Purchase Agreement will generally refer to this practice to make sure that the buyer is not put at risk by the seller’s refusal to abide by these bulk sales laws.
In the event that the seller has a large workforce and will be acquiring the business from a competitor which holds a major percentage of the market share in the seller’s field, then the Federal Hart-Scott-Rodino Antitrust Improvements Act of 1976 must be complied with before the sale can occur. While this federal law is not a topic of this statewide legal review, it is critical in any deal in which it applies and so is referenced here. Generally, the purchase must be approved before the sale can be consummated.
A purchase of the assets of a domestic company by a foreign company could give rise to antitrust issues under federal antitrust acts if the buyer will gain control over a significant portion of the market for a product or a service. Again, while the details of such a statute are not within the scope of this chapter, suffice it to say that a careful review of the applicable acts is critical.
Encumbrances may also exist as to the assets of the business for governmental or other liabilities. Failure to pay taxes by the seller could have resulted in a federal or state tax lien. Failure to pay utilities to a local water department could result in a lien in the event that real estate is also being sold with the business’ assets. Liens of this nature are discovered through searches obtained by the buyer’s attorney. Dependent on the nature of the business, searches are conducted for judgments, pending lawsuits, federal tax liens, state tax liens, and other liens on the seller’s assets.
Some of these liens are not governmental based but are particularly important to be aware of and to make sure that they have been paid. Otherwise, the buyer’s newly acquired assets could carry an unforeseen liability. Banks, equipment finance companies, and other types of businesses routinely take a secured interest in the assets of a business to whom they provide funding, and this type of liability must be extinguished before the sale and purchase of the assets or stock of the seller is finalized under the terms of most Purchase Agreements.
Acquisition of Real Estate
In Illinois the purchase or sale of real estate requires the entry into a written contract with the seller. The Deed or other document conveying the property must be made by a person of legal age (18 years old in Illinois), in good mental capacity, and the seller must not be under any legal “duress” to convey the real estate. The Real Estate Purchase Agreement (“Purchase Agreement”) must provide a clear description of the property, the property’s location, and size. The typical Purchase Agreement also must provide the amount of the purchase price, the currency in which payment will be made, other payment terms, and the condition of the real estate; for instance, as to the condition of the property, whether it is being taken “as is” (with any defects or other problems) or with certain covenants concerning the property’s condition. Further, the Purchase Agreement should identify the buyer and the seller, their locations, and whether they are buying or selling as individuals, sole proprietors, partnerships, limited partnerships, corporations, or limited liability companies or another type of entity.
It is also important to specify whether any personal property is included in the purchase. For instance, someone buying a house or a condominium should be advised whether light fixtures, fireplace screens, curtains, shelving, carpeting, or a washer and/or dryer are included in the purchase price or not. In a commercial setting, the contract should indicate, for instance, if racking or built-in equipment is included. A Bill of Sale will be used to convey this personal property, whereas a Deed will be used to convey the real property to the purchaser. Purchase Agreements must be customized for each particular transaction. For instance, if a property is to be used for commercial purposes, it is important to obtain a confirmation by the seller of the property’s zoning, especially if the city or village in which the property is located has changed or is in the process of changing zoning regulations. Also, there is some spot zoning which prevents certain types of businesses in limited locations to meet a city or village’s goals. This type of careful drafting insures that the purchaser can use the acquired property for the intended purpose.
Purchase Agreements will also clarify whether the property is in a flood plain or whether a state, federal, or county governmental authority has granted an access to a major road or highway from the property. In most Purchase Agreements, a buyer may be granted a certain amount of time to obtain financing. A buyer may also be given time to obtain a building permit for the project or other governmental permissions. For commercial strip malls and new commercial or residential developments, this type of planning can be critical in that state, county, and local governmental authorities can be involved in the planning process.
Real estate may be purchased solely in the name of an individual or business entity or co-purchased with another person or entity. An individual person or business entity will acquire as a single person, or Illinois limited liability or corporation, for instance. However, when two or more individuals or entities acquire real property in Illinois, the Joint Tenancy Act provides for several types of titling options. These are available for real property but also personal property, like a bank account or ownership of shares of stock in a business. These titling options are Tenancy in Common, Tenants by the Entirety, and Joint Tenants with Right of Survivorship. In Tenancy in Common, the individuals or entities each take title to a certain percentage of the real estate. If, for any reason, the owners of a parcel of real estate held in Tenancy in Common have a dispute or otherwise need to dissolve their joint ownership, the property is partitioned or divided and each party then receives a Deed for sole ownership of a portion of the original real estate parcel. If the language of a Deed is not clear, the property is titled as Tenancy in Common. Joint Tenancy with Right of Survivorship is a very common type of joint ownership. In this instance, both parties own an undivided interest in the real or personal property. On the death of an individual, the other party takes ownership as a sole owner without the necessity of the property going through the state court probate process as might otherwise be required.
If a person who owns real estate in Joint Tenancy with Right of Survivorship dies, the sole action which needs to be taken subsequent to the death by the other co-owner is for the real property (and the personal property, where applicable) to be re-titled in the name of the sole owner. A husband and wife may hold real property in Joint Tenancy with Right of Survivorship, but other related or unrelated persons can also hold property this way. Tenancy by the Entirety is a newer titling device. Under this type of titling, the creditors of a husband or wife will not be allowed to collect on a judgment against the husband or wife by using the real property, if the property held in Tenancy by the Entirety is the marital residence.
Another issue in a real estate transaction is whether the buyer will own the property for an indefinite time period or whether the property is to be owned by the individual or business only for a set time period or for the life of the buyer. Generally, purchasers acquire real estate in Illinois in “fee simple” for an indefinite period as opposed to obtaining title in a partial interest, like a “life interest”.
The key concern for any buyer of real property is whether the buyer is getting the real estate that they think they are obtaining and whether the property is free and clear of any encumbrances, charges, or liens of any kind. If not, the property might end up costing the buyer more than anticipated. The buyers might have to pay more money to release liens, mechanics liens, satisfy a judgment, or address another types of encumbrances. In Illinois, a title company is retained to provide title transfer services. This means that the documents are signed at the title company, checks conveyed, tax and mechanics liens and other encumbrances cleared, and other transfer issues handled. In conjunction with these types of services, the title company conducts searches of the recorded records of the county in which the property is located to make sure who the owner is on the date of the sale and that no encumbrances, liens, or charges have been placed on the property. This type of search will make sure that no transfer of the property has previously occurred to a third party and that no judgments, tax liens, or other encumbrances could affect the title of the buyer. The results of the search are embodied in a title commitment. If the real estate being sold has been part of a new construction project, then the title company will make sure that all contractors used and all supplies incorporated into any buildings on the property are clear from mechanics liens.
This is accomplished by the seller disclosing the names of all contractors and suppliers and then each contractor or supplier providing the title company with a waiver stating that it has been paid in full. Once the title company has examined the historical documents associated with the property and obtained certain assurances from the seller, then the title company will be able to insure the title of the property for the buyer and for the buyer’s lender bank; while not inexpensive, title insurance is well worth the cost to preserve a party’s investment in real property. In most Purchase Agreements, most or all of the cost of title insurance is paid by the seller. This is appropriate because the seller has represented to the buyer in the Purchase Agreement that it owns the real estate being purchased. The title insurance assures the buyer that either the seller owns the property or that the title insurance company will pay for the diminution in the title due to any problems encountered.
If title insurance is to be obtained, the document which evidences the searches done with regard to the history of the property and the property’s current condition is called “the Title Commitment”. The Title Commitment provides information including the current owner of the property, the proposed purchaser, the purchase price, the buyer’s proposed lender for the acquisition, and any other issues affecting title.
The title company provides a description in the Title Commitment of any action needed to be taken by the seller to clear common title issues which are raised in the commitment. A title examiner is available at the title company to discuss any defect in title and how to correct it. At the closing of the purchase, the Title Commitment is marked up to show all of the defects which have been corrected or waived by the title company so that the buyer will know the extent of the insurance coverage it has obtained when the title policy is issued.
Each seller is required to provide a survey of the property being conveyed. This is a very critical step in the purchase process. A survey is a drawing which shows the land which is being conveyed and the location of the house or commercial building(s) on the land. A survey also shows where any public or private streets are located, and where fences, driveways, sewers, retention ponds, and utilities, for instance, are located and references any related easements.
The survey is reviewed with applicable governmental agencies for planning and building permit purposes. A survey enables the buyer to insure that the property will be able to be used the way the buyer intends. For instance, if a commercial developer wants to construct a building on a certain portion of the property but a governmental agency has required that the portion of the land be used for a pond to collect water to avoid flooding (retention pond), then the buyer must obtain a variance from the governmental authority, otherwise the property does not meet the buyer’s needs for the proposed project.
The Deed issued to a buyer is of paramount importance. The document is notarized to make sure that the person who signed the deed was, in fact, the seller or an authorized agent of the seller. Further, the language used in the deed is dictated by the language of the Conveyances Act and reviewed by the title company to insure that it can be relied upon by the buyer to grant good title. Deeds in Illinois are either Warranty Deeds, Special Warranty Deeds, or Quit Claim Deeds. The differences in the deeds are based on the types of covenants and representations made by a seller to the buyer in granting each type of deed.
In a Quit Claim Deed, the seller merely states that any interest which it has in the property is conveyed to the buyer. This is not sufficient for most purchases. Therefore, it is generally used only in transfers between relatives for little or no consideration. For instance, if a woman owned property before her marriage and after the marriage desired to convey it to herself and her husband, then she would probably use a Quit Claim Deed to accomplish this change. Similarly, if an elderly parent desired to put an adult child on title with them on the parent’s home using, for instance, Joint Tenancy with Right of Survivorship, a Quit Claim Deed might be used.
Most real estate transfers, however, use a Warranty Deed. The seller transferring real estate by a Warranty Deed makes certain covenants or promises to the buyer. There are three covenants made under Illinois law for a Warranty Deed; first, that the seller is the lawful owner of an interest in fee simple in the property and has full power to convey (mentally competent, legal age, and not under duress to convey) the property; second, that the property is free from any and all encumbrances; and, third, that the seller will defend the title if the property sold to the buyer against any parties that lawfully claim an interest.
In a Special Warranty Deed, by contrast, the seller expressly limits the warranty given the buyer. Usually, the limitation is that the seller will only defend the buyer against a party claiming to have an interest in the property, which the claimant obtained from the seller. Special Warranty Deeds are often used by a condominium developer. The developer is willing to state that it acquired the real estate properly but does not want to warrant that there were not any other title problems before the developer made its acquisition.
Legal issues related to real estate, whether dealing with commercial or residential property, are complicated and many traps exist for the inexperienced buyer. While, in some states, residential property is conveyed without an attorney representing the buyer, in Illinois it is common for both the buyer and the seller to have an attorney represent them. In commercial real estate transfers throughout the United States, attorneys represent the buyer and the seller.
A company considering doing business in the State of Illinois may find the level of taxation moderate and the various types of taxes complex. Illinois is aggressive in its approach to attract new business that will employ Illinois workers and will offer tax savings to further that goal. In that regard, the Illinois Department of Commerce and Economic Opportunity has established a business website, www.ILDCEO.net, which assists the prospective business owner in Illinois in locating available commercial and industrial sites. The site provides the cost of leasing and purchasing options for any given parcel of real estate. The site also provides maps, distances from highways, airports, and railroad hubs and provides links to community and local incentives.
A non-Illinois business which wishes to do business in the State of Illinois is generally required to register with the Illinois Secretary of State to obtain authority as a foreign business to operate in Illinois. The business also needs to obtain tax identification numbers from the Department of Revenue (Illinois Business Tax Number, known as an IBT) and the Internal Revenue Service (Federal Employment Identification Number, known as an FEIN or EIN). The Department of Revenue will require disclosure of the type of business that the company desires to operate and acknowledgement from the company that the company realizes its duty and responsibility for paying the various local and State of Illinois imposed taxes.
The State of Illinois requires that companies doing business in Illinois become the collector of sales taxes and payroll taxes. These taxes are required to be withheld from customers and employees. These collections are known as trust fund taxes. Both the company and its officers are personally liable for the collection and the remittance of these taxes. If the company has employees, there is a requirement to withhold 3 per cent of the employee wages and for the company to remit these withheld funds to the state on behalf of the employee(s). There is also a requirement to collect and remit to the state sales taxes collected on any retail product sold to an end user.
There is also a requirement for every business in the state to register to pay income taxes. The amount of the tax varies depending on the legal structure of the company. Companies are also required to pay a “Use Tax” on materials and supplies that it will use for its own consumption rather than for resale. Finally, there is a requirement to register for and pay state unemployment taxes. The unemployment tax is based on the wages paid to employees of the company limited to $13,560 per annum per employee. The rate of state unemployment tax determined varies depending on the company’s history of employees filing claims for unemployment benefits. For 2012, the tax rate is less favorable than in the past because the State has increased the State Experience Factor from 123 per cent to 139 per cent and the Fund Building from .5 per cent to .55 per cent. Therefore, a company will pay a pre-assigned rate (assigned by the state) from between .55 per cent to 9.45 per cent. The rate decreases or increases annually depending on the amount of unemployment claims paid to former employees of the company.
Of all the taxes so far mentioned, only state income taxes, use taxes on consumables, and employee unemployment taxes are taxes that are directly incurred and paid by the company. With the other taxes mentioned, the company is merely the agent for the state and collects and remits to the state the taxes the company withheld or collected. The State of Illinois and local governments assess taxes on all real estate located in the State of Illinois that is not government owned, a school, a house of worship, and some not for profit entities. Real estate taxes in the State of Illinois rank as the tenth highest in the United States. However, Illinois schools and community resources are higher than in other states as a compensation.
The State of Illinois has two programs where a company may participate to limit various tax liabilities. The first program is known as Tax Increment Financing (TIF) and the other program is known as Illinois Jobs Now.
The Tax Increment Financing program was established more than 50 years ago. Businesses wishing to relocate to an economically blighted area may enjoy tax rebates, low-interest government financing to acquire property and equipment, and/or tax credits which will reimburse the company for some of the first year’s wages it pays new employees. The goal is to bring jobs to communities to restore the community’s viability.
The Illinois Jobs Now program is a relatively new initiative where the State of Illinois will assist companies in purchasing and/or constructing facilities. This program, announced on 10 March 2010, will provide a company with fewer than 50 employees a $2,500 tax credit for each new full-time employee position created over the next year. There will be additional assistance to companies developing “green positions” that are less likely to be exported to other countries. Through the American Recovery and Reinvestment Act (ARRA), companies may apply and receive grants to train and develop workers in newer technologies and other skills. The ARRA funds are accessed through the Illinois Jobs Now Program and may benefit current and newly hired employees.
The company requesting tax breaks or State of Illinois funding must have a plan on how their business will employ Illinois workers. Tax breaks can be in the form of income tax rebates, reimbursement of wages, or payroll tax credits.
Illinois corporations’ income taxes are based on “net taxable income” for federal income tax purposes with few modifications. The State of Illinois has a corporate income tax rate of seven per cent. S corporations are taxed at 1.5 per cent of “net taxable income” for federal income tax purposes and trusts/estates taxed at three per cent tax. While some states have corporate income tax rates higher than Illinois, most states assess their corporate tax rate within 1 per cent of the Illinois tax rate. The sales and use tax rate charged by the State of Illinois is 6.25 per cent. The purchase of qualifying foods, drugs, and medical appliances are taxed at the rate of 1 per cent. Sales taxes refer to the purchase of goods in the State of Illinois. Use tax refers to the purchase of goods outside of Illinois for use in Illinois. Sales taxes paid to foreign states and governments may be used to reduce the Illinois state-imposed use tax. It is important to note that local counties and cities or villages may assess additional sales and use taxes on purchases. For instance, the City of Chicago imposes a 1.25 per cent city sales and use tax. Chicago is in the County of Cook, which also imposes a sales and use tax of 7 per cent. Therefore, the total sales tax assessed on merchandise purchased in the City of Chicago would be 8.25 per cent of the sales price of the merchandise.
The majority of the other states have lower sales tax rates, and some states do not charge their citizens any sales tax.
Illinois has an advantage over some states because it has a flat income tax rate for individuals and families. The Illinois flat income tax rate for the period from 1 January 2012 to 31 December 2015 is 5 per cent of the individual’s federal income tax line for “adjusted taxable income”. Many states have income tax rates that increase as the family income increases. Some states have income tax rates that are three times greater than the income tax rates of Illinois.
The Illinois rate for individuals rewards the more skilled and educated workers, providing Illinois businesses with the best and brightest employees to serve their needs.
Illinois also recognizes, for income tax purposes, an entity known as a partnership. In Illinois there is no income tax distinction between the taxation of limited liability companies, limited partnerships, or general partnerships.
To the extent that the partners have reasonable earned income from the partnership, the value of the partners’ services rendered to the partnership or the amount of the partners’ pro rata share of the partnership’s income may be deducted for taxable state income tax purposes. The Illinois partnership tax rate is 5 per cent of the federal “taxable income” as reflected on the federally filed income tax return for each individual partner.
The State of Illinois requires every S corporation, limited liability company taxed as a partnership, and trust to withhold tax from distributions to shareholders, members, partners, and beneficiaries who are non-Illinois state residents. The amount of the withheld taxes must be sufficient to cover the non-Illinois resident’s share of Illinois assessable income taxes from the earnings distributed by the partnership to the partner.
The company can file tax returns electronically and can even research tax questions. Various types of tax returns can be prepared, calculated, and paid via the state website, which also provides proof that a return was filed and that taxes were paid. The forms on the State of Illinois website are easy to complete and there are easy to understand instructions and aids to service the taxpayer’s needs.
The State of Illinois regularly audits sales tax and income tax compliance among its locally located taxpayers. Some businesses may be audited every three years. Some smaller companies may never be audited.
The Illinois Department of Revenue has the task of monitoring taxpayer compliance. The Illinois Department of Revenue employs highly skilled upper-level management personnel who are accessible to assist in taxpayer problems.
The state has also established a Board of Appeals and informal resolution procedures to resolve taxpayer compliance issues. In this age of the internet, where problems are often emailed to email boxes that fail to solve the problem, the State of Illinois has employees to resolve problems face to face or via correspondence.
The federal government addresses the regulation of customs into and out of the United States. The State of Illinois does not regulate any imports or exports. Moreover, the State of Illinois is not allowed to create custom barriers or preferences between other countries due to the federal constitutional law.
The State of Illinois is prohibited from entering into a treaty, alliance, or confederation with countries as well as from establishing its own tax or duty upon imported or exported goods.
Currency Regulation, Capital and Profit Transfer Investment Incentives
Federal law controls the regulation of currency throughout the United States.
There are several investment incentive opportunities available to Illinois businesses. The Illinois Department of Commerce and Economic Opportunity offers resources for developing business in Illinois, which can be accessed online at www.commerce.state.il.us.
Included in the offerings are expansion incentives, technology support services, access to capital, global marketing expertise, and job training and education for workers. The business development office also offers several loans, grants, and tax assistance.
Illinois also offers an Economic Development for a Growing Economy (EDGE) program that seeks to level the playing field between Illinois and its neighboring states when competing for the location of large job-creation projects. The Illinois Capital Access Program (CAP) is designed to encourage financial institutions to make loans to small and new businesses that do not qualify under conventional lending policies. The Illinois Large Business Development Program (LBDP) provides incentive financing to encourage large out-of-state companies to locate in Illinois or existing large companies to undertake substantial job expansion or retention projects.
The Illinois Technology Enterprise Center (ITEC) program provides operational support for regional centers that serve technology entrepreneurs, innovators, and small businesses and provides investments to or on behalf of young or growing companies in cooperation with private sector investments.
The Illinois Business Development Office is located at 620 East Adams, Springfield, IL 62701 and can be reached via telephone at 877-221-4403. The State of Illinois Business Portal on the state’s website offers more resources to start and run an Illinois business, which can be accessed online at www.business.illinois.gov. Included in these resources are offer grants, loans, start-up incentives, small business assistance, women and minority business assistance, business incentives, and tax incentives.
While, traditionally, the law of competition has focused on applicable federal statutes like the antitrust acts and the Lanham Act, there are many issues in the area of competition which are governed at the state level.
In Illinois, the area of competition law is reflected in statutes and in common law principles developed through case law. The statutes involved are the Illinois Antitrust Act, the Trade Secrets Act, the Fraudulent Sales Act, the Uniform Deceptive Trade Practices Act, and the Right of Publicity Act.
The Illinois Antitrust Act provides a variety of remedies that the government, on behalf of the people of Illinois, or private individuals or companies who have been injured, may use where competition is negatively affected by restraints of trade in Illinois. The stated purpose of the Act is to insure the unhampered growth of industry throughout the state caused by restraints of trade. Remedies include charging the offending business or individual with a criminal felony violation, including fines of up to $1,000,000 per business charged with illegal conduct, and $100,000 per individual charged with illegal conduct.
In addition, civil actions and remedies are available under actions that may be brought by the Illinois Attorney General’s Office or by a private individual. In each type of lawsuit, damages and injunctions can be awarded to prohibit further restraints of trade. Further, in private actions, court costs and attorneys’ fees can be awarded if an injunction is granted. In some instances, a penalty equal to three times the amount of the damages awarded shall also be awarded.
Restraints of trade are defined broadly by the Act and include contracts, combinations, or conspiracies with a competitor which affect pricing for goods or services or which affect the production, manufacturing, or supply of goods or services or the allocation or division of a territory or customers between two or more parties.
In addition, certain contracts, combinations, or conspiracies are regarded as restraints of trade if they attempt to obtain or maintain the monopoly power of a business or a business acts by its leasing or selling activities to lessen competition. Certain conduct of companies doing business with foreign governments is also prohibited.
A number of types of activities are specifically excluded by the Illinois Antitrust Act. In some instances, these exclusions exist because other state governmental agencies tightly control the area as, for example, public utilities and telecommunications and insurance or, in other instances, federal statutes control the area (i.e., labor organizations, agricultural cooperatives and organizations, and securities dealers.
The acts of a competitor in misappropriating the trade secrets of a competitor are also prohibited in Illinois. The Illinois Trade Secrets Act governs actual trade secrets. The Illinois Trade Secrets Act defines trade secrets as information, technical or non-technical, formulas, patterns, computations, programs, devices, methods, techniques, drawings, processes, financial data, or the loss of actual or potential customers or suppliers, if the information is sufficiently secret and has or would have economic value if it was known to a competitor and has been the subject of reasonable efforts to maintain its secrecy or confidentiality.
The intent of the Illinois Trade Secrets Act is to protect the investment by an Illinois business in a trade secret which it developed from a wrongful taking by a competitor by creating a consistent approach to trade secrets law, replacing current inconsistencies in common law.
The Illinois Trade Secrets Act specifically restricts the misappropriation of the trade secrets of another. Misappropriation occurs under the terms of the Act where: (i) the acquiring party knows or should have known that the acquisition of the information or documents resulted from improper means; (ii) where the information or documents were acquired properly (for instance, during the term of employment or a business relationship) but the acquiring party has knowledge that the original party who obtained it had a duty to keep the trade secrets confidential; or (iii) where the use or disclosure of trade secrets was acquired from another occurred without the consent of the party who owned the trade secrets.
Damages vary based on the facts of the situation. A wronged party may seek an injunction to prevent actual or threatened misappropriation. An injunction is a court order requiring a party to take or not to take certain actions with regard to the trade secrets. In most cases, obtaining an injunction to prevent the misappropriation or to prevent the disclosure is the sole practical remedy in order to prevent catastrophic injury to the business owning the trade secrets. Notwithstanding that practical reality, damages for actual loss and the unjust enrichment of a party may also be awarded by a court that determines that a misappropriation has occurred. Where the court finds that the conduct of the party taking the trade secrets was willful and malicious, then punitive damages may also be awarded to the wronged party equal to up to two times the amount of money damages awarded to the wronged business. Where the wrongful party’s conduct was egregious but actual damages are difficult to prove or relatively small, punitive damages may result in millions of dollars of damages. Punitive damages are designed to punish and to act as a deterrent to future conduct by the wrongdoer and also the business community at large.
The Uniform Deceptive Trade Practices Act also addresses issues relative to competition. This Act is aimed at penalizing conduct which is aimed at causing confusion as to the source of goods in the market (for example, a company trying to make their product look like the product of a more well-known competitor’s product) and also the disparagement of the goods of another. Only competition related to conduct will be raised here. In finding that a particular practice is aimed at causing deception between two parties, the Illinois courts hold that no proof needs to exist that the two parties are actually competitors or that actual confusion or misunderstanding resulted from the conduct.
The Act does not apply to conduct required by a Court Order or by the rules of any governmental agency, whether federal, state, county, or city. Further, it excludes publishers, broadcasters, and printers who disseminate information or reproduce content where no knowledge of its deceptive character was known by them. Damages for deceptive conduct includes injunctive relief. Relief is granted to insure that confusion or misunderstanding as to the source of goods or services does not occur. Notably, monetary damages, loss of profits, or intent to deceive is not required. Attorneys’ fees and/or court costs may be awarded by a court if the conduct is held to be willful.
The Illinois Publicity Act restricts a third party from using the name, voice, or picture of an individual to promote or sell a product. This right exists during and after the death of an individual with certain limitations. As a result of this Act’s requirements, photographers, film production companies, advertising and marketing firms operationally implement rules that any party portrayed in the selling of a product or service must sign a release of liability, called a “Model Release”. Damages include actual damages and/or profits, and a court may award the party who prevails in the lawsuit attorneys’ fees, court costs, and expenses related to the lawsuit.
Of note, the Act does not apply to a few very important situations: i) where the name of the person is used in a live performance or literary or other work (i.e., play, book, or movie); ii) where the usage is for non-commercial purposes like a news or sports broadcast; iii) where the use designates the individual as the author of a particular work or performance; iv) for any marketing materials related to any of the above uses; and v) where the use of photographs, and video, reflecting the image of a third party, are used by a professional photographer as part of the photographer’s portfolio or promotional materials, except where the photographer is requested to cease using the image by the party portrayed and refuses.
In Illinois, one of the biggest concerns for businesses in the area of competition law is obtaining protection from competition by their own employees. Employees often develop business contacts and clients using the employer’s good will, resources, and time and then leave to establish their own businesses in a nearby geographic area or leave to be employed by a competitor and attempt to take clients away from their former employer. Independent contractors, like sales agents, working with a business are likely to do exactly the same thing as employees in this regard. Vendors involved in transactions with a business may also seize an opportunity based on their experience with that business’s customers. All of these scenarios in Illinois are governed by the law of confidentiality, non-competition, and non-solicitation. Legal restrictions to open competition exist based on fiduciary duties and contractual obligations.
An employee owes his employer a duty of loyalty based on his employment status. An independent contractor or vendor owes no such duty. This means that, during the period of time in which an employee is employed, the employee cannot compete against his employer. No contract is needed to enforce this basic Illinois legal principle. However, post termination of employment, no such fiduciary duty exists. Therefore, employers must restrict employees from using any confidential information or from competing against the employer post termination by a restriction in a contract. A contractual restriction is needed both during and after the termination of the business relationship with an independent contractor or vendor to afford protection to the business which owns the confidential information.
In Illinois, if certain requirements are met, a court will enforce a confidentiality, non-competition, or non-solicitation restriction in a written agreement or contract. Thus, it is very common in Illinois to require that an Employment Agreement, Independent Contractor Agreement, or Vendor Agreement contain a confidentiality, non-competition, and/or non-solicitation restriction. A confidentiality restriction prohibits disclosure or use of confidential and proprietary information which the company developed or that it received from its clients. A non-competition restriction prevents an employee, independent contractor, or vendor from doing business in a particular industry or field in a clearly defined geographic area during an agreed-upon time period. A non-solicitation restriction also prohibits an employee, independent contractor, or vendor from solicitation or doing any business with the business’ clients (even if the client contacted the ex-employee) in the same type of business for an agreed-upon time period.
In order to enforce non-competition and non-solicitation restrictions in an Employment Agreement, which constitutes a restraint on trade, Illinois courts must determine that a protectable business interest exists. Essentially, if the business has i) trade secrets or confidential and proprietary information about the operation of the business or the business’ clients; or ii) has long-term, near permanent customer relationships with its customers, then a protectable business interest will be deemed to exist under Illinois law. The alleged confidential information must not generally be known in the field or industry involved, must not be able to be easily duplicated or obtained, have value to a competitor, and must have been treated as confidential by the business seeking the protection from competition. A business may show that it has treated its confidential information secret by i) keeping the information in a locked drawer or in a password-protected computer file and providing access only to those in the business who need to have the confidential information to conduct business; and ii) for documents, by restricting access but also marking the applicable documents with a confidentiality stamp.
Where an Employment Agreement is being scrutinized, if a protectable business interest exists, then the scope of the non-competition or non-solicitation restriction must next be examined. Where no employee is involved, courts in Illinois tend to look solely at whether the scope of the non-competition or non-solicitation provision is appropriate. For a non-competition restriction, this means an analysis of whether the geographic restriction and time period stated in the restriction are sufficiently narrow. The issues are very fact dependent. For instance, a large national or international company will want a large geographic restriction area, while a small flower shop may realistically only seek a five-mile restriction area from the shop.
It is hard, therefore, to generalize what type of geographic restriction will be allowed by a court. Further, the area is complicated by distinct lines of cases for employees and independent contractors. In the employment situation, the restricted area must not be any broader than where most of the business’ sales originate. Courts often hold two-to-three-year restrictions as reasonable. In a non-solicitation of clients’ restriction, the scope is not a geographic one but rather prohibits the individual involved from i) soliciting the sale of goods or services from the employers/business’ clients whom the individual had worked with while employed; or ii) in an employment situation, where the employee involved was more management level or otherwise knew about the business’ confidential business information, for example, financial information, pricing, or technology, then the restriction allowed will be broader and against soliciting all customers of the business. Time restrictions in a non-solicitation situation are treated similar to those in a non-competition restriction.
Intellectual property (IP) law deals generally with the intangible assets of individuals and corporations. Examples of intangible assets that may be protected under IP law include inventions, business methods, and innovative solutions to problems in the industry, a slogan, a product name, or an artistic creation.
Intellectual property is generally classified into four different categories: patents, trademarks, copyrights, and trade secrets. In some cases, a product or creation will fall into more than one category of IP. This is because each of the four categories is meant to protect a different aspect of the intangible asset and, on occasion, the intangible asset can be protected in more than one way.
Patents are usually thought of as inventions, processes, combinations of matter, or methods. For example, an improved method of filling a soda can before sealing the lid might be patentable. Additionally, the machine that performs such a soda-filling method might be patentable. Even the aluminum can itself may be patentable if it is truly novel. In the business world, patents may even cover methods of doing business.
Patents are granted and regulated exclusively by the federal government. According to the United States Constitution, patents serve “To promote the progress of science and useful arts, by securing for limited times to … inventors the exclusive right to their respective … discoveries”.
Therefore, “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore” . By rewarding inventors and creators, the federal government has recognized that human knowledge will expand more rapidly, and society as a whole will benefit.
If the invention is determined to be new, useful, and not obvious, it might be said that the inventor receives a statutorily granted monopoly. In the case of a “utility” patent, that monopoly lasts 20 years. In contrast, “design” patents, which might be more appropriate for protecting, for example, a new design for an office chair, have only a 14-year period of enforcement. Regardless of the duration, the monopoly provides the patent owner with the right to exclude others from i) making the claimed invention; ii) using the claimed invention; and iii) selling the claimed invention within the boundaries of the United States. If an inventor or corporation wishes to protect itself outside the United States, patent protection in other countries would need to be pursued.
After the term of the patent has expired, the invention or idea will be considered public property, and anyone can make, use, or sell it. Indeed, the entire patent application is published 18 months after it is filed, including “the best mode contemplated by the inventor of carrying out his invention”. This might be considered the “cost” of obtaining the monopoly: the inventor must provide details of his invention in exchange for the right to exclude others from doing it for the statutory period of time, knowing full well that he is publishing his invention for all competitors to see. An inventor’s failure to describe the best way known to the inventor to carry out the invention may result in courts deeming the patent invalid.
Patent laws are strict and can be unforgiving. Therefore, corporations are highly encouraged to seek skilled patent counsel before launching a new product or invention. For example, if an inventor does not file a patent application in the United States Patent and Trademark Office (USPTO) within one year of a publication, public use, or an offer for sale, the inventor permanently loses the right to a patent. Additionally, if a patent does not properly list the inventors, including each and every person who contributed to the “claimed invention”, the patent can be deemed invalid.
Once an application is on file, the patent office takes quite a bit of time (currently averaging more than 18 months) to determine whether the invention is new, useful, and not an obvious variation of something that has already been invented. If all of these requirements are met, the patent office will ultimately grant the inventor a patent.
Corporations may implement numerous types of strategies with their patent portfolios. For example, patent portfolios may have a monetary value, such that they can be used as capital, collateral, a bargaining tool, or a source of licensing revenue. Patents may also be used as a device to prevent competitors from entering a certain space of technology—regardless of whether the patent owner is in that space. In other words, there is no requirement that a patent owner practice the invention in order to keep it in force. Finally, some companies will resort to enforcing their patents in courts. In the United States, such patent enforcement is always brought in federal courts.
Trade marks are used to protect the association between goods or services and their sources. Trade marks are frequently found in the form of words, logos, and slogans (e.g., Coca-Cola®, the Coca-Cola® wave, and “Enjoy Coca-Cola®”). However, trade marks may exist in other forms. For example, numbers may be trade marked (“273” for a perfume), a color may be trade marked (“John Deere green”), and even the shape of a bottle (the Coca-Cola® shape) may be trade marked.
Companies use trade marks to identify their goods or services so that customers can recognize the trade marks and associate products with that company. This association often benefits both the trade mark owner and the public. The trade mark owner benefits by having customer loyalty and goodwill; the public benefits by being assured that they know the origin of the goods, and that the goods or services they are purchasing are of a certain quality associated with the trade mark. For example, a purchaser of a $70,000 Mercedes Benz® would likely not make the same purchasing decision if he/she was uncertain whether Mercedes Benz® was the true manufacturer.
It is important to understand early in a company’s formation that not all names, slogans, and identifying characteristics can be protected via trade mark. Moreover, even among marks that can be protected, some marks are considered “stronger” than others. The USPTO will often reject marks that are considered “merely descriptive” or “generic” (i.e., marks that merely describe the underlying product or use generic, industry-wide terminology). For example, a company that wishes to protect “Chicago Pizza Company” will undoubtedly find resistance at the USPTO, and therefore an inability to stop a competitor from using the same words to describe its products.
On the other end of the scale, a company that coins a new word, such as Prozac®, will likely receive prompt registration of its mark, as well as broad trade mark protection in courts of law. Marks that are “suggestive”, e.g., Greyhound®, for a bus transportation company, fall somewhere in the middle. Assuming a trade mark is properly registered and consistently used, it can last forever, and often be one of the most valuable assets owned by a company.
Trade marks may be registered at the federal level, the state level, or both. Likewise, trade marks can be enforced in either federal or state courts, depending on where they were registered. Often, the decision between federal and state registration rests on whether the corporation intends to sell its products or services beyond the bounds of the state lines, since federal registration requires use in interstate commerce and state registration does not.
According to the USPTO, interstate commerce occurs when goods are sent across state lines with the mark displayed on the goods or the packaging for the goods. With services, interstate commerce involves offering a service to those in another state or rendering a service that affects interstate commerce (eg, restaurants, gas stations, hotels, and so on).
Federal trade mark applications are processed through the USPTO, and undergo an extensive review process. For example, the mark will be reviewed for its strength, whether it is “confusingly similar” to another mark, and whether generic or descriptive portions of the mark should be disclaimed prior to registration. Furthermore, each federal trade mark application is “published for opposition” prior to obtaining its final registration. This provides affected third parties with a way to oppose marks they believe should not be registered.
In contrast, state registrations typically undergo little review, other than a comparative search of the state’s own trademark database. In Illinois, trademark registrations are regulated by the Trade Mark Regulation and Protection Act.
Under Illinois law, a mark may be registered unless it: i) consists of immoral, deceptive, or scandalous matter; ii) consists of matter that may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; iii) consists of the flag or coat of arms or other insignia of the United States, or of any state or municipality, or of any foreign nation, or any simulation thereof; (iv) consists of or comprises the name, signature, or portrait identifying a particular living individual, except by the individual’s written consent; or v) consists of a mark which: (a) when used on or in connection with the goods or services of the applicant, is merely descriptive or deceptively mis-descriptive of them; (b) when used on or in connection with the goods or services of the applicant is primarily geographically descriptive or deceptively mis-descriptive of them; or (c) is primarily merely a surname.
In Illinois, even if one of the above-listed factors is present, the mark may still be registered if the mark has become distinctive of the applicant’s goods or services. Abandonment of a company’s trade mark may occur when either: i) its use has been discontinued with intent not to resume that use; or ii) when any course of conduct of the owner, including acts of omission as well as commission, causes the mark to lose its significance as a mark.
If no interstate commerce occurs with regard to goods or services, then an Illinois trademark may be the appropriate avenue of protection. Illinois trade mark applications can be found at www.ilsos.net/publications/pdf_public-ations/tmsm15.pdf and the filing fee is $10. Every mark must be renewed at five-year intervals. The renewal form can be found at www.ilsos.net/ publications/pdf_publications/tmsm30.pdf and the renewal fee is $5.
Copyrights protect “original works of authorship” that are found in nearly any type of medium. For example, a soda can, a compact disc, or even a website can be considered a medium. Accordingly, the print on a Coca-Cola® can, the music on a CD, and the artistic layout of a website can be protected by copyright law.
Copyright law falls exclusively under federal law. Pursuant to the Berne Convention, the US has joined numerous other countries in providing automatic copyright protection upon completion of a work. Therefore, no formal registration is required. Registration with the United States Copyright Office is only necessary if the copyright owner wishes to enforce his copyrights in court.
In recent years, Congress has greatly extended the length of copyright protection. The present law states that, in the case of an individual author, a copyright endures for the life of the author plus 70 years. For corporations, the copyright lasts 95 years from publication of the work, or 120 years from creation of the work, whichever is shorter.
In Illinois, a trade secret may relate to “technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers”. Such a trade secret may be patentable, or it may not be. It could simply just be data, such as a privileged customer list. In contrast to patents, trademarks, and copyrights, a trade secret requires no governmental filings of any kind. Instead, a company or inventor can secure a trade secret by keeping the data, method, or invention a secret. In fact, a trade secret lasts for as long as it can be kept a secret—possibly forever. One of the most widely recognized trade secrets in the world is the recipe for Coca-Cola®.
However, trade secrets have a number of guidelines that must be followed in order to maintain them. In Illinois, the Illinois Trade Secrets Act spells out these guidelines.
In general, the Illinois Trade Secrets Act sets forth the guidelines for how a trade secret can remain secret, and what remedies a company has to maintain that secret. Specifically, the Illinois Trade Secrets Act gives companies the ability to enjoin both actual and threatened trade secret misappropriation as long as the company followed statutory procedures in securing and maintaining the trade secret.
The loss of a trade secret may occur when adequate measures are not taken to safeguard the secret, e.g., when a company discusses the confidential information with others without a non-disclosure agreement, or when there is a lack of proper security measures taken at a business.
However, other major considerations must be considered. For example, trade secrets do not protect inventions from being obtained through “[r]everse engineering or independent development”.
Therefore, if the trade secret pertains to an invention, once that invention is revealed through legal means, the trade secret is permanently lost. The concern over reverse engineering is often the biggest factor determining whether an invention should be protected by patent law or trade secret law. Using the example of the recipe for Coca-Cola®, if technology were to ever advance enough that soda recipes could be reverse engineered, Coca-Cola’s® trade secret recipe could be lost forever.
The purpose of this section is to give those who are doing business in Illinois an overview of some, but not all, of the laws governing the employer-employee relationship.
From the moment a prospective employee submits his or her resume to an employer, or makes an inquiry concerning possible employment, that relationship between the employer and the applicant is already covered by a number of state and federal laws. During the interview and employment screening process, employers are prohibited from making certain types of inquiries or considering certain factors in their decisions to hire or not hire prospective employees.
While it will come as no surprise that most employers can not consider a prospective employee’s national origin, race, gender, or religion in the hiring process, employers must also be aware that they are prohibited from considering a prospective employee’s marriage status, pregnancy or number of children, or sexual orientation. In addition, an employer cannot take into account whether a prospective employee has ever been arrested, but not convicted, and subsequently had his or her arrest record sealed or expunged.
Employees in Illinois also should be aware that, in most instances, they are now prohibited from running a credit check or considering an employee’s credit history when making a hiring decision. In addition, employers using an outside company to perform background checks for pre-employment screenings should be aware that such companies are limited in the information they might seek by the Fair Credit Reporting Act. Employers seeking to a obtain a background check on a prospective employee pursuant to the Fair Credit Reporting Act should obtain that employee’s consent before the check is performed.
Employees versus Independent Contractors
Once an employment relationship has been established, it is critical for both employers and employees to determine if the relationship between the two is employer-employee or employer-independent contractor. Most of the statutes discussed in this section apply only to bona fide employer-employee relations, and not to relationships between employers and independent contractors. For this reason, it is important for employers and employees to be clear about the nature of the employment relationship in order to establish each side’s rights and potential liabilities.
In determining whether someone is an employee or an independent contractor, courts and government agencies typically look to the degree of control an employer has over what the worker does and how the worker is paid. The greater degree of control the employer has over the worker, the more likely the worker will be considered an employee rather than independent contractor.
Employment Contracts and Non-Compete Clauses
Employees in Illinois are presumed to be “at will”. At-will employees may be terminated for any reason or no reason, as long as the employer’s reasons for terminating the employee are not illegal.
In Illinois, an employment relationship may not be considered at will if that relationship is subject to a contract that permits termination by the employer only under specified circumstances. Employment contracts are most frequently used for executives and certain positions requiring employees with specialized training or talent.
Some employers require their employees to sign employment contracts at the beginning of an employment relationship to ensure that their employees are subject to a non-compete agreement.
Non-compete agreements typically take the form of clauses in which the employer seeks to prevent the employee, upon his or her termination or resignation, from working for a competitor of the employer or starting a business that competes with the employer.
Employers frequently use non-compete clauses to protect confidential information about their operations or trade secrets. When drafting non-compete clauses, employers should be aware that in order for that clause to be enforceable, it must be reasonably limited in its scope and duration.
Employers seeking to protect their confidential or proprietary information should understand that overly broad non-compete clauses may be found by a court to be unenforceable.
Wages and Working Hours
An employee’s working hours are subject to an agreement between the employer and the employee, with certain restrictions. Likewise, an employee’s wages are negotiable between the employer and employee, so long as the payment arrangement complies with state and federal laws covering minimum wages and overtime.
It is an employer’s responsibility to be aware of the requirements of state and federal laws governing the calculation and payment of wages. Employers risk significant potential exposure to lawsuits by current and former employees if they violate these laws. An employer’s lack of awareness of these laws does not protect the employer from these lawsuits. With certain limited exceptions, all employees are subject to the minimum wages requirements of Illinois and federal law.
Currently, the Illinois minimum wage increases on a yearly schedule, and covered employers in Illinois must pay their employees the higher of the Illinois or the federally mandated minimum wage. Employers can often find themselves subject to lawsuits for unpaid minimum wages by engaging in practices such as requiring their employees to work “off the clock” or by making illegal deductions from their employees’ paychecks.
Both the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law (IMWL) require that non-exempt employees receive overtime pay equal to one-and-a-half times their regular hourly pay for any hours worked over 40 in a week. In most cases, this happens when employees work more than eight hours a day, or more than five days a week.
Determining if an employee is exempt from the overtime requirements of the FLSA and IMWL can be a complex and difficult task. For an employee to be exempt from overtime requirements of the FLSA, the employee must be paid on a weekly basis and meet the primary-duty test of one or more of the following exemptions: executive, professional, administrative, or outside salesperson. Given the proliferation of wage and overtime lawsuits filed by employees against employers, business owners in Illinois seeking to ensure compliance with law should consult with an attorney or human resources specialist who is well versed in the requirements of state and federal laws governing wages and overtime.
Overtime pay that has not been paid to an employee that is due can be collected up to two years from the date the pay was earned, and up to three years if the employer willfully violated the law. Under the FLSA, where the employer’s failure to pay overtime is found to be willful, the employer can be required to pay an additional amount of money equal to the amount owed.
In addition to the IMWL and the FLSA, the Illinois Wage Payment and Collection Act (IWPCA) provides employees with a private right of action to recover unpaid wages from their employers. If an employer unlawfully withholds an employee’s paycheck, or promises to pay an employee certain benefits but then fails to do so, that employer may find itself subject to a claim under this law. Moreover, employers should be aware that the FLSA, the IMWL, and the IWPCA provide that individual owners, agents, directors, and managers may be subject to both civil and criminal liability for willful nonpayment of wages.
Often, lawsuits for minimum wage violations and unpaid overtime are filed against employers as class actions, and damages against the employer can multiply very quickly. This occurs even in cases where the employer does not know that they are violating the law. Given how quickly employers’ exposure under these claims can multiply, it is critically important that an employer in Illinois be aware of their duties and obligations with respect to the payment of wages and overtime to their employees.
Discrimination, Harassment, and Retaliation
Employers in Illinois are subject to a variety of state and federal laws that prohibit discrimination in the workplace. Virtually all employers in Illinois are prohibited from discriminating against their employees on the basis of age, race, sex, religion, national origin, disability, and pregnancy. It is illegal for an employer to consider these characteristics with regard to promotions, job assignments, termination, and wages.
Employees in Illinois have a variety of options in terms of forums and laws when choosing to pursue a claim of discrimination against an employer in Illinois. The federal law most commonly invoked in claims of employment discrimination is Title VII of the Civil Rights Act of 1964. Title VII’s counterpart in Illinois law is the Illinois Human Rights Act. While the Illinois and federal laws prohibiting discrimination and harassment have a great deal of overlap, there are some key differences between the two. For example, the Illinois Human Rights Act specifically prohibits discrimination based on an employee’s sexual orientation, whereas Title VII does not. In addition, the Illinois Human Rights Act provides that an Illinois employer is strictly liable for harassment perpetrated by its supervisory employees, regardless of whether the harasser has any authority over the employee, regardless of whether the employer knew of the harassment, and regardless of what action the employer took if or when it found out.
As with discrimination, claims of sexual harassment in Illinois can be brought under both state and federal laws. While sexual harassment can take many forms, most claims of sexual harassment include conduct such as unwelcome sexual advances, requests for sexual favors, or verbal or physical harassment that is sexual in nature.
It is unlawful for employers in Illinois to retaliate against employees for engaging in “protected activity” such as refusing to break a law, filing a discrimination or safety claim against the employer, or for taking leave as allowed under the Family Medical Leave Act. Termination, reduction in the employee’s hours or wage, and denial of promotions can all be considered retaliation when they occur in response to an employee engaging in protected activities.
If any employer is found by a court to have engaged in discrimination, harassment, and/or retaliation against an employee, a court may issue an injunction prohibiting the employer from engaging in such practices, order the employer to reinstate an employee who has been fired with back pay, and award compensatory and punitive damages to the employee, as well as order the employer to pay the employee’s reasonable attorney’s fees.
Disability, Illness, and Injury
In most cases, an employer is not obligated to pay an employee when he or she is too ill to work. However, many employers implement policies or agreements with their employees where the employer agrees to provide a fixed amount of paid sick time.
While employers in Illinois are generally free to offer paid sick time as they see fit, employers may be subject to a federal law that requires them to offer unpaid leave to their employees. The Family Medical Leave Act (FMLA) is a federal law that allows eligible employees to take up to 12 weeks of unpaid medical leave, with continued medical benefits and restoration of their original position upon return. Determining if an employee is “eligible” under the FMLA can be a complicated task. The general rule of thumb is that the employee must have been employed by the employer for at least a total of 12 months before the commencement of the leave; the employee must have worked at least 1,250 hours in the 12 months immediately preceding the leave; and the employee must work at a site at which the employer has 50 or more employees within a 75-mile radius. Moreover, employers who are subject to the FMLA may not discriminate or retaliate against an employee who chooses to use his or her FMLA leave time for a legitimate purpose.
Moreover, both Illinois and federal law prohibit discrimination and retaliation on the basis of disability in the workplace. In addition to prohibiting discrimination on the basis of race and sex, the Illinois Human Rights Act also prohibits employers from discriminating against employees on the basis of disability, or perceived disability. Under Illinois law, “disability” generally refers to any physical or mental characteristic of a person that may result from disease, injury, or congenital condition of birth. The Americans With Disabilities Act (ADA) provides even broader coverage to employees than the Illinois law.
The ADA defines “disability” much more broadly than the Illinois Human Rights Act as “a physical or mental impairment that substantially limits a major life activity”. Both the Illinois and federal law subject employers who are found to have discriminated against an employee on the basis of disability to potentially severe penalties. Employers with disabled employees would do well to consult with an experienced attorney or human resources professional to ensure compliance with these statutes.
Finally, in Illinois, the area of the law known as “workers compensation” generally refers to the laws and rules governing workplace injuries. Under these laws, employees who are injured in the course of performing their jobs may make claims against their employers (or their employer’s insurers) for lost compensation resulting from the injury. Workers’ compensation claims are overseen by the Illinois Workers’ Compensation Commission. The amount of compensation paid to an employee depends upon the classification of his or her disability, with employees who are found to be totally disabled receiving the most compensation. Employers’ generally cannot avoid liability to workers compensation claims by having their employees sign waivers at the beginning of their employment.
Moreover, as with claims for sick leave and disability, employers can not retaliate against their employees for filing legitimate claims for workers compensation benefits.
The Illinois Department of Employment Security administers Illinois’ system of unemployment compensation, which is funded by employers. Generally, unless an employee has been terminated for “misconduct” as defined by the law, an employee is eligible to receive monetary compensation in the form of unemployment benefits.
In determining whether an employee engaged in misconduct, the Illinois Department of Employment Security considers whether the employee committed a “deliberate and willful violation of a reasonable rule or policy of the employing unit, governing the individual’s behavior in performance of his work, provided such violation has harmed the employing unit or other employees or has been repeated by the individual despite a warning or other explicit instruction from the employing unit”.
In addition, employers should be aware that employees who terminate their own employment for “good cause” may be eligible for unemployment benefits. This can occur in cases where an employee chooses to resign his or her employment after being given a choice of “quit or be fired”.
Employers must be sensitive to the fact that the way in which a worker’s employment is terminated can affect the employer’s potential liability with respect to the payment of unemployment benefits.
Employers in Illinois face many legal obligations with respect to their employees, established under both federal and Illinois law. In order to deal with employment disputes, and to prevent disputes before they arise, it may be in an employer’s best interests to speak to an experienced employment law attorney who will explain the employer’s options and protect its rights.
In the United States, banking is regulated by a complex web of national and local regulatory bodies. State banks (those chartered at the state level) are supervised by either the Federal Reserve System (FRS) or the Federal Deposit Insurance Corporation and by their chartering state. In contrast, national banks (those chartered at the national level) are supervised by the Office of the Comptroller of the Currency (OCC), a division of the United States Department of the Treasury, and are subject to many of the laws of the states in which they, and their subsidiaries, operate. This is often referred to as the “two-charter model”.
Ever since the Civil War, the American banking industry has operated under a system of overlapping state and federal regulation. Unique among the nation’s private industries, banks and thrift institutions can be chartered either by a state or by the federal government. By selecting one chartering authority rather than another, depository institutions can, to a substantial extent, determine the nature of the regulations to which they will be subject, as well as the identity of the government agency that exercises the regulatory function. Furthermore, the choice is a continuing one, in that a depository institution dissatisfied with its regulator can, for a nominal expense, convert from federal to state charter or vice versa.
The pertinent Illinois banking laws can be found under the Illinois Banking Act. The Illinois state office charged with overseeing banks is the Illinois Office of Banks and Real Estate. National and state chartered banks and savings associations may establish bank accounts, and the law under which they were established regulates each.
Throughout its history, United States banking regulation has constrained bank growth through prohibitions or restrictions on the means of direct and indirect bank expansion both within states (intrastate banking and branching) and between states (interstate banking and branching). Although restrictions on intrastate expansion were eliminated through piecemeal changes in legislation over the past several decades, many restrictions remained regarding interstate expansion. The passage of the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 removed any remaining federal restrictions on interstate expansion, but allowed the states considerable leeway in deciding the rules governing entry by out-of-state branches. As a result, states opposing entry used IBBEA to erect barriers to out-of-state branch entry.
Under the IBBEA, banking companies could merge either subsidiary or branch banks across state lines in four ways: i) interstate bank acquisitions (acquisitions of separately chartered institutions); ii) interstate agency operations (allowing a bank subsidiary of a banking company to act as an agent of an affiliate of the banking company without being legally considered as a branch of that affiliate); iii) interstate branching (consolidation of acquired banks or individual branches into branches of the acquiring bank); and iv) de novo branching (establishment of a new branch office of a banking company across state lines, into states which have passed a statute expressly allowing it).
Foreign Banks in Illinois
Under the provisions of the International Banking Act of 1978 (IBA), a foreign bank or bank holding company with certain United States operations is subject to many of the laws that regulate the activities of United States bank holding companies, including many provisions of the BHCA. The impact of an acquisition of a subsidiary United States bank on the United States activities of such an acquirer will thus be largely a matter of form; that is, the foreign acquirer will be required to register formally as a bank holding company and will thereby become subject to the BHCA directly, rather than indirectly subject to it through the IBA.
Federal law permits foreign persons and entities to own national banks and does not prohibit such persons or entities from owning state-chartered banks. The laws of a substantial number of states also permit foreign ownership of banks chartered by such states. Illinois permits foreign ownership pursuant to the Foreign Banking Office Act.
Interest Rates and Checking/Savings Accounts
Until the early 1980’s, interest rates on bank accounts were regulated and controlled by the national government. A ceiling existed on interest rates for savings accounts. Interest payments on demand deposit accounts were generally prohibited. Banks were also prohibited from offering money market accounts. The Depository Institutions Deregulation Act of 1980 (DIDRA) eliminated the interest rate controls on savings accounts. The restrictions on checking and money market accounts were lifted nationwide by the DIDRA (by the authorization of NOW and Super NOW checking accounts) and the Garn-St Germain Depository Institutions Act.
Checking accounts are now governed by state law supplemented by some federal law. Article 4 of the Uniform Commercial Code, which was adopted under Illinois law, “defines rights between parties with respect to bank deposits and collections”. Part 1 of the Article contains general provisions and definitions. Part 2 governs the actions of the first bank to accept the check (depository bank) and other banks that handle the check but are not responsible for its final payment (collecting banks). Part 3 governs the actions of the bank that is responsible for the payment of the check (payor bank). Part 4 governs the relationship between a payor bank and its customers. Part 5 governs documentary drafts. These are checks or other types of drafts that will only be honored if certain papers are first presented to the payor of the draft.
If a check passes through the federal reserve system (as the majority of checks do), Regulation J of the Federal Reserve comes into effect. Regulation CC governs extensively the availability of funds in a depositor’s account and the process involving checks dishonored due to non-payment.
The Expedited Funds Availability Act limits the time that a depository bank can delay before making the amount of a deposited check available for withdrawal. The act is elaborated by Subpart B of regulation CC.
Checks are negotiable instruments. As such, sections of Article 3 of the Uniform Commercial Code govern the relationship between parties who receive and transfer checks.
Also bearing on banking activities are Articles 4A, 5, and 8 of the Uniform Commercial Code, which deal with funds transfers, letters of credit, and securities, respectively.
Note: All material and information provided in this chapter is merely for informational purposes. While the authors will seek to update this chapter periodically, it may not reflect the most current and complete aspects of the legal developments and law, and should not be taken as an indication of any future results. Nothing in this material and information is offered as legal or other advice. The application of this information and material will vary with specific circumstances and facts of each case. Any user is strongly cautioned not to use this material and information without and before consulting with an attorney qualified to practice law in Illinois.
Acknowledgments: The Introduction, Establishment of Enterprises, Acquisition of Real Estate and Competition Law sections of this chapter were written by Joanne F Hurley of Hurley Stanners, LLC. Ms. Hurley also acted as the editor of this chapter. The Taxation section of this chapter was written by Larry Goldsmith, CPA. The Employment Law section of this chapter was written by Matthew D Lango of Hays Lango. A special acknowledgment is made to Chicago Loyola University law student Kristin Corrigan; Johannes Gutenberg University (Mainz, Germany) legal trainee (Rechtsreferendarin) Judith Karst; Valparaiso University May 2010 law school graduate Brandie L. Thomas; and Bridget Guy and Lionel Friday of Hurley Stanners, LLC, who all provided assistance to this project.
Published with the permission of Juris Publishing
 805 ILCS 105 et seq.
 805 ILCS 15 et seq.
 805 ILCS 110 et seq.
 805 ILCS 30 et seq.
 805 ILCS 405/0.01 et seq.
 805 ILCS 5 et seq.
 805 ILCS 5/2.10.
 805 ILCS 5/2.25.
 805 ILCS 5/15.35
 805 ILCS 5/14.05.
 805 ILCS 5 et seq.
 26 USC ss 1 et seq.
 26 USC ss 13611379.
 26 USC s 1362(b).
 805 ILCS 5/4.10.
 See discussion on Trademarks in the Intellectual Property Section of this chapter.
 805 ILCS 5/4.05.
 805 ILCS 5/4.15.
 805 ILCS 5/7.05.
 805 ILCS 5/8.10.
 805 ILCS 5/7.10.
 805 ILCS 5/8.50.
 805 ILCS 5/8.15.
 805 ILCS 5/8.45.
 805 ILCS 180 et seq.
 805 ILCS 180/5-5.
 805 ILCS 180/15-5.
 805 ILCS 180/1-10(a)(1).
 805 ILCS 180/1-10(a)(4).
 805 ILCS 180/1-15.
 805 ILCS 180/1-20.
 805 ILCS 180/1-25.
 805 ILCS 180/1-35.
 805 ILCS 180/15-15.
 805 ILCS 180/5-5.
 805 ILCS 180/1-5.
 805 ILCS 180/1-5.
 805 ILCS 180/5-5.
 805 ILCS 180/15-5.
 805 ILCS 180/15-5(b).
 805 ILCS 180/13-5.
 805 ILCS 180/15-3.
 805 ILCS 180/15-3(b).
 805 ILCS 180/15-3(c).
 805 ILCS 180/15-3(g).
 805 ILCS 180/15-3(g)(2), (4).
 805 ILCS 180/10-10(a).
 805 ILCS 180/10-10(d).
 805 ILCS 180/10-10(c).
 See discussion of confidentiality agreements in more detail in the Competition Law section of this chapter.
 35 ILCS 5/902(a).
 820 ILCS 405/100 et seq.
 35 ILCS/1405; 820 ILCS 405/2600.
 Pub L No 94-435, 90 Stat 1390.
 15 USCA ss 1 et seq. The federal antitrust laws consist of several statutes: Antitrust Amendments Act of 1990; Antitrust Civil Process Act; Antitrust Criminal Penalty Enhancement and Reform Act of 2004; Antitrust Criminal Penalty Enhancement Reform Act of 2004; Extension Act; Antitrust Modernization Commission Acts; Antitrust Procedural Improvement Act of 1980; Antitrust Procedures and Penalties Act; and Antitrust Technical Corrections Act of 2002.
 765 ILCS 5/1.
 765 ILCS 5/1.
 765 ILCS 1005/0.01 et seq.
 765 ILCS 1005/1.
 765 ILCS 1005/1.
 765 ILCS 1005/1; 765 ILCS 1005/1c.
 765 ILCS 1005/1; 765 ILCS 1005/1b.
 David J Lanciotti, JD, IL Law and Prac, Joint Tenancy s 3, Right of Survivorship (May 2010); In re Estate of Regelbrugge, 225 Ill App 3d 593, 167 Ill Dec 710, 588 NE2d 351 (2d Dist 1992).
 735 ILCS 5/12-112.
 765 ILCS 5/13.
 770 ILCS 60 et seq.
 765 ILCS 5/0.01 et seq.
 765 ILCS 5/8.
 765 ILCS 5/8.
 765 ILCS 5/10.
 765 ILCS 5/9.
 805 ILCS 5/13.05.
 35 ILCS 5/120.
 35 ILCS 5/704-5/706.
 35 ILCS 5/704-5/706.
 35 ILCS 5/705.
 35 ILCS 5/120.
 35 ILCS 5/201 et seq.
 35 ILCS 5/105.
 35 ILCS 5/25.
 35 ILCS 5/16.
 35 ILCS 5/201 et seq.
 35 ILCS 5/201 et seq.
 35 ILCS 5/201 et seq.
 35 ILCS 5/201 et seq.
 35 ILCS 5/303.
 35 ILCS 105/9.
 Code of Federal Regulations, tit 19 and United States Code, tit 19.
 United States Constitution, art I, s 9.
 United States Constitution, art I, s 10.
 United States Constitution, art I, s 8.
 765 ILCS 5/1.
 15 USCA ss 1051 et seq.
 740 ILCS 10 et seq.
 765 ILCS 1065 et seq.
 850 ILCS 350 et seq.
 815 ILCS 510 et seq.
 765 ILCS 1075 et seq.
 740 ILCS 10/2.
 740 ILCS 10/6.
 740 ILCS 10/7.
 740 ILCS 10/7.
 740 ILCS 10/3-1a.
 740 ILCS 10/3-1b.
 740 ILCS 10/3-1c.
 740 ILCS 10/3.
 740 ILCS 10/4-2.
 740 ILCS 10/3-5.
 740 ILCS 10/5(1) – (15).
 740 ILCS 10/5-3, 4.
 740 ILCS 10/5-5.
 740 ILCS 10/5-1.
 740 ILCS 10/5-2.
 740 ILCS 10/5-8.
 765 ILCS 1065/2(d).
 Flavorchem Corp v Mission Flavors and Fragrances Inc, 939 Supp 593 (ND IL 1996); Glenda Harnad, JD, 34A IL Law and Prac Trademarks, Etc, s 22 Legislative Intent (May 2010).
 765 ILCS 1065/3.
 765 ILCS 1065/2. See also the Trade Secrets discussion in the Intellectual Property Section of this chapter.
 Melvin F Jager, 1 Trade Secrets Law s 7:4 Remedies in Trade Secret Litigation: Injunctive Relief (March 2010).
 765 ILCS 1065/4(a).
 765 ILCS 1065/4(b). Much has been written on the meaning of the concept of “willful and malicious” but generally think intentional and deliberate bad acts.
 765 ILCS 1065/4(b).
 815 ILCS 510/2(a).
 815 ILCS510/2(b).
 815 ILCS 510/4(1).
 815 ILCS 510/4(2).
 815 ILCS 510/3.
 815 ILCS 510/3.
 765 ILCS 1075/40.
 765 ILCS 1075/55.
 765 ILCS 1075/35.
 Veco Corporation v Babcock, 183 Ill Dec 406, 611 NE 2d 1054 (Ill App 1st Dist 1993).
 Midwest Television, Inc v Olloffson, 298 Ill App 3d 548, 232 Ill Dec 783, 699 NE 2d 230; Petersen, ‘Understanding Illinois Noncompetition Agreements and Restrictive Covenants’, Vol 89 (2001) 472 Illinois Bar Journal.
 Donald Mc Elroy, Inc v Delaney, 72 Ill App 3d 285, 389 NE2d 1300 (1979); Tower Oil & Technology, Inc v Buckley, 99 Ill App 3d 637, 54 Ill Dec 843, 425 NE2d 1060 (Ill App 3rd Dist 1981); Canfield v Spear 44 Ill 2d 49, 254 NE2d 433 (1969).
 Cambridge Eng’g, Inc v Mercury Partners, 316 Ill Dec 445, 378 Ill App 3d 437, 879 NE 2d 512 (Ill App 1st Dist 2007).
 Tower Oil & Technology, Inc v Buckley, 99 Ill App 3d 637, 54 Ill Dec 843, 425 NE2d 1060 (Ill App 3rd Dist 1981).
 Tower Oil & Technology, Inc v Buckley, 99 Ill App 3d 637, 54 Ill Dec 843, 425 NE2d 1060 (Ill App 3rd Dist 1981); Canfield v Spear, 44 Ill 2d 49, 254 NE2d 433 (1969).
 Tower Oil & Technology, Inc v Buckley, 99 Ill App 3d 637, 54 Ill Dec 843, 425 NE2d 1060 (Ill App 3rd Dist 1981).
 State Street Bank and Trust Company v Signature Financial Group, Inc, 149 F 3d 1368 (Fed Cir 1998).
 US Constitution, art I, s 8.
 35 USC ss 101 et seq.
 35 USC ss 102 and 103.
 In order to enjoy a full 20-year patent term, a patent owner must pay periodic maintenance fees on the fourth, eighth, and 12th anniversaries of the patent. Also, on certain occasions the 20 years may be extended, such as when the US Patent Office takes longer than reasonable to review the patent application.
 35 USC s 112.
 “The best mode requirement creates a statutory bargained-for-exchange by which a patentee obtains the right to exclude others from practicing the claimed invention for a certain time period, and the public receives knowledge of the preferred embodiments for practicing the claimed invention.” Eli Lilly & Company v Barr Laboratories Inc, 251 F3d 955, 963, 58 USPQ2d 1865, 1874 (Fed Cir 2001).
 35 USC s 102 (f): “… a person shall be entitled to a patent unless … (f) he did not himself invent the subject matter sought to be patented”. See also Pannu v Iolab Corp, 155 F3d 1344, 1349 (Fed Cir 1998), finding a patent invalid for failure to properly name all inventors.
 Even trademarks that were never registered enjoy limited protection in state courts. Such trademarks are protected under common law.
 Trade Mark Manual of Examining Procedure, s 901 03.
 Trade Mark Manual of Examining Procedure, s 901 03.
 765 ILCS 1036 et seq.
 765 ILCS 1036/10.
 765 ILCS 1036/10 (e).
 Pursuant to 765 ILCS 1036/5, a prima facie case of abandonment is made when there is no use of the mark for two consecutive years.
 765 ILCS 1036/5.
 17 USC s 102.
 Title 17, US Code.
 17 USC s 302.
 765 ILCS 1065/2 (d).
 765 ILCS 1065 et seq.
 765 ILCS 1065/3.
 765 ILCS 1065/2(a).
 This section does not cover traditional “labor law”, which generally refers to the set of laws governing the relationship between employers and unions. With some exceptions, most of the laws and procedures that govern unions are federal laws. Employers who have a unionized workforce, or a workforce that is trying to unionize, would do well to consult an attorney experienced in labor matters.
 42 USC s 2000e-2.
 42 USC s 2000e-2; 42 USCS s 2000e(k); and 775 ILCS 5/1-103(J).
 775 ILCS 5/1-101.1.
 775 ILCS 5/2-103.
 820 ILCS 70/1 et seq.
 15 USC s 1681.
 15 USC s 1681(b).
 Nationwide Mut Ins Co v Darden, 503 US 318, 323-24, 112 S Ct 1344, 117 L Ed 2d 581 (1992).
 Cmty for Creative Non-Violence v Reid, 490 US 730, 751 (1989).
 Krum v Chi Nat’l League Ball Club, Inc, 851 NE2d 621, 624 (Ill App 1st Dist 2006).
 Duldulao v Saint Mary of Nazareth Hosp Ctr, 115 Ill 2d 482, 505 NE 2d 314, 318, 106 Ill Dec 8 (1987).
 Abel v Fox, 274 Ill App 3d 811, 211 Ill Dec 129, 654 NE 2d 591, 596 (Ill App 4th Dist 1995).
 Office Mates 5, North Shore v Hazen, 234 Ill App 3d 557, 175 Ill Dec 58, 599 NE 2d 1306 (Ill App 1st Dist 1985).
 Label Printers v Pflug, 206 Ill App 3d 483, 491, 151 Ill Dec 720, 725, 564 NE 2d 1382, 1387 (Ill App 2nd Dist 1991); see also, Interfast Corp v Harkabus, 250 Ill App 3d 13, 17, 189 Ill Dec 288, 619 NE 2d 1337 (Ill App 2nd Dist 1993).
 See the Illinois One Day Rest in Seven Act, 820 ILCS 140/1, et seq, providing in pertinent part: “Every employer shall permit its employees who are to work for 7 1/2 continuous hours or longer … at least 20 minutes for a meal period beginning no later than 5 hours after the start of the work period”; 820 ILCS 140/3.
 See generally, 29 USCS s 206 and 820 ILCS 105/4.
 820 ILCS 105/3; 29 USC s 203.
 820 ILCS 105/4.
 820 ILCS 105/4a; 29 USC s 207.
 820 ILCS 105/4a ; 29 USCS s 213.
 820 ILCS 105/12; 29 USCS s 216.
 29 USCS s 260.
 820 ILCS 115/1.
 Francorp, Inc v Siebert, 126 F Supp 2d 543 (ND Ill 2000).
 29 USC 203 s (d); 820 ILCS 105/3(c); 820 ILCS 115/13.
 See generally: 775 ILCS 5/1; 42 USC s 2000e.
 42 USC s 2000e et seq.
 775 ILCS 5/1 et seq.
 775 ILCS 5/1-101.1.
 Sangamon County Sheriff’s Dep’t v Ill Human Rights Comm’n, 233 Ill 2d 125, 139 (2009).
 775 ILCS 5/2-101(e); 42 USC s 2000e-2.
 Talanda v KFC National Management Co, 140 F 3d 1090, 1095 (7th Cir 1998); Stone v City of Indianapolis Public Utilities Division, 281 F 3d 640, 644 (7th Cir 2002); Long v Teachers’ Ret Sys of Ill, 585 F 3d 344, 349 (7th Cir 2009).
 Burlington Northern & Santa Fe Ry v White, 548 US 53 (2006).
 775 ILCS 5/8A-104; 42 USCS s 2000e-5; Kolstad v ADA, 527 US 526 (1999).
 28 USC ss 2611–2612.
 28 USC s 2611.
 28 USC s 2615.
 775 ILCS 5/1-103(I).
 775 ILCS 5/1-103(I).
 42 USC ss 12101 et seq.
 42 USC s 12102(2).
 820 ILCS 305/1 et seq.
 820 ILCS 305/4d.
 820 ILCS 305/8.
 820 ILCS 305/23.
 Kelsay v Motorola, Inc, 74 Ill 2d 172, 384 NE 2d 353 (1978).
 820 ILCS 405/100 et seq.
 820 ILCS 405/602.
 820 ILCS 405/602; Messer & Stilp, Ltd v Dep’t of Empl Sec, 392 Ill App 3d 849, 331 Ill Dec 467, 910 NE 2d 1223, (Ill App 1st Dist 2009).
 820 ILCS 405/601; Jaime v Director, Dep’t of Emp Sec, 301 Ill App 3d 930, 235 Ill Dec 148, 704 NE 2d 721 (Ill App Ct 1st Dist 1998).
 205 ILCS 5 et seq.
 The means of geographic expansion are: 1) interstate banking (acquiring or establishing a charter in a state outside the main bank’s home state); 2) interstate branching (acquiring or establishing a branch office, an office which is not separately chartered or capitalized, in a state outside the main bank’s home state); 3) intrastate banking (acquiring or establishing a charter within the main bank’s home state); and 4) intrastate branching (acquiring or establishing a branch office within the main bank’s home state).
 Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA), Pub L No 103-328, 108 Stat 2338 (1994) (codified as amended in scattered sections of 12 USC).
 Edward J Kane, “De Jure Interstate Banking: ‘Why Only Now?”’, 28 J Money, Credit & Banking 141, 143–48 (1996).
 International Banking Act of 1978, Pub L No. 95-369, 92 Stat 607 (1978).
 IBA, s 8(a), 12 USC s 3106.
 12 USC ss 21–216(d).
 205 ILCS 645/1.
 Pub L No 96-221, 1980.
 Pub L No 97-320, 1982.
 810 ILCS 5/4-101 et seq.
 12 CFR 210.
 12 CFR 229.
 12 CFR 229.
 810 ILCS 5/3-101 et seq.
 810 ILCS 5/4A-101 et seq.
 810 ILCS 5/5-101 et seq.
 810 ILCS 5/8-101 et seq.