Business Services

Low-Profit LLC

With the effectiveness of PA. 96-126 on January 1, 2010, low-profit LLC's, or L3C's, have been introduced in Illinois. Among other changes, P.A. 96-126 creates new Section 1-26 in the Limited Liability Company Act. 805 ILCS 180/1-26, as added by P.A. 96-126.

Note that P.A. 96-126 also amends Section 1-10 of the Limited Liability Company Act to provide that any company organized pursuant to Section 1-26 shall contain the term L3C in lieu of the traditional designations of LLC or L.L.C.

As a result of the state and federal provisions, a company intending to either form as or amend to become a low-profit limited liability company must include the term L3C in lieu of LLC or L.L.C. in its title and also include the following three statements as part of its purpose in Article 5 of the Articles of Organization:

1. The company intends to qualify as a low-profit limited liability company pursuant to Section 1-26 of the Limited Liability Company Act and shall at all times significantly further the accomplishment of one or more charitable or educational purposes within the meaning of Section 170(c)(2)(B) of the Internal Revenue Code of 1986, or its successor, and would not have been formed but for the relationship to the accomplishment of such charitable or educational purposes.
2. No significant purpose of the company is the production of income or the appreciation of property.
3. No purpose of the company is to accomplish one or more political or legislative purposes within the meaning of Section 170(c)(2)(D) of the Internal Revenue Code of 1986.

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