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Coming Soon to Illinois: Fresh Changes to the Illinois Limited Worker Cooperative Association (LWCA) Act

Posted by Rachael J. Leah | Jun 24, 2021 | 0 Comments

Illinois Congress Proposes Changes to LWCA Law in HB3577

On May 31, 2021, Illinois legislatures agreed on a bill that would add much-needed clarity and direction to the 2020 LWCA law. As of today (June 24, 2021), the bill is enrolled (meaning congress has agreed to what's written) but has not yet been sent to Governor Pritzker for signature. Because the bill is still in limbo, my description of the proposed law in this blog post are intentionally vague. The last thing that I want to do is write a detailed post about a proposed law and end up misleading people if it ends up not becoming law. The purpose of this post is to generally inform people that there is a new law in the works and to stay tuned for more information later on.

UPDATE: On June 29, 2021, HB3577 was sent to Governor Pritzker and is awaiting signature

To give you a general idea of the amount of changes that may be made to the current LWCA Act, consider that the current LWCA Act is about 6 pages long and the proposed law in HB3577 is approximately 36 pages long. 

What's In the Proposed New Law?

If HB3577 is passed into law, it would make a host of significant and important changes to the current LWCA Act. Some of the key changes include:

  1. Allowing LWCAs to enjoy the powers and privileges of LLCs.
  2. Specific guidance on how, for example, the monetary value of shares can be calculated if the shares are being given to worker-members based on "use or patronage" rather than financial contributions.
  3. "Multi-stakeholder cooperative" structures are taken out of the law, as are "stakeholders."
  4. "Investor members" and "patron members" are added, describing the different types of relationships that an association may have with persons or other business organizations.
  5. More robust language is used to explain how an LWCA is formally created (such as initial filings with the Illinois Secretary of State, requirements for the names of LWCAs, and what type of reports need to be filed and when).
  6. Instead of "bylaws," the proposed law suggests that LWCAs have "cooperative agreements" to describe the internal procedures and operations of the LWCA. Requirements are given for what is and is not included in the cooperative agreements.

Those are just some of the types of changes that could be made to the current LWCA Act if HB3577 is passed into law. The fact that Illinois Congress is moving towards revamping the LWCA Act is exciting for legal professionals - such as myself - who advise small businesses. More importantly, though, the proposed law would benefit small and startup businesses that are considering structuring their business as an LWCA. 

About the Author

Rachael J. Leah

WHAT THE PRACTICE OF LAW MEANS TO ME What motivates and guides me in the client-centered practice of law is my curiosity, compassion, and critical thinking. I thrive in situations where I systematically identify, research, and strive to solve client issues. By keeping the human element in the practice of law, I am mindful of where you - the client - are, and am always aware that what I do impacts your life. My job as a lawyer is not merely academic; it is to assist clients to achieve their individual goals and have a positive impact on their lives.

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