Illinois Compiled Statutes
805 ILCS 5/7.80 (2026)
Provisions relating to actions by shareholders
✓ current as of May 2026
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(805 ILCS 5/7.80)
(from Ch. 32, par. 7.80)
Sec. 7.80.
Provisions relating to actions by shareholders.
(a) No
action shall be brought in this State by a shareholder in the right of a
domestic or foreign corporation unless the plaintiff was a shareholder of
record at the time of the transaction of which
he or she complains, or his or her shares or voting trust certificates thereafter
devolved upon him or her by operation of law from a person who was a holder
at such time; provided, however, that a shareholder who does not meet such
requirement may nevertheless be allowed in the discretion of the court to
bring such action on a preliminary showing to and determination by the court,
upon motion and after a hearing at which the court may consider such evidence
by affidavit or testimony as it deems material, that plaintiff acquired
the shares before there was disclosure to the public or to the plaintiff
of the wrongdoing of which plaintiff complains.
(b) A complaint in a proceeding brought in the right of a corporation
must allege with particularity the demand made, if any,
to obtain action by the directors and either why the complainant could not
obtain the action or why he or she did not make the demand. If a demand
for action was made and the corporation's investigation of the demand is
in progress when the proceeding is filed, the court may stay the suit for
thirty days or until the investigation is completed, whichever is less.
(c) A proceeding commenced under this Section may not be discontinued
or settled without the court's approval. If the court determines that a
proposed discontinuance or settlement will substantially affect the interest
of the corporation's shareholders or a class of shareholders, the court
may direct that notice be given the shareholders affected.
(Source: P.A. 83-1025.)
Notes of Decisions
Cited in 4
cases (1 in the last 5 years), 1995–2021 · leading case: Tufo v. Tufo, 2021 IL App (1st) 192521 (Ill. App. Ct. 2021).
Tufo v. Tufo, 2021 IL App (1st) 192521 (Ill. App. Ct. 2021). “805 ILCS 5/7.80(a) (West 2014). Here, the record shows, and plaintiff acknowledges, that the conduct he challenged occurred prior to the time he became a shareholder by virtue of the Share Transfer Agreement in September 2013.”
Werner Frank & Werner Frank Enter., Inc. v. Hadesman & Frank, Inc., 83 F.3d 158 (7th Cir. 1996). “The procedural consequence is that Frank must notify the firm’s board (or establish an exception to that requirement) and demand that the firm bring the suit in its own name; only after a refusal may Frank institute derivative litigation in the right of the corporation.”
Schnitzer v. O'CONNOR, 653 N.E.2d 825 (Ill. App. Ct. 1995). “However, whether demand is made or proven futile is merely a prerequisite to a derivative action under Illinois’ demand statute, section 7.”
Hill v. Lynn (N.D. Ill. 2018). “” 805 ILCS 5/7.80(a). The Act also defines a “shareholder” as “one who is a holder of record of shares in a corporation.”
— 805 ILCS 5/7.80(a) — 2 cases
Tufo v. Tufo, 2021 IL App (1st) 192521 (Ill. App. Ct. 2021). “805 ILCS 5/7.80(a) (West 2014). Here, the record shows, and plaintiff acknowledges, that the conduct he challenged occurred prior to the time he became a shareholder by virtue of the Share Transfer Agreement in September 2013.”
Hill v. Lynn (N.D. Ill. 2018). “” 805 ILCS 5/7.80(a). The Act also defines a “shareholder” as “one who is a holder of record of shares in a corporation.”
— 805 ILCS 5/7.80(b) — 2 cases
Werner Frank & Werner Frank Enter., Inc. v. Hadesman & Frank, Inc., 83 F.3d 158 (7th Cir. 1996). “The procedural consequence is that Frank must notify the firm’s board (or establish an exception to that requirement) and demand that the firm bring the suit in its own name; only after a refusal may Frank institute derivative litigation in the right of the corporation.”
Schnitzer v. O'CONNOR, 653 N.E.2d 825 (Ill. App. Ct. 1995). “However, whether demand is made or proven futile is merely a prerequisite to a derivative action under Illinois’ demand statute, section 7.”
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