LLC Members’ Rights to Company Documents

Assuming a member has a “proper purpose,” Illinois LLCs are required to provide documents a member demands.

Within ten days of a member’s demand, the company is required to either: 1) produce the requested documents; or 2) respond in writing describing the documents that will be provided and stating a reasonable time and place at which the documents will be provided. Additionally, if a member demands to inspect company records, the company must designate a reasonable time and place for the member to do so, and the member may make copies of documents. If the company refuses to make requested records available, it must provide the member its reasons for refusing in writing. 180 ILCS 180/10-15(a), (b). If the reasons for withholding are spurious or asserted in bad faith, a member may need to seek relief from a court.

While the LLC Act does not define “proper purpose,” Illinois courts have interpreted the meaning of “proper purpose” in the context of shareholder demands for records under the Business Corporation Act. Seeking information to protect the interests of a member or the company are proper purposes, and a member is “entitled to know anything and everything” reflected in the company’s books and records relevant to protecting her interest. See Weigel v. O’Connor, 57 Ill. App. 3d 1017, 1025 (1st Dist. 1978) (interpreting Business Corporation Act). Evidence of mismanagement or wrongdoing is not necessary to establish proper purpose. See id.

An LLC member may demand company records such as QuickBooks files, bank account statements, credit card statements, and tax returns in order to determine whether the company is being appropriately managed and whether profits are being recorded and distributed fairly.