2017 ORS 63.661¹
Grounds for judicial dissolution
  • finding that limited liability company is shell entity
  • prima facie showing by Attorney General
  • effects
  • affirmative defenses

(1) A circuit court may dissolve a limited liability company:

(a) In a proceeding by the Attorney General if the court finds that:

(A) The limited liability company filed articles of organization with fraudulent intent, with fraudulent information or in a manner that otherwise indicates fraud;

(B) The limited liability company has continued to exceed or abuse the authority conferred upon the limited liability company by law; or

(C) The limited liability company is a shell entity. For purposes of this subparagraph:

(i) A court may find that a limited liability company is a shell entity if the court determines that the limited liability company was used or organized for an illegal purpose, was used or organized to defraud or deceive a person or a governmental agency or was used or organized to fraudulently conceal any business activity from another person or a governmental agency; and

(ii) The Attorney General may make a prima facie showing that a limited liability company is a shell entity by stating in an affidavit that:

(I) The limited liability company did not provide a name or address required by the Secretary of State, or the name or address the limited liability company provided was false, fraudulent or inadequate;

(II) The limited liability company’s articles of organization, a record the limited liability company must keep under ORS 63.771 (Limited liability company records) or the limited liability company’s annual report is false, fraudulent or inadequate;

(III) A public body, as defined in ORS 174.109 (“Public body” defined), attempted to communicate with, or serve legal process upon, the limited liability company at the address or by means of other contact information the limited liability company provided to the Secretary of State, but the limited liability company failed to respond; or

(IV) The Attorney General has other evidence that shows that the limited liability company was used or organized for an illegal purpose, was used or organized to defraud or deceive a person or a governmental agency or was used or organized to fraudulently conceal any business activity from another person or a governmental agency.

(b) In a proceeding by or for a member if the court finds that it is not reasonably practicable to carry on the business of the limited liability company in conformance with the articles of organization or any operating agreement.

(c) In a proceeding by the limited liability company to have the limited liability company’s voluntary dissolution continued under court supervision.

(2) In addition to subjecting a limited liability company to dissolution under subsection (1)(a)(C) of this section, a finding that a limited liability company is a shell entity has the following effects:

(a) A court may rebuttably presume that the limited liability company’s filings with the Secretary of State constitute a false claim, as defined in ORS 180.750 (Definitions), in any action the Attorney General brings against the limited liability company under ORS 180.760 (Civil action for violation) and may award to the Attorney General reasonable attorney fees and the costs of investigation, preparation and litigation if the Attorney General prevails in the action; and

(b) A public body, as defined in ORS 174.109 (“Public body” defined), in any proceeding against the limited liability company, may move to enjoin a member, manager or other person that exercises significant direction or control over the limited liability company from engaging in commercial activity in this state, including but not limited to incorporating or organizing another entity in this state.

(3) A limited liability company may affirmatively defend against an allegation that the limited liability company is a shell entity by showing that the limited liability company, within 60 days after receiving a request to provide or correct a name, address or other information required for a filing or in articles of organization, a record the limited liability company must keep or an annual report, or within 60 days after the date of a request to respond to a communication or service of process, provided or corrected the name, address or other information or responded to the communication or service of process. [1993 c.173 §66; 2017 c.705 §24]

Law Review Cita­tions

73 OLR 55 (1994)

Chapter 63

Law Review Cita­tions

30 WLR 291 (1994); 73 OLR 5, 25, 43, 133, 151 (1994)

  • (Un)Common Sense Lawyer, Dec 19, 2009
    “An all too-common hypothetical: friends doing business don’t plan for deadlock and the business dissolves as a result...”
1 Legislative Counsel Committee, CHAPTER 63—Limited Liability Companies, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors063.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 63, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano063.­html (2017) (last ac­cessed Mar. 30, 2018).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.