75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2577
House Bill 2886
Sponsored by Representatives GALIZIO, READ; Representatives
BAILEY, BARKER, GARRETT, ROBLAN, J SMITH, STIEGLER, THOMPSON
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Creates low-profit limited liability company as type of limited
liability company with specified business purpose. Provides that
business purpose of low-profit limited liability company must be
to significantly further charitable, educational or related
purposes identified in Internal Revenue Code. Prohibits
low-profit limited liability company from engaging in certain
activities. Specifies form of name for low-profit limited
liability company.
Provides that Secretary of State may administratively dissolve
low-profit limited liability company for failure to meet business
purpose requirement and failure to amend articles of organization
to accurately describe business purpose and change name.
A BILL FOR AN ACT
Relating to low-profit limited liability companies; amending ORS
63.001, 63.074, 63.094, 63.101 and 63.647.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 63.001 is amended to read:
63.001. As used in this chapter:
(1) 'Anniversary' means { - that - } { + the + } day each
year { + that is + } exactly one or more years after:
(a) The date { - of filing by - } { + on which + } the
Secretary of State
{ - of - } { + files + } the articles of organization
{ - in the case of - } { + for + } a domestic limited
liability company.
(b) The date { - of filing by - } { + on which + } the
Secretary of State
{ - of an - } { + files a foreign limited liability
company's + } application for authority to transact business
{ - in the case of a foreign limited liability company - } .
(2) 'Articles of organization' means the document described in
ORS 63.047 { - for the purpose of forming - } { + that is
intended to form + } a limited liability company, including
articles of organization as { - they - } { + the articles of
organization + } may be amended or restated, articles of
conversion and articles of merger.
(3) 'Bankruptcy' means:
(a) Assignment by a member for the benefit of creditors;
(b) Commencement of a voluntary bankruptcy case by a member;
(c) Adjudication of a member as bankrupt or insolvent;
(d) Filing by a member of a petition or answer seeking for the
member { - any - } { + a + } reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under
{ - any - } { + a + } statute, law or rule;
(e) Filing by a member of an answer or other pleading admitting
or failing to contest the material allegations of a petition
filed against the member in { - any proceeding of this
nature - } { + a bankruptcy proceeding + };
(f) Seeking, consenting to or acquiescing in the appointment of
a trustee, receiver or liquidator of the member or of all or any
substantial part of the member's properties;
(g) Commencement of an involuntary bankruptcy case against a
member that has not been dismissed on or before the 120th day
after the commencement of the case;
(h) Appointment, without the member's consent, of a trustee,
receiver or liquidator either of the member or of all or any
substantial part of the member's properties that is not vacated
or stayed on or before the 90th day after appointment; or
(i) Appointment described in paragraph (h) of this subsection
that is not vacated on or before the 90th day after expiration of
the stay under paragraph (h) of this subsection.
(4) 'Contribution' means anything of value { - which - }
{ + that + } a person contributes to the limited liability
company as a prerequisite for or in connection with membership
including cash, property or services rendered or a promissory
note or other binding obligation to contribute cash or property
or to perform services.
(5) 'Corporation' or 'domestic corporation' means a corporation
for profit { + that is + } incorporated under ORS chapter 60.
(6) 'Distribution' means a direct or indirect transfer of money
or other property, except of a limited liability company's own
interests, or incurrence of indebtedness by a limited liability
company to or for the benefit of { - its - } members { + of
the limited liability company + } in respect of { - any of its
member's - } { + the members' + } interests. A distribution may
be in the form of a declaration or payment of profits, a
purchase, retirement or other acquisition of interests, a
distribution of indebtedness, or otherwise.
(7) 'Domestic nonprofit corporation' means a corporation not
for profit incorporated under ORS chapter 65.
(8) 'Domestic professional corporation' means a corporation
organized under ORS chapter 58 for the purpose of rendering
professional services and for the purposes provided under ORS
chapter 58.
(9) 'Entity' includes a domestic or foreign limited liability
company, corporation, professional corporation, foreign
corporation, domestic or foreign nonprofit corporation, domestic
or foreign cooperative corporation, profit or nonprofit
unincorporated association, business trust, estate, domestic or
foreign general or limited partnership, trust, two or more
persons having a joint or common economic interest, { - any - }
{ + a + } state, the United States or { - any - } { + a + }
foreign government.
(10) 'Foreign corporation' means a corporation for profit
incorporated under a law other than the law of this state.
(11) 'Foreign limited liability company' means an entity that
is an unincorporated association organized under the laws of a
state other than this state, under the laws of a federally
recognized Indian tribe or under the laws of a foreign country
and that is organized under a statute under which an association
may be formed that affords to each of { - its - } { + the
association's + } members limited liability with respect to the
liabilities of the entity.
(12) 'Foreign limited partnership' means a limited partnership
formed under the laws of any jurisdiction other than this state
and having as partners one or more general partners and one or
more limited partners.
(13) 'Foreign nonprofit corporation' means a corporation not
for profit organized under the laws of a state other than this
state.
(14) 'Foreign professional corporation' means a professional
corporation organized under the laws of a state other than this
state.
(15) 'Incompetency' means the entry of a judgment by a court of
competent jurisdiction adjudicating the member incompetent to
manage the member's person or estate.
(16) 'Individual' means a natural person.
(17) 'Limited liability company' or 'domestic limited liability
company' means an entity that is an unincorporated association
having one or more members that is organized under this chapter.
(18) 'Limited partnership' or 'domestic limited partnership'
means a partnership formed by two or more persons under ORS
chapter 70 and having one or more general partners and one or
more limited partners.
{ + (19) 'Low-profit limited liability company' means a
limited liability company that specifies in the articles of
organization a business purpose that satisfies the requirements
set forth in ORS 63.074 (1)(b). + }
{ - (19) - } { + (20) + } 'Manager' or 'managers' means a
person or persons, who need not be members, designated by the
members of a manager-managed limited liability company to manage
the limited liability company's business and affairs.
{ - (20) - } { + (21) + } 'Manager-managed limited
liability company ' means a limited liability company that is
designated as a manager-managed limited liability company in
{ - its - } { + the + } articles of organization or
{ - whose - } { + for which the + } articles of organization
otherwise expressly provide that the limited liability company
will be managed by a manager or managers.
{ - (21) - } { + (22)(a) + } 'Member' or 'members' means a
person or persons with both an ownership interest in a limited
liability company and all the rights and obligations of a member
specified under this chapter.
{ + (b) + } 'Member' does not include an assignee of an
ownership interest who has not also acquired the voting and other
rights appurtenant to membership.
{ - (22) - } { + (23) + } 'Member-managed limited liability
company ' means a limited liability company other than a
manager-managed limited liability company.
{ - (23) - } { + (24) + } 'Membership interest' or
'interest' means a member's collective rights in a limited
liability company, including the member's share of profits and
losses of the limited liability company, the right to receive
distributions of the limited liability company's assets and any
right to vote or participate in management.
{ - (24) - } { + (25) + } 'Office,' when used to refer to
the administrative unit directed by the Secretary of State, means
the office of the Secretary of State.
{ - (25) - } { + (26) + } 'Operating agreement' means
{ - any - } { + a + } valid agreement, written or oral, of the
member or members as to the affairs of a limited liability
company and the conduct of { - its - } { + the + }
business { + of the limited liability company + }.
{ - (26) - } { + (27) + } 'Organizer' means one of the
signers of the initial articles of organization.
{ - (27) - } { + (28) + } 'Party' { - includes - } { +
means + } an individual who was, is or is threatened to be made a
named defendant or respondent in a proceeding.
{ - (28) - } { + (29) + } 'Person' means an individual or
entity.
{ - (29) - } { + (30) + } 'Proceeding' means { - any - }
{ + a + } threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or
investigatory and whether formal or informal.
{ - (30) - } { + (31) + } 'State,' when referring to a part
of the United States, includes a state, commonwealth, territory
or insular possession of the United States and { - its - }
{ + the + } agencies and governmental subdivisions { + of the
state, commonwealth, territory or insular possession + }.
{ - (31) - } { + (32) + } 'United States' includes a
district, authority, bureau, commission, department or any other
agency of the United States.
SECTION 2. ORS 63.074 is amended to read:
63.074. (1) { + (a) + } Except as otherwise provided by the
laws of this state and in this section, a limited liability
company formed under this chapter may conduct or promote any
lawful business or purpose { - which - } { + that + } a
partnership, corporation or professional corporation as defined
in ORS 58.015 may conduct or promote, unless a more limited
purpose is set forth in the articles of organization.
{ + (b) A low-profit limited liability company formed under
this chapter conducts or promotes a lawful business or purpose
only if:
(A) The business or purpose significantly furthers the
accomplishment of a purpose identified in 26 U.S.C. 170(c)(2)(B);
and
(B) The low-profit limited liability company would not have
been formed but for the low-profit limited liability company's
relationship to the accomplishment of the identified purpose.
(c) A low-profit limited liability company may not:
(A) Have as a significant purpose the production of income or
the appreciation of property, except that in the absence of other
evidence the low-profit limited liability company's production of
significant income or capital appreciation is not conclusive
evidence that a significant purpose of the low-profit limited
liability company is the production of income or appreciation of
property; or
(B) Accomplish a political or legislative purpose identified in
26 U.S.C. 170(c)(2)(D). + }
(2) Subject to the laws of this state, the rules and
regulations of the regulatory board of the profession, if any,
and the standards of professional conduct of the profession, if
any, a limited liability company or { - its - } members { +
of the limited liability company + } may render professional
service in this state. Notwithstanding any other law, members,
including members who are managers, of a limited liability
company who are also professionals, as defined in ORS 58.015,
{ - shall be - } { + are + } personally liable as members of
the limited liability company to the same extent and in the same
manner as provided for shareholders of a professional corporation
in ORS 58.185 and 58.187 and as otherwise provided in this
chapter.
(3) A business that is subject to regulation under another
statute of this state may not be organized under this chapter if
the business is required to be organized only under the other
statute.
SECTION 3. ORS 63.094 is amended to read:
63.094. (1) { + (a) + } The name of { - the - } { + a + }
limited liability company
{ - shall - } { + must + } contain the words 'limited
liability company' or the abbreviation 'L.L.C.' or 'LLC. '
{ + (b) The name of a low-profit limited liability company
must contain the words 'low-profit limited liability company' or
the abbreviation 'L3C.' + }
(2) A limited liability company name { - shall - } { +
may + } not contain the word or abbreviation 'cooperative,'
'corporation, ' ' corp.,' 'incorporated,' 'Inc.,' 'limited
partnership, ' ' L.P.,' 'LP,' 'Ltd.,' 'limited liability
partnership, ' ' L.L.P.,' 'LLP' or 'partnership' or any
derivation of any of the foregoing.
(3) A limited liability company name { - shall - } { +
must + } be written in the alphabet used to write the English
language and may include Arabic and Roman numerals and incidental
punctuation.
(4) A limited liability company name { - shall - } { +
must + } be distinguishable upon the records of the office from
any other limited liability company name, corporate name,
professional corporate name, nonprofit corporate name,
cooperative name, limited partnership name, business trust name,
reserved name, registered corporate name or assumed business name
of active record with the office.
(5) The limited liability company name need not satisfy the
requirement of subsection (4) of this section if the applicant
delivers to the office a certified copy of a final judgment of a
court of competent jurisdiction that finds that the applicant has
a prior or concurrent right to use the limited liability company
name in this state.
(6) The provisions of this section do not prohibit a limited
liability company from transacting business under an assumed
business name.
(7) The provisions of this section do not:
(a) Abrogate or limit the law governing unfair competition or
unfair trade practices; or
(b) Derogate from the common law, the principles of equity or
the statutes of this state or of the United States with respect
to the right to acquire and protect trade names.
SECTION 4. ORS 63.101 is amended to read:
63.101. (1) A foreign limited liability company { + , including
a low-profit limited liability company, + } may apply to the
office to register { - its - } { + the + } name { + of the
company + }.
(2) The application must set forth the limited liability
company name, the state or country of { - its - }
organization, the date of { - its - } organization { + , + }
{ - and - } a brief description of the nature of the business
in which { - it - } { + the limited liability company + } is
engaged and a statement that { - it - } { + the limited
liability company + } is not carrying on or doing business in the
State of Oregon. The application must be accompanied by a
certificate of existence or a document of similar import current
within 60 days of delivery, duly authenticated by the official
having custody of the limited liability company records in the
state or country under whose law
{ - it - } { + the limited liability company + } is
organized.
(3) If the Secretary of State finds that the name conforms to
ORS 63.094, the Secretary of State shall register the name
effective for one year.
SECTION 5. ORS 63.647 is amended to read:
63.647. The Secretary of State may commence a proceeding under
ORS 63.651 to administratively dissolve a limited liability
company if:
(1) The limited liability company does not pay when due any
fees imposed by this chapter;
(2) The limited liability company does not deliver
{ - its - } { + an + } annual report to the Secretary of State
when due;
(3) The limited liability company is without a registered agent
or registered office in this state;
(4) The limited liability company does not notify the Secretary
of State that { - its - } { + the + } registered agent or
registered office { + of the limited liability company + } has
been changed, that
{ - its - } { + the + } registered agent has resigned or that
{ - its - } { + the + } registered office has been
discontinued; { - or - }
(5) The limited liability company's period of duration stated
in { - its - } { + the + } articles of organization
expires { + ; or
(6) The limited liability company is a low-profit limited
liability company that:
(a) Does not meet the requirements set forth in ORS 63.074
(1)(b); and
(b) Failed to file an amendment to the articles of organization
that accurately described the company's business purpose and that
changed the company's name to conform with the requirements set
forth in ORS 63.094 within 60 days after the date on which the
low-profit limited liability company ceased to meet the
requirements set forth in ORS 63.074 (1)(b) + }.
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