Professional Documents
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There are important statutory limitations on the ability of Oregon corporations and limited
liability companies (“LLC’s”) to make distributions to their shareholders and members which are
often ignored ultimately at the risk of the directors, managers or other members. Distributions,
including redemptions, made disregarding the statutory limitations may result in personal
liability of those directors, managers or members responsible for an improper distribution if the
company subsequently becomes insolvent.
The statutory definition of a “distribution” for purposes of corporations is ORS 60.001(7) is wide
in its scope.
1. The corporation or LLC will be able to pay its debts as they come due in the
ordinary course of the entity’s business; and,
2. The corporation’s total assets will be at least equal to its total liabilities.
ORS 60.181(3)(a) and (b), defining the corporate limitation; ORS 63.229(1)(a) and (b), defining
the limitation for LLC’s.
The statutes also define the effective date on which the distribution is made for purposes of the
limitations. ORS 60.181(5) and ORS 63.229(4).