Chapter 86 Oregon Laws 1999

Session Law

AN ACT

SB 51

Relating to business entities; creating new provisions; amending ORS 63.001, 63.034, 63.047, 63.130, 63.140, 63.155, 63.160, 63.165, 63.229, 63.235, 63.437, 63.441, 63.629, 63.707, 63.771, 63.784, 63.787, 67.645 and 70.465; and repealing ORS 63.135, 63.145 and 63.150.

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 day each year exactly one or more years after:

(a) The date of filing by the Secretary of State of the articles of organization in the case of a domestic limited liability company.

(b) The date of filing by the Secretary of State of an 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 a limited liability company, including articles of organization as they may be amended or restated.

(3) "Bankruptcy" means:

(a) Assignment by a member for the benefit of creditors;

(b) Commencement of a voluntary bankruptcy case by a member;

(d) Filing by a member of a petition or answer seeking for the member any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any 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;

(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 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 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 in respect of any of its member's 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) "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 state, the United States or any foreign government.

(8) "Foreign corporation" means a corporation for profit incorporated under a law other than the law of this state.

(9) "Foreign limited liability company" means an entity that is an unincorporated association that is organized under the laws of a state other than of this state or under the laws of any foreign country and that is organized under a statute pursuant to which an association may be formed that affords to each of its members limited liability with respect to the liabilities of the entity.

(10) "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.

(11) "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.

(12) "Individual" means a natural person.

(13) "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.

(14) "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.

(15) "Manager" or "managers" means a person or persons, who need not be members, designated by the members of a manager-managed limited liability company [in accordance with ORS 63.135] to manage the limited liability company's business and affairs.

(16) "Manager-managed limited liability company" means a limited liability company that is designated as a manager-managed limited liability company in its articles of organization or whose articles of organization otherwise expressly provide that the limited liability company will be managed by a manager or managers.

[(16)] (17) "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. "Member" does not include an assignee of an ownership interest who has not also acquired the voting and other rights appurtenant to membership.

(18) "Member-managed limited liability company" means a limited liability company other than a manager-managed limited liability company.

[(17)] (19) "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.

[(18)] (20) "Office," when used to refer to the administrative unit directed by the Secretary of State, means the office of the Secretary of State.

[(19)] (21) "Operating agreement" means any valid agreement, written or oral, of the member or members as to the affairs of a limited liability company and the conduct of its business.

[(20)] (22) "Organizer" means one of the signers of the initial articles of organization.

[(21)] (23) "Party" includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

[(22)] (24) "Person" means an individual or entity.

[(23)] (25) "Proceeding" means any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigatory and whether formal or informal.

[(24)] (26) "State," when referring to a part of the United States, includes a state, commonwealth, territory or insular possession of the United States and its agencies and governmental subdivisions.

[(25)] (27) "United States" includes a district, authority, bureau, commission, department or any other agency of the United States.

SECTION 2. ORS 63.034 is amended to read:

63.034. [(1) Except as provided in subsection (3) of this section, notice under this chapter shall be in writing unless oral notice is specifically permitted under the circumstances by the articles of organization or any operating agreement.]

[(2) Notice may be communicated in person, by telephone, facsimile, telegraph, teletype or other form of wire or wireless communication, or by mail or private carrier.]

[(3) Written notice by a domestic or foreign limited liability company to a member or manager, if in a comprehensible form, is effective when mailed if it is mailed postpaid and is correctly addressed to the member's address shown in the limited liability company's current record of members or the manager's address shown in the limited liability company's records. All notices required by this chapter by a limited liability company to its members shall be in writing.]

[(4) Written notice to a domestic limited liability company or to a foreign limited liability company authorized to transact business in this state may be addressed to its registered agent at its registered office or to the domestic or foreign limited liability company or its manager or managers at its principal office or mailing address as shown in the records of the office.]

[(5) Except as provided in subsection (3) of this section, or unless the articles of organization or any operating agreement provides otherwise for notices to managers, written notice, if in a comprehensible form, is effective at the earliest of the following:]

[(a) When received;]

[(b) Five days after it is deposited in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed; or]

[(c) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.]

[(6) Oral notice is effective when communicated if communicated in a comprehensible manner.]

[(7) If this chapter prescribes notice requirements for particular circumstances, those requirements govern. If articles of organization or any operating agreement prescribes notice requirements not inconsistent with this section or other provisions of this chapter, those requirements govern.]

(1) A person knows a fact if the person has actual knowledge of it.

(2) A person has notice of a fact if the person:

(a) Knows of it;

(b) Has received a notification of it; or

(c) Has reason to know it exists from all the facts known to the person at the time in question.

(3) A person notifies or gives notification to another by taking steps reasonably required to inform the other person in the ordinary course, whether or not the other person learns of it.

(4) A person receives a notification when the notification:

(a) Comes to the person's attention; or

(b) Is addressed to the person and is duly delivered at the person's place of business or at any other place held out by the person as a place for receiving communications.

(5) A person other than an individual knows, has notice or receives a notification of a fact for purposes of a particular transaction when the individual conducting the transaction knows, has notice or receives a notification of the fact, or in any event when the fact would have been brought to the individual's attention if the person had exercised reasonable diligence.

(6) Written notice to a domestic limited liability company or to a foreign limited liability company authorized to transact business in this state may be addressed to its registered agent at its registered office or to the domestic or foreign limited liability company or its manager or managers at its principal office or mailing address as shown in the records of the office.

SECTION 3. ORS 63.047 is amended to read:

63.047. (1) The articles of organization shall set forth:

(a) The name of the limited liability company which satisfies the requirements of ORS 63.094;

(b) The address, including street and number, and mailing address, if different, of the limited liability company's initial registered office and the name of its initial registered agent at that office;

(c) A mailing address to which notices, as required by this chapter, may be mailed until an address has been designated by the limited liability company in its annual report;

[(d) If the limited liability company is to be managed by a manager or managers, a statement to that effect;]

(d) Whether the limited liability company is to be member-managed or manager-managed, or shall specify whether the limited liability company is to be managed by a manager or managers;

(e) The name and address of each organizer;

(f) The latest date on which the limited liability company is to dissolve or a statement that its existence is perpetual; and

(g) If a limited liability company is to render professional service or services, as defined in ORS 58.015, the professional service or services to be rendered through the limited liability company.

(2) The articles of organization may set forth any other provisions, not inconsistent with law, for the regulation of the internal affairs of the limited liability company, including any provision that is required or permitted to be included in any operating agreement of the limited liability company under this chapter.

(3) The articles of organization need not set forth any of the powers enumerated in this chapter.

SECTION 4. ORS 63.130 is amended to read:

63.130. [Unless the articles of organization provide for a manager or managers, the business and affairs of a limited liability company shall be managed by its members, subject to any provisions of the articles of organization or any operating agreement restricting or enlarging the management rights and duties of any member, manager, or group or class of members or managers. Unless management is vested in a manager or managers:]

[(1) The members shall be deemed to be managers for purposes of applying any provision of this chapter unless the context clearly requires otherwise; and]

[(2) The members shall have and be subject to all duties and liabilities of managers as set forth in this chapter.]

(1) In a member-managed limited liability company, unless otherwise provided in the articles of organization or any operating agreement:

(a) Each member has equal rights in the management and conduct of the limited liability company's business; and

(b) Except as otherwise provided in subsection (3) of this section, any matter relating to the business of the limited liability company may be decided by a majority of the members.

(2) In a manager-managed limited liability company, unless otherwise provided in the articles of organization or any operating agreement:

(a) Each manager has equal rights in the management and conduct of the limited liability company's business;

(b) Except as otherwise provided in subsections (3) and (4) of this section, any matter relating to the business of the limited liability company may be exclusively decided by the manager or, if there is more than one manager, by a majority of the managers; and

(c) A manager:

(A) Must be designated, appointed, elected, removed or replaced by a vote, approval or consent of a majority of the members; and

(B) Holds office until a successor has been elected and qualified, unless the manager sooner resigns or is removed.

(3) Unless otherwise provided in the articles of organization or any operating agreement, the following matters of a member-managed or a manager-managed limited liability company require the consent of all of the members:

(a) The amendment of the operating agreement or the articles of organization under ORS 63.444;

(b) The compromise, as among the members, of an obligation to make a contribution under ORS 63.180 (4) or to return money or other property paid or distributed in violation of any provision of this chapter; and

(c) The consent to dissolve the limited liability company under ORS 63.621 (3).

(4) Unless otherwise provided in the articles of organization or any operating agreement, the following matters of a member-managed or a manager-managed limited liability company require the consent of a majority of the members:

(a) The making of interim distributions under ORS 63.200, including the redemption of an interest;

(b) The admission of a new member;

(c) The use of the limited liability company's property to redeem an interest subject to a charging order;

(d) The sale, lease, exchange, mortgage, pledge or other transfer or disposition of all, or substantially all, of the limited liability company's property, with or without goodwill;

(e) The merger of the limited liability company with any other entity;

(f) The conversion of the limited liability company into any other type of entity;

(g) The incurring of indebtedness by the limited liability company other than in the ordinary course of the business of the limited liability company;

(h) A transaction involving an actual or a potential conflict of interest between a member or a manager and the limited liability company;

(i) A change in the nature of the limited liability company's business; and

(j) Any other matter specified in the articles of organization or any operating agreement as requiring member approval if no number or percentage of members is otherwise stated.

(5) Unless otherwise provided in the articles of organization or any operating agreement, action requiring the consent of members or managers under this chapter may be taken without a meeting.

(6) Unless otherwise provided in the articles of organization or any operating agreement, a member or manager may appoint a proxy to vote or otherwise act for the member or manager by signing an appointment instrument, either personally or by the member's or manager's attorney-in-fact.

(7) Unless the context clearly requires otherwise, references in this chapter to managers apply both to managers of a manager-managed limited liability company and to members of a member-managed limited liability company.

SECTION 5. ORS 63.140 is amended to read:

63.140. [(1) Every manager is an agent of the limited liability company for the purpose of its business or affairs. The act of every manager, including the execution on behalf of the limited liability company of any instrument, for apparently carrying on in the usual way the business or affairs of the limited liability company binds the limited liability company, unless the manager so acting lacks the authority to act for the limited liability company and the person with whom the manager is dealing has knowledge of the fact that the manager has no such authority.]

[(2) If articles of organization provide for managers, members who are not managers shall not have the authority to bind the limited liability company merely as a result of their status as members.]

(1) Subject to subsections (2) and (3) of this section:

(a) Each member is an agent of the limited liability company for the purpose of its business, and an act of a member, including the signing of an instrument in the limited liability company's name, for apparently carrying on in the ordinary course the business of the limited liability company, or business of the kind carried on by the limited liability company, binds the limited liability company unless the member had no authority to act for the limited liability company in the particular matter and the person with whom the member was dealing knew or had notice that the member lacked authority.

(b) An act of a member that is not apparently for carrying on in the ordinary course the business of the limited liability company, or business of the kind carried on by the limited liability company, binds the limited liability company only if the act was authorized by the other members.

(2) Subject to subsection (3) of this section, in a manager-managed limited liability company:

(a) A member is not an agent of the limited liability company for the purpose of its business solely by reason of being a member. Each manager is an agent of the limited liability company for the purpose of its business, and an act of a manager, including the signing of an instrument in the limited liability company's name, for apparently carrying on in the ordinary course the business of the limited liability company, or business of the kind carried on by the limited liability company, binds the limited liability company unless the manager had no authority to act for the limited liability company in the particular matter and the person with whom the manager was dealing knew or had notice that the manager lacked authority.

(b) An act of a manager that is not apparently for carrying on in the ordinary course the business of the limited liability company, or business of the kind carried on by the limited liability company, binds the limited liability company only if the act was authorized under ORS 63.130.

(3) Unless the articles of organization limit their authority, any member of a member-managed limited liability company or manager of a manager-managed limited liability company may sign and deliver any instrument transferring or affecting the limited liability company's interest in real property. The instrument is conclusive in favor of a person who gives value without knowledge of the lack of the authority of the person signing and delivering the instrument.

SECTION 6. Section 7 of this 1999 Act is added to and made a part of ORS chapter 63.

SECTION 7. A limited liability company is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a member or manager acting in the ordinary course of the business of the limited liability company or with authority of the limited liability company.

SECTION 8. ORS 63.155 is amended to read:

63.155. [(1) A manager shall discharge the duties of a manager, including the duties as a member of a committee, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner the manager reasonably believes to be in the best interests of the limited liability company.]

[(2) In discharging the duties of a manager, a manager is entitled to rely on information, opinions, reports or statements, including financial statements or other financial data, if prepared or presented by:]

[(a) One or more employees or other agents of the limited liability company whom the manager reasonably believes to be reliable and competent in the matter or matters presented;]

[(b) Legal counsel, public accountants or other persons as to matters which the manager reasonably believes are within such person's professional or expert competence; or]

[(c) A committee of managers upon which the manager does not serve, if the manager reasonably believes the committee merits confidence.]

[(3) A manager is not acting in good faith if the manager has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) of this section unwarranted.]

[(4) A manager is not liable for any action taken as a manager, or any failure to take any action, if the manager performs the duties of the manager's office in compliance with this section.]

[(5) Except as otherwise provided in the articles of organization or any operating agreement, every manager and member must account to the limited liability company for and hold as trustee for it any benefit or any profits derived by the manager or member from any transaction connected with the formation, conduct or winding up of the limited liability company or from any use by the manager or member of its property unless such benefit or profit expressly is approved or ratified by a majority vote of the members as provided in ORS 63.150.]

(1) The only fiduciary duties a member owes to a member-managed limited liability company and its other members are the duty of loyalty and the duty of care set forth in subsections (2) and (3) of this section.

(2) A member's duty of loyalty to a member-managed limited liability company and its other members includes the following:

(a) To account to the limited liability company and hold for it any property, profit or benefit derived by the member in the conduct and winding up of the limited liability company's business or derived from a use by the member of limited liability company property, including the appropriation of a limited liability company opportunity;

(b) Except as provided in subsections (5) and (6) of this section, to refrain from dealing with the limited liability company in a manner adverse to the limited liability company and to refrain from representing a person with an interest adverse to the limited liability company, in the conduct or winding up of the limited liability company's business; and

(c) To refrain from competing with the limited liability company in the conduct of the business of the limited liability company before the dissolution of the limited liability company.

(3) A member's duty of care to a member-managed limited liability company and the other members in the conduct and winding up of the business of the limited liability company is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct or a knowing violation of law.

(4) A member shall discharge the duties to a member-managed limited liability company and the other members under this chapter or under any operating agreement of the limited liability company and exercise any rights consistent with the obligation of good faith and fair dealing.

(5) A member of a member-managed limited liability company does not violate a duty or obligation under this chapter or under any operating agreement of the limited liability company merely because the member's conduct furthers the member's own interest.

(6) A member of a member-managed limited liability company may lend money to or transact other business with the limited liability company, provided that any loan or transaction between the member and the limited liability company must be:

(a) Fair to the limited liability company;

(b) Authorized by an operating agreement; or

(c) Authorized or ratified by a majority of the disinterested members or by a number or percentage of members specified in the operating agreement after full disclosure of all material facts.

(7) Loans and other transactions between a member-managed limited liability company and a member are binding on the parties in the same manner as transactions between the limited liability company and persons who are not members, subject to other applicable law.

(8) This section also applies to a person who is not a member and who is winding up the limited liability company's business.

(9) In a manager-managed limited liability company:

(a) A member who is not also a manager owes no duties to the limited liability company or the other members solely by reason of being a member;

(b) A manager is held to the same standards of conduct prescribed for members in subsections (2) to (8) of this section;

(c) A member who, pursuant to an operating agreement, exercises some or all of the rights of a manager in the management and conduct of the limited liability company's business is held to the standards of conduct described in subsections (2) to (8) of this section to the extent that the member exercises the managerial authority vested in a manager by this chapter; and

(d) A manager is relieved of liability imposed by law for violation of the standards prescribed by this section to the extent, if any, of the managerial authority delegated to the members who are not also managers by an operating agreement.

(10) An operating agreement may:

(a) Identify types or categories of activities that do not violate the duty of loyalty, if not unconscionable; and

(b) Specify the number or percentage of members, whether interested or disinterested, or disinterested managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty.

(11) An operating agreement may not:

(a) Eliminate the duty of loyalty under subsection (2) of this section;

(b) Unreasonably reduce the duty of care under subsection (3) of this section; or

(c) Eliminate the obligation of good faith and fair dealing under subsection (4) of this section, but an operating agreement may determine the standards by which the performance of the obligation is to be measured, if the standards are not unconscionable.

SECTION 9. ORS 63.160 is amended to read:

63.160. The articles of organization or any operating agreement may provide for indemnification of any person for acts or omissions as a member, manager, employee or agent and may eliminate or limit the liability of a member, manager, employee or agent to the limited liability company or its members for damages from such acts or omissions. However, no such provision shall eliminate or limit the liability or provide for indemnification of a member of a member-managed limited liability company or a manager of a manager-managed limited liability company for any act or omission occurring prior to the date when such provision became effective, and no such provision shall eliminate or limit the liability or provide for indemnification of a member or manager for:

(1) Any breach of [a] the member's or manager's duty of loyalty to the limited liability company or its members;

(2) Acts or omissions not in good faith which involve intentional misconduct or a knowing violation of law;

(3) Any unlawful distribution under ORS 63.235; or

(4) Any transaction from which the member or manager derives an improper personal benefit.

SECTION 10. ORS 63.165 is amended to read:

63.165. [A member or manager of the limited liability company is not personally liable for any debt, obligation or liability of the limited liability company merely by reason of being a member or manager or both.]

(1) The debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, are solely the debts, obligations and liabilities of the limited liability company. A member or manager is not personally liable for a debt, obligation or liability of the limited liability company solely by reason of being or acting as a member or manager.

(2) The failure of a limited liability company to observe the usual limited liability company formalities or requirements relating to the exercise of its limited liability company powers or management of its business is not a ground for imposing personal liability on the members or managers for liabilities of the limited liability company.

SECTION 11. ORS 63.229 is amended to read:

63.229. (1) A distribution may be made by a limited liability company to any member only if, after giving effect to the distribution, in the judgment of the members, for a member-managed limited liability company, or the managers, for a manager-managed limited liability company:

(a) The limited liability company would be able to pay its debts as they become due in the ordinary course of business; and

(b) The fair value of the total assets of the limited liability company would at least equal the sum of:

(A) Its total liabilities; plus

(B) Unless the articles of organization permit otherwise, the amount that would be needed, if the limited liability company were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution, if any, of other members that are superior to the rights of the members receiving the distribution.

(2) The members or managers of a limited liability company may base a determination that a distribution is not prohibited under subsection (1) of this section either on:

(a) Financial statements that the members or managers reasonably believe have been prepared on the basis of accounting practices and principles that are reasonable in the circumstances; or

(b) A fair valuation or other method that the members or managers reasonably believe is reasonable in the circumstances.

(3) For purposes of this section, the amount, if any, by which a liability as to which the recourse of creditors is limited to specific property of the limited liability company exceeds the fair value of such specific property shall be disregarded as a liability of the limited liability company.

(4) The effect of a distribution under subsection (1) of this section is measured for purposes of this section:

(a) In the case of distribution by purchase, retirement or other acquisition of all or a portion of a member's interest in the limited liability company, as of the earlier of the date the money or other property is transferred or debt incurred by the limited liability company or the date the member ceases to be a member with respect to the membership interest purchased, retired or otherwise acquired;

(b) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and

(c) In all other cases, as of the date a distribution is authorized if the payment occurs within 120 days after the date of authorization or the date the payment is made if it occurs more than 120 days after the date of authorization.

(5) A limited liability company's indebtedness to a member incurred by reason of a distribution made in accordance with this section is at parity with the limited liability company's indebtedness to its general unsecured creditors, unless the member agrees to subordination or the limited liability company grants the member a security interest or other lien against limited liability company assets to secure the indebtedness.

SECTION 12. ORS 63.235 is amended to read:

63.235. [(1) A manager who votes for or assents to a distribution in violation of this chapter, the articles of organization or any operating agreement is personally liable to the limited liability company for the amount of the distribution that exceeds what could have been distributed without violating this chapter, the articles of organization or any operating agreement, if it is established that such manager did not act in compliance with ORS 63.155.]

[(2) Each manager held liable under this section for an unlawful distribution is entitled to contribution:]

[(a) From each other manager who could be held liable under this section for the unlawful distribution; and]

[(b) From each member for the amount the member received knowing that the distribution was made in violation of this chapter, the articles of organization or any operating agreement.]

[(3) A proceeding under this section is barred unless it is commenced within two years after the date on which the effect of the distribution is measured.]

(1) A member of a member-managed limited liability company or a member or manager of a manager-managed company who votes for or assents to a distribution made in violation of ORS 63.229, the articles of organization or any operating agreement, is personally liable to the limited liability company for the amount of the distribution that exceeds the amount that could have been distributed without violating ORS 63.229, the articles of organization or any operating agreement, if it is established that the member or manager did not perform the member's or manager's duties in compliance with ORS 63.155.

(2) A member of a manager-managed limited liability company who receives a distribution knowing that it was made in violation of ORS 63.229 is personally liable to the limited liability company, but only to the extent that the distribution received by the member exceeded the amount that could have been properly paid under ORS 63.229.

(3) A member or manager against whom an action is brought under subsection (1) of this section may implead in the action all:

(a) Other members or managers who voted for or assented to the distribution in violation of subsection (1) of this section and may compel contribution from them; and

(b) Members who received a distribution in violation of subsection (2) of this section and may compel contribution from them in the amount received in violation of subsection (2) of this section.

(4) A proceeding under this section is barred unless it is commenced within two years after the distribution.

SECTION 13. ORS 63.437 is amended to read:

63.437. (1) The managers of a manager-managed limited liability company may restate its articles of organization at any time with or without member action.

(2) The restatement may include one or more amendments to the articles of organization. If the restatement includes an amendment requiring member approval, it must be adopted as provided in ORS 63.444.

(3) A limited liability company restating its articles of organization shall deliver to the office for filing articles of restatement setting forth the name of the limited liability company and the text of the restated articles of organization together with a certificate setting forth:

(a) Whether the restatement contains an amendment to the articles of organization requiring member approval and, if it does not, that the managers adopted the restatement; or

(b) If the restatement contains an amendment to the articles of organization requiring member approval, the information required by ORS 63.434.

(4) Restated articles of organization shall contain all statements required to be included in the initial articles of organization except that no statement is required to be made with respect to:

(a) The names and addresses of the organizers or the initial or present registered office or agent; or

(b) The mailing address of the limited liability company if an annual report has been filed with the office of the Secretary of State.

(5) Duly adopted restated articles of organization supersede the initial articles of organization and all amendments to them.

SECTION 14. ORS 63.441 is amended to read:

63.441. Except as provided in the articles of organization, the manager or managers of a manager-managed limited liability company may adopt without member action one or more amendments to the articles of organization to:

(1) Delete the names and addresses of the initial managers, if named in the initial articles of organization;

(2) Delete the name and address of the initial registered agent or registered office, if a statement of change is filed with the office of the Secretary of State;

(3) Delete the mailing address of the limited liability company if a report reflecting the mailing address has been filed with the office of the Secretary of State;

(4) Change the limited liability company's name by substituting "limited liability company" for the abbreviation "L.L.C." or "LLC," substituting the abbreviation "L.L.C." for "limited liability company" or "LLC," or substituting the abbreviation "LLC" for "limited liability company" or "L.L.C."; or

(5) Make any other changes expressly permitted by this chapter to be made without member action.

SECTION 15. ORS 63.629 is amended to read:

63.629. (1) Except as provided in subsections (2) and (3) of this section, and except as otherwise provided in the articles of organization or any operating agreement, after dissolution of the limited liability company, each member of a member-managed limited liability company and each manager of a manager-managed limited liability company can bind the limited liability company:

(a) By any act or omission appropriate for winding up the limited liability company's affairs or completing transactions unfinished at dissolution; and

(b) By any transaction that would have bound the limited liability company if it had not been dissolved, if the other party to the transaction does not have actual notice of the dissolution.

(2) An act or omission of a member or manager [which] that would not be binding on the limited liability company pursuant to subsection (1) of this section is binding if it is otherwise authorized or ratified by the limited liability company.

(3) An act or omission of a member or manager that would be binding on the limited liability company under subsection (1) of this section or [which] that otherwise would be authorized, but [which] that is in contravention of a restriction on the authority of the member or manager shall not bind the limited liability company to persons having knowledge of the restriction.

SECTION 16. ORS 63.707 is amended to read:

63.707. (1) A foreign limited liability company may apply for authority to transact business in this state by delivering an application to the office for filing. The application shall set forth:

(a) The name of the foreign limited liability company or, if its name is unavailable for filing in this state, another name that satisfies the requirements of ORS 63.717;

(b) The name of the state or country under whose law it is organized;

(c) Its date of organization and either the date on which the period of its duration expires or a statement that its duration is perpetual;

(d) The address, including street and number, and mailing address, if different, of its principal office;

(e) The address, including street and number, of its registered office in this state and the name of its registered agent at that office; [and]

(f) A statement that the foreign limited liability company satisfies the requirements of ORS 63.714 (3)[.]; and

(g) A statement whether the foreign limited liability company is member-managed or manager-managed, or shall specify whether the foreign limited liability company is managed by a manager or managers.

(2) The foreign limited liability company shall deliver with the completed application a certificate of existence, or a document of similar import, current within 60 days of delivery and authenticated by the official having custody of limited liability company records in the state or country under whose law it is organized.

SECTION 17. ORS 63.784 is amended to read:

63.784. If a limited liability company indemnifies or advances expenses to a member or manager under ORS 63.160 in connection with a proceeding by or in the right of the limited liability company, the limited liability company shall report the indemnification or advance in writing to the members.

SECTION 18. ORS 63.787 is amended to read:

63.787. (1) Each domestic limited liability company, and each foreign limited liability company authorized to transact business in the state, shall by its anniversary deliver to the office of the Secretary of State for filing an annual report that sets forth:

(a) The name of the limited liability company and the state or country under whose law it is organized;

(b) The street address of its registered office and name of its registered agent at that office in this state;

(d) The names and addresses of the managers[; if the] for a manager-managed limited liability company [is managed by its members,] or the name and address of at least one member for a member-managed limited liability company;

(e) The category of the classification code established by rule of the Secretary of State most closely designating the primary business activity of the limited liability company;

(f) The federal employer identification number of the limited liability company; and

(g) Additional identifying information that the Secretary of State may require by rule.

(2) The information contained on the annual report shall be current as of 30 days before the anniversary of the limited liability company.

(3) The Secretary of State shall mail the annual report form to any address shown for the limited liability company in the current records of the office. The failure of the limited liability company to receive the annual report form from the Secretary of State shall not relieve the limited liability company of its duty to deliver an annual report to the office as required by this section.

(4) If an annual report does not contain the information required by this section, the Secretary of State shall notify the reporting domestic or foreign limited liability company in writing and return the report to it for correction. The domestic or foreign limited liability company must correct the error within 45 days after the Secretary of State gives such notice.

(5) A domestic or foreign limited liability company may deliver to the office for filing an amendment to the annual report if a change in the information set forth in the annual report occurs after the report is delivered to the office for filing and before the next anniversary. This subsection applies only to a change that is not required to be made by an amendment to the articles of organization. The amendment to the annual report must set forth:

(a) The name of the limited liability company as shown on the records of the office; and

(b) The information as changed.

SECTION 19. ORS 70.465 is amended to read:

70.465. In any case governing limited partnerships that is not provided for in this chapter, the provisions of ORS [chapters 67 and 68] chapter 67 govern.

SECTION 20. Notwithstanding ORS 70.465, before January 1, 2003, in any case governing limited partnerships that is not provided for in ORS chapter 70, the provisions of ORS chapter 68 govern limited partnerships formed before January 1, 1998, that have not elected, in the manner provided in the partnership agreement or by law for amending the partnership agreement, to be governed by the provisions of ORS chapter 67.

SECTION 21. ORS 67.645 is amended to read:

67.645. (1) Each limited liability partnership registered to transact business in this state, and each foreign limited liability partnership authorized to transact business in this state, shall by its anniversary deliver an annual report to the office of the Secretary of State for filing. [The annual report shall be filed each year not later than the date that is the anniversary of the date the registration of the limited liability partnership was effective or the authorization of the foreign limited liability partnership was effective.] The annual report shall set forth:

(a) The name of the partnership and the state or country under whose law it is registered or qualified as a limited liability partnership;

(b) The address, including street and number, and mailing address, if different, of the principal office from which the partnership conducts its business;

(d) A brief statement describing the primary business activity of the partnership;

(e) The federal employer identification number of the partnership; and

(f) Additional identifying information that the Secretary of State may require by rule.

(2) The information contained on the annual report shall be current within 30 days before the report is due.

(3) The Secretary of State shall mail the annual report form to any address shown for the limited liability partnership or foreign limited liability partnership in the current records of the office of the Secretary of State. The failure of the limited liability partnership or foreign limited liability partnership to receive the annual report form from the Secretary of State shall not relieve the limited liability partnership or foreign limited liability partnership of its duty to deliver an annual report to the office of the Secretary of State as required by this section.

(4) If an annual report does not contain the information required by this section, the Secretary of State shall notify the reporting limited liability partnership or foreign limited liability partnership in writing and return the report to it for correction. The limited liability partnership or foreign limited liability partnership must correct the error within 45 days after the Secretary of State gives such notice.

(5) A limited liability partnership or foreign limited liability partnership may deliver to the office of the Secretary of State for filing an amendment to the annual report if a change in the information set forth in the annual report occurs after the report is delivered to the office of the Secretary of State for filing and before the next anniversary. The amendment to the annual report must set forth:

(a) The name of the limited liability partnership or foreign limited liability partnership as shown on the records of the office; and

(b) The information as changed.

SECTION 22. ORS 63.771 is amended to read:

63.771. (1) Each limited liability company shall keep at an office specified in the manner provided in any operating agreement or, if none, at the registered office, the following:

(a) A current list of the full name and last-known business, residence or mailing address of each member and manager, both past and present.

(b) A copy of the articles of organization and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed.

(c) Copies of the limited liability company's federal, state and local income tax returns and reports, if any, for the three most recent years.

(d) Copies of any currently effective written operating agreements and all amendments thereto, copies of any writings permitted or required under this chapter, and copies of any financial statements of the limited liability company for the three most recent years.

[(e) Minutes of any meeting of members or managers as described in ORS 63.150.]

[(f)] (e) Unless contained in a written operating agreement or in a writing permitted or required under this chapter, a statement prepared and certified as accurate by a manager of the limited liability company which describes:

(A) The amount of cash and a description and statement of the agreed value of other property or services contributed by each member and which each member has agreed to contribute in the future;

(B) The times at which or events on the occurrence of which any additional contributions agreed to be made by each member are to be made; and

(C) If agreed upon, the time at which or the events on the occurrence of which the limited liability company is dissolved and its affairs wound up.

[(g) Any written consents obtained from members pursuant to ORS 63.150.]

(2) Any limited liability company records are subject to inspection and copying at the reasonable request, and at the expense, of any member during ordinary business hours.

(3) Failure of the limited liability company to keep or maintain any of the records or information required pursuant to this section shall not be grounds for imposing liability on any person for the debts and obligations of the limited liability company.

SECTION 23. ORS 63.135, 63.145 and 63.150 are repealed.

Approved by the Governor April 20, 1999

Filed in the office of Secretary of State April 20, 1999

Effective date October 23, 1999

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