Limited liability companies were created as a new, more flexible form of business entity which would enable its members to exercise their freedom of contract to the fullest permissible limits. Because they are contractually malleable, the language of the operating agreement organically defining an LLC must be precise and judicious. In Synectic Ventures I, LLC v. EVI Corp., 353 Or. 62 (2012) the Oregon Supreme Court, reversing an earlier decision by the Court of Appeals, … Read more
Aug 23, 2012
Liability Issues for LLC Members
When I meet with clients for the first time they usually tell me they want to set up an LLC so that they cannot be sued personally for the company’s business. However, limited liability does not mean absolute liability. Members of limited liability companies can be liable for company debts, obligations, and liabilities for a number of reasons.
As a general rule members of a limited liability company are not personally liable for the debts, … Read more
May 22, 2012
Kevin Tillson to Speak at Local LLC CLE
Our very own Kevin J. Tillson is scheduled be a speaker at a CLE entitled “LLCs: From Formation to Special Uses“. The CLE is scheduled to take place on Tuesday June 26, 2012 all day beginning at 8:30 AM at the Red Lion Hotel & Convention Center which is located at 1021 NE Grand Avenue in Portland, Oregon. He will be specifically discussing the impact of state law on LLCs. Sign up for … Read more
Mar 12, 2012
When Directors Assert Individual Privileges Preventing Their Corporation from Responding to Discovery Requests
What happens when a corporation can’t respond to proper discovery requests in civil litigation because its officers or directors refuse to provide the corporation with the information necessary to respond to those requests under a claim of personal privilege unavailable to the corporation? Are the legal consequences to such a corporation softened if the corporation is publicly funded and the assertions of personal privilege on Fifth Amendment grounds by its directors “politically sensitive”?… Read more
Aug 30, 2011
Planning the Exit from Your Business
Sooner or later, willingly or unwillingly, deliberately or unconsciously, a small business owner decides how they’ll leave their business. Whether they’re carried feet first out the door at death; they sell; they transfer the business to the next generation; or they take some other path out the door: the day will come when each owner makes their final exit from their business.… Read more
Apr 26, 2011
Reducing Fiduciary Duties in Oregon LLCs: How Far Can You Go?
Freedom of contract is one of the principal principles in the law of limited liability companies. That is, limited liability companies were legislatively created to enable the equity owners of such companies to contractually define their relationship vis-à-vis their company and each other to the fullest extent reasonably possible. The limited liability company operating agreement provides the vehicle for the exercise of that freedom. Unfortunately, such freedom can make trust more expensive where the members … Read more
Mar 8, 2011
Managing Against Legal Threats to Your Business: The Value of Annual Meetings
Most businesses operate in a legal jungle full of potential threats to their life and profitability. A single successful employee claim for wrongful discrimination or harassment; litigation between shareholders; an environmental claim; or the death of a principal; can, in many cases, break a small business which had been profitable and growing. These are just examples of the wide range of legal threats to your business.… Read more
Dec 1, 2010
Limitations on Distributions from Closely Held Corporations and Limited Liability Companies in Oregon and Their Potential for Personal Liability
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.… Read more
Nov 5, 2010
Indemnification and Limitations on Liabilities of Members and Managers of Limited Liability Companies under Oregon Law
When a legal claim is brought against the manager, member, employee or agent of a limited liability company one of their first questions is who will pay for their defense and any damages ultimately assessed against them for the claim. They will generally look to the company itself to fund their defense and to pay any damages or settlement amounts to the claimant. That is, they will want the company to indemnify them against the … Read more
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