Oregon Statutes 65.751 – Grounds for judicial revocation
(1) A circuit court may revoke the authority of a foreign corporation to transact business in this state:
Terms Used In Oregon Statutes 65.751
- Affidavit: A written statement of facts confirmed by the oath of the party making it, before a notary or officer having authority to administer oaths.
- Allegation: something that someone says happened.
- Articles of incorporation: means the articles of incorporation described in ORS § 65. See Oregon Statutes 65.001
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bylaws: means a set of provisions for managing and regulating a corporation's affairs that the corporation must adopt under ORS § 65. See Oregon Statutes 65.001
- Contact information: means a street address, a mailing address or an electronic address at which a member or director elects to receive notices and other messages from the corporation. See Oregon Statutes 65.001
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means a domestic corporation or a foreign corporation. See Oregon Statutes 65.001
- Director: means an individual who acts as a member of the board of directors, who has a right to vote on questions concerning the management and regulation of a corporation's affairs and who is:
(a) An appointed director;
(b) A designated director; or
(c) A director elected by the incorporators, directors or members. See Oregon Statutes 65.001
- Entity: means a domestic corporation, foreign corporation, business corporation and foreign business corporation, profit and nonprofit unincorporated association, corporation sole, business trust, partnership, two or more persons that have a joint or common economic interest, any state, the United States, a federally recognized Native American or American Indian tribal government and any foreign government. See Oregon Statutes 65.001
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Foreign corporation: means a corporation that is organized under laws other than the laws of the state and that would be a nonprofit corporation if organized under the laws of the state. See Oregon Statutes 65.001
- Fraud: Intentional deception resulting in injury to another.
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- Mutual benefit corporation: means a domestic corporation that is organized to serve and operates primarily to serve the mutual interests of a group of persons, but is not a public benefit corporation or religious corporation. See Oregon Statutes 65.001
- Person: means an individual or an entity. See Oregon Statutes 65.001
- Proceeding: means a civil, criminal, administrative or investigatory action. See Oregon Statutes 65.001
- Public benefit corporation: means a domestic corporation that:
(a) Is formed as a public benefit corporation under ORS § 65. See Oregon Statutes 65.001
- public body: means state government bodies, local government bodies and special government bodies. See Oregon Statutes 174.109
- Religious corporation: means a domestic corporation that is formed as a religious corporation under ORS § 65. See Oregon Statutes 65.001
- Service of process: The service of writs or summonses to the appropriate party.
- Shell entity: means an entity that has the characteristics described in ORS § 65. See Oregon Statutes 65.001
- Voting power: means the total number of votes entitled to be cast on an issue at the time the determination of voting power is made, excluding a vote that is contingent upon a condition or event occurring that has not occurred at the time. See Oregon Statutes 65.001
(a) In a proceeding by the Attorney General if the court finds that:
(A) The foreign corporation obtained authority to transact business in this state with fraudulent intent, with fraudulent information or in a manner that otherwise indicates fraud;
(B) The foreign corporation has exceeded or abused the authority conferred upon the foreign corporation by law;
(C) The foreign corporation would have been a public benefit corporation had the foreign corporation been incorporated in this state and the foreign corporation’s corporate assets are being misapplied or wasted;
(D) The foreign corporation would have been a public benefit corporation had the foreign corporation been incorporated in this state and the foreign corporation is no longer able to carry out the foreign corporation’s purposes;
(E) An incorporator, director, officer or agent of the foreign corporation signed a document knowing that the document was false in any material respect with the intent that the document be delivered to the Secretary of State for filing;
(F) The foreign corporation has fraudulently solicited money or has fraudulently used the money solicited; or
(G) The foreign corporation is a shell entity. For purposes of this subparagraph:
(i) A court may find that a foreign corporation is a shell entity if the court determines that the foreign corporation was used or incorporated for an illegal purpose, was used or incorporated to defraud or deceive a person or governmental agency or was used or incorporated 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 foreign corporation is a shell entity by stating in an affidavit that:
(I) The foreign corporation did not provide a name or address required by the Secretary of State, or the name or address the foreign corporation provided was false, fraudulent or inadequate;
(II) The foreign corporation’s application for authority to transact business in this state, a record the foreign corporation must keep under ORS § 65.771 or the foreign corporation’s annual report is false, fraudulent or inadequate;
(III) A public body, as defined in ORS § 174.109, attempted to communicate with, or serve legal process upon, the foreign corporation at the address or by means of other contact information the foreign corporation provided to the Secretary of State, but the foreign corporation failed to respond; or
(IV) The Attorney General has other evidence that shows that the foreign corporation was used or incorporated for an illegal purpose, was used or incorporated to defraud or deceive a person or a governmental agency or was used or incorporated to fraudulently conceal any business activity from another person or governmental agency.
(b) Except as provided in the articles of incorporation or bylaws of a foreign corporation that would have been a religious corporation had the foreign corporation been incorporated in this state, in a proceeding by 50 members or members holding five percent or more of the voting power, whichever is less, or by a director or any person specified in the articles of incorporation, if the court finds that:
(A) The directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to break the deadlock;
(B) The directors or those in control of the foreign corporation have acted, are acting, or will act in a manner that is illegal, oppressive or fraudulent;
(C) The members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired;
(D) The corporate assets are being misapplied or wasted; or
(E) The foreign corporation would have been a public benefit corporation or religious corporation had the foreign corporation been incorporated in this state, and is no longer able to carry out the foreign corporation’s purposes.
(c) In a proceeding by a creditor if the court finds that:
(A) The creditor’s claim has been reduced to judgment, the execution on the judgment returned unsatisfied and the foreign corporation is insolvent; or
(B) The foreign corporation has admitted in writing that the creditor’s claim is due and owing and the foreign corporation is insolvent.
(2) Before revoking a foreign corporation’s authority, the court shall consider whether:
(a) Reasonable alternatives to revocation of authority exist;
(b) Revocation of authority is in the public interest, if the foreign corporation would have been a public benefit corporation had the foreign corporation been incorporated in this state; or
(c) Revocation of authority is the best way to protect the interests of members, if the foreign corporation would have been a mutual benefit corporation had the foreign corporation been incorporated in this state.
(3) In addition to subjecting a foreign corporation to revocation of the foreign corporation’s authority to transact business in this state under subsection (1)(a)(G) of this section, a finding that a foreign corporation is a shell entity has the following effects:
(a) A court may rebuttably presume that the foreign corporation’s filings with the Secretary of State constitute a false claim, as defined in ORS § 180.750, in any action the Attorney General brings under ORS § 180.760 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, in any proceeding against the foreign corporation, may move to enjoin a director, officer or other person that exercises significant direction or control over the foreign corporation from engaging in commercial activity in this state including, but not limited to, incorporating or organizing an entity in this state.
(4) A foreign corporation may affirmatively defend against an allegation that the foreign corporation is a shell entity by showing that the foreign corporation, within 60 days after receiving a request to provide or correct a name, address or other information required for a filing or in an application for authority to transact business in this state, a record the foreign corporation 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. [1989 c.1010 § 161; 2019 c.174 § 105]