A new Oregon law that requires companies to provide additional information when filing documents with the Secretary of State takes effect January 1, 2018. Although this law’s primary purpose is to reduce the registration of anonymous shell companies, its requirements will affect all business entities registered in Oregon.
Under the new law, a physical street address will be required for the principal office and registered agent when filing articles of incorporation/organization (including amended, restated, conversion and merger filings) for business, nonprofit and professional corporations, as well as limited liability companies and other entities.
The principal office is defined as an office “where the principal executive offices” are located. The lawspecifically prohibits the use of addresses of commercial mail receiving agencies, mail forwarding businesses and virtual offices for the address of the principal office or the registered agent.
In addition, these above-described documents must list the name and address of an individual with direct knowledge of the operations and business activities of the organization. This person can be a corporation’s director or controlling shareholder or an LLC’s member or manager. It can also be any other individual that has direct knowledge of the operations and business activities of the entity.
The signer of the document must state under penalty of perjury that the document “does not fraudulently conceal, fraudulently obscure, fraudulently alter or otherwise misrepresent the identity of” the person signing the document or of any of the officers, directors, employees, members, managers, employees, or agents of the organization.
Still under penalty of perjury, he or she must also represent that “This filing has been examined by me and is, to the best of my knowledge and belief, true, correct, and complete.”
The movement to reform Oregon entity registration laws began in earnest after a reporter for the Portland Business Journal discovered 1,300 shell companies operating out of one home. For purposes of the new legislation, a shell entity is one that was set up or used for an illegal purpose, to defraud or deceive a person or a governmental agency or to fraudulently conceal any business activity from another person or a governmental agency.
The new legislation grants the Secretary of State investigative powers and the right to order a company to submit a list of owners and officers, or respond to questions from the Secretary of State. A company’s failure to comply may result in it being fined or dissolved or, in the case of a foreign entity, losing its authorization to do business in Oregon.
Further, the Department of Revenue may recommend dissolution for failure to comply with Oregon tax laws, and a court can dissolve a business that the court finds was used as a shell company or was incorporated or organized for illegal purposes.
Also, the Attorney General can bring an action to dissolve a shell entity. There is a presumption that the company is a shell entity if the Attorney General shows that (a) the organization did not provide a name or address required by the Secretary of State, or the name or address provided was false, fraudulent or inadequate; (b) certain documents required to be filed or maintained are false, fraudulent or inadequate; or (c) a government body attempted to communicate with, or serve legal process upon, the entity at the address the entity provided to the Secretary of State, and the entity failed to respond.
In addition, an officer, director, employee or agent of a shell entity is liable for damages resulting from his or her participation in fraudulent activities engaged in by that shell entity.
Please feel free to contact us if you have any questions about the new law or if you need help structuring your business or drafting and filing the appropriate documents.
