OR Bar Business Associations 3

Question 1

An Oregon LLC member wishes to enforce an agreement that limits distributions to members. Where is this agreement most appropriately set forth?

Accepted Answer

The LLC's operating agreement

Answer

An LLC's operating agreement governs the internal affairs of the LLC, including distribution rights and limitations among members.

Question 2

Under Oregon corporate law, which of the following is NOT required for a de facto corporation to exist, shielding promoters from personal liability?

Accepted Answer

Filing of articles of incorporation with the Secretary of State

Answer

De facto corporation status requires a valid enabling statute, a good-faith incorporation attempt, and actual use of corporate powers — not actual filed articles.

Question 3

A corporation's board of directors adopts a resolution authorizing a major asset sale. A shareholder argues the board lacked authority because shareholders did not approve it. Under the Oregon Business Corporation Act, shareholder approval of a major asset sale is generally:

Accepted Answer

Required for a sale of substantially all assets outside the ordinary course of business

Answer

Oregon follows the MBCA rule requiring shareholder approval for a sale of substantially all assets outside the ordinary course of business.

Question 4

Which of the following most accurately describes the business judgment rule?

Accepted Answer

It is a presumption that directors acted on an informed basis, in good faith, and in the honest belief they were acting in the corporation's best interests

Answer

The business judgment rule is a presumption protecting directors who acted on an informed basis, in good faith, and in the corporation's best interest from judicial second-guessing.

Question 5

A manager-managed Oregon LLC defaults to which governance structure for decisions outside the ordinary course of business?

Accepted Answer

Approval by a majority-in-interest of the members

Answer

In a manager-managed LLC, extraordinary matters outside ordinary business typically require member approval by a majority interest, not manager action alone.

(OR Bar) Oregon Bar Exam Practice Test

(OR Bar) Oregon Bar Exam Practice Test

OR Bar Business Associations 3