Corporate Dividend and Distribution Requirements in Oregon

At a glance

Requirements one by one

Governing law, entity, distribution, and scope

ORS §§ 60.001 and 60.181 apply Chapter 60 to an ordinary Oregon domestic for- profit corporation. A distribution includes a direct or indirect transfer of money or property other than the corporation's own shares, or incurred debt, to or for shareholders with respect to shares. Dividends, purchases, redemptions, other acquisitions, debt, and other forms are expressly listed.

Section 60.181 contains no express liquidation exclusion. This survey addresses voluntary nonliquidating distributions and does not apply liquidation rules.

Board, committee, shareholder, and charter authority

ORS § 60.181(1) assigns authorization to the board, subject to articles restrictions and the financial tests. Subsection (3) expressly places the post- distribution judgment with the board. The surveyed provisions state no general shareholder-approval step.

Under ORS § 60.354(5), a committee may authorize or approve a distribution only according to a formula or method, or within limits, prescribed by the board. The chapter, articles, or bylaws may further restrict committee authority.

Cash, property, shares, debt, repurchase, and redemption forms

ORS § 60.001(7) reaches money, other property, incurred debt, dividend declarations and payments, purchases, redemptions, other acquisitions, debt distributions, and other forms. Section 60.131(3) also permits articles to make a class redeemable for cash, indebtedness, securities, or other property.

The corporation's own shares are excluded from the definition's property branch and follow the separate ORS § 60.154 share-dividend rules, which also treat a nonreverse share split as a share dividend.

Surplus, net-profit, equity, and capital-source test

ORS § 60.181 states no separate surplus, retained-earnings, net-profit, stated- capital, or other source test. Oregon instead uses the two post-distribution limits in Subsection (3), together with articles restrictions and class or series preferences.

This reports the statutory test without applying it to a corporation's numbers.

Liquidity, balance-sheet, liability, and preference test

ORS § 60.181(3) permits a distribution only if, after giving it effect, the board judges that the corporation can pay debts as they become due in the usual course and that assets at least equal liabilities plus the amount needed for superior dissolution preferences.

The articles may permit departure from the preference add-on, but the exception does not extend to the debts-as-due or basic assets-versus-liabilities parts.

Financial statements, valuation, reserves, and reliance

ORS § 60.181(4) permits financial statements prepared under accounting practices and principles reasonable in the circumstances, or a fair valuation or another reasonable method. The distribution section supplies no reserve formula.

Under ORS § 60.357(2)-(3), qualified reliance may extend to reliable and competent officers or employees, experts within their competence, or a trusted board committee. Knowledge making reliance unwarranted defeats that route.

Record date, measurement date, payment delay, and revocation

ORS § 60.181(2) makes authorization the default record date for a nonacquisition distribution unless the board fixes a different date. The subsection states no forward maximum or nonretroactivity condition.

For a purchase, redemption, or other acquisition, Subsection (5) uses the earlier of property transfer or debt incurrence and the end of shareholder status. Other debt distributions are measured when distributed. Other payments use authorization when paid within 120 days and payment when later. The section states no general revocation power.

Class, series, equal treatment, stock distributions, and fractions

ORS § 60.131 ordinarily makes terms identical within a class. ORS § 60.134 does the same within a series while permitting articles-authorized board determination of class or series terms before issuance. The articles may establish cumulative or noncumulative dividends, redemption terms, and distribution or dissolution preferences.

Under ORS § 60.154, share dividends are pro rata and without consideration. A cross-class or cross-series dividend requires articles authorization, majority approval by the class or series to be issued, or no outstanding shares of that class or series. The section includes a share split other than a reverse split. Section 60.141 permits fractions, value cash, holder disposition, or registered or bearer scrip; fractions carry dividend rights, while scrip does so only if its terms provide.

Distribution debt, priority, liquidation, insolvency, and boundaries

ORS § 60.181(6) places compliant distribution debt at parity with general unsecured creditors unless the shareholder agrees to subordination or the corporation grants a security interest or other lien against corporate assets. The section has no conditional-debt exclusion or payment-date retest rule and no express liquidation exclusion.

Liability, recovery, fraudulent transfer, bankruptcy, covenants, fiduciary duties, tax, accounting, and valuation advice remain outside scope.

What trips people up

• The board's judgment is in the operative test. The statute does not merely state numerical conditions; Subsection (3) expressly places the judgment with the board.
• A share split can be a share dividend. ORS § 60.154 includes every share split other than a reverse share split.
• Distribution debt may be secured. The parity rule expressly preserves a corporate security interest or other lien securing the shareholder debt.
• There is no conditional-debt subsection. Do not import the liability exclusion and payment-date retest found in some newer Model Act enactments.

Common questions

Does Oregon require surplus or current net profits?

No separate source test appears in ORS § 60.181. The operative limits are the debts-as-due and assets-versus-liabilities-plus-preferences tests.

May the articles remove both financial tests?

No. The articles exception reaches the superior-preference add-on, not the debts-as-due requirement or the basic assets-versus-liabilities comparison.

Does the record date always control the financial-test date?

No. The record-date rule identifies eligible shareholders, while Subsection (5) separately sets the measurement date by distribution form and payment timing.

Statutes and sources

• ORS § 60.001(5), (7) — corporation and distribution definitions. Official Oregon Legislature Chapter 60 text (accessed 2026-09-03).
• ORS §§ 60.131 and 60.134 — class and series terms, preferences, redemption forms, and equal treatment. Official Oregon Legislature Chapter 60 text (accessed 2026-09-03).
• ORS §§ 60.141 and 60.154 — fractions, scrip, share dividends, share splits, and record dates. Official Oregon Legislature Chapter 60 text (accessed 2026-09-03).
• ORS § 60.181 — authority, solvency, valuation, timing, and distribution debt. Official Oregon Legislature Chapter 60 text (accessed 2026-09-03).
• ORS §§ 60.354 and 60.357 — bounded committee authority and qualified reliance. Official Oregon Legislature Chapter 60 text (accessed 2026-09-03).