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Can a manager-managed LLC be its own sole member in Oregon? (I would assume it couldn't be member-managed, because in that case, nobody could manage it.)

If so, how would you do this? Could the original owner just sell the LLC to itself in the same way you could sell it to any other LLC?

Also, could the LLC sell itself later?

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No.

A limited liability company cannot own itself. If a membership interest is transferred to the company itself, for example, in a redemption transaction, that interest simply ceases to exist.

In a manager-managed limited liability company, a manager can only be appointed by a member. See Section 63.130. And, a limited liability company is defined as "an entity that is an unincorporated association that has one or more members and is organized under this chapter".

A “member” under the law is "a person with both an ownership interest in a limited liability company and all the rights and obligations of a member."

The Oregon limited liability company law requires limited liability companies to have members for various purpose, including allocation of tax liability. See Section 63.185. But under the applicable tax law, a limited liability company cannot allocate income and losses to itself. So, a limited liability company that purported to be a member would not have all of the obligations of a member under Oregon law.

Under Section 63.265 of the law, if the last member of the company ceases to be a member, for example, by dying, the person who becomes the owner of the membership interest (e.g., in the case of a death, the probate estate of the member) automatically becomes a member so that the company has members. This same section also describes transactions by which one can cease to be a member that do not have the effect of causing the company to be a member. If for some reason that couldn't happen, and a company had no members, it would be immediately dissolved by operation of law. See § 63.621(4).

The law also prohibits "shell companies", which while defined narrowly, still clarifies the legislature's intent.

While an Oregon limited liability company can be formed by someone who is not a member, called an organizer, see § 63.044, and while not all members contemplated when the company is formed need to be members initially, § 63.245, by definition, it must have at least on initial member, and without a member it can't appoint a manager and hence can't conduct business in any way.

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  • Thank you! Does this apply to corporations as well?
    – Someone
    May 7, 2022 at 18:57
  • @Someone The analysis and reasoning is quite different in the case of a corporation than in the case of a limited liability company. One often thinks of a not-for-profit corporation as one that owns itself, but then, it must have a charitable purpose.
    – ohwilleke
    May 11, 2022 at 15:10
  • could a for-profit corporation buy all of its own shares? (Like my original question, but with a corporation)
    – Someone
    May 11, 2022 at 15:30
  • @Someone Probably not, but it is a closer question as a for profit corporation is taxed at the entity level and not merely on a pass through basis. This is an important reason why the analysis is more complicated. Some jurisdiction also allow for the concept of "treasury shares" owned by the corporation and corporate shares aren't subject to the same limitations on transferability.
    – ohwilleke
    May 11, 2022 at 15:48

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