Oregon Devises Strategy to Become ‘Delaware of West’

Oregon--where timber and agriculture reign--is rolling out the red carpet for corporate America in the hope of becoming “the Delaware of the West.”

In the past six months, the state has enacted laws to protect business from corporate raiders, simplified the laws of incorporation and limited the liability of corporate officers.

“It really makes Oregon the Delaware of the West,” said Jim Bernau, director of the Oregon chapter of the National Federation of Independent Business. “It’s not just blue smoke and mirrors.”

The cumulative effect of the changes in state law is expected to make Oregon a haven for corporations seeking such protection, and give Oregon a competitive edge over other Western states in providing a home for corporations with an eye on business opportunities in Japan, China and other Pacific Rim countries.

“What started out as a law reform bill turned out to be an economic development bill,” Attorney General Dave Frohnmayer said. “Now Oregon can claim a business climate that may well inspire businesses to locate here rather than just file incorporation papers.”

“In the last six months, Oregon has gone from being a nice place to live to creating a business climate that encourages expansion . . . and we still have the same quality of life,” said Richard Butrick, director of Associated Oregon Industries, the state’s largest business lobby.

Governor Leads Effort

The driving force behind the effort to put out the welcome mat for business originated with Gov. Neil Goldschmidt, a pro-business Democrat who took office in January after five years as a corporate officer with Nike, Inc., the athletic apparel company.

“The real question is how hospitable do we want to be to business,” Goldschmidt said, calling the new incorporation laws “a marketing tool for Oregon that helps eliminate any anti-business reputation.”

Oregon earned such a reputation because of its high income and property taxes, the toughest land-use laws in the nation and a message born in the 1960s that said “visit, but don’t stay.”

The state has attempted to rid itself of that reputation by, among other things, reducing the taxes paid by foreign corporations that do business in Oregon and actively wooing Japanese electronics firms.

Oregon also has lowered workers’ compensation insurance rates for business, reduced corporate taxes, started work on a new convention center in Portland and witnessed the start of direct air service between Portland and Tokyo.

“Oregon is trying to say that it has a good business climate and that it is easy to do business here,” said state Sen. Jim Hill, D-Salem, who shepherded the incorporation bills through the state Legislature.

What Law Provides

Of the companies listed on the New York Stock Exchange, 40% are incorporated in Delaware. Included in that list are several of Oregon’s largest businesses--Fred Meyer Inc., Louisiana-Pacific Corp. and Pope and Talbot Inc.

Under the revisions of 149 sections of Oregon corporate law, a U.S.-based business can incorporate in Oregon for $40 and a foreign company for $440.

The changes also:

Establish procedures a shareholder must follow to gain access to company records.

Repeal the requirement that shareholders approve share options for corporate officers and employees.

Allow corporations to mortgage property without shareholder approval.

While the new laws do not exactly mirror Delaware’s, they offer the added advantage of limited protection from corporate raiders, the sponsors said.

Oregon now requires a “cooling-off” period between the time a bid is made to take over an Oregon-based company and when shareholders have to make a decision on whether to sell their stock.

Hill, who was the measure’s chief sponsor, said it is an attempt to eliminate the need to make quick decisions under pressure from hostile takeovers. “It is an attempt to offer Oregon companies that provide Oregonians with jobs protection from the T. Boone Pickenses of the world,” Hill said.