Arizona’s LLC laws lay out the procedures for forming and operating an Arizona limited liability company (LLC).
We provide straightforward explanations of Arizona LLC laws in this guide, including:
Requirements for forming an LLC
Statutory Agent Responsibilities and Appointment
Operating Contracts
Requirements for forming an LLC
The requirements for forming an LLC are outlined in Arizona LLC laws. To make the process easier, the State of Arizona created the eCorp online portal and PDF Articles of Organization form.
Arizona LLC Formation Law
The Arizona Limited Liability Company Act contains the following LLC Formation statutes:
29-3201 is a section. Articles of incorporation; formation of a limited liability company
A. One or more people may act as organizers to form a limited liability company by delivering the articles of organization to the commission for filing.
B. All of the following must be stated in the articles of incorporation:
1. The name of the limited liability company formed in accordance with Section 29-3112.
2. The principal address, which may be the same as the statutory agent’s mailing address.
3. The name, street, and mailing addresses of the company’s statutory agent in this state.
4. Whether the company is a manager-managed limited liability company or a member-managed limited liability company, and whether it meets any of the following criteria:
(a) If the company is a manager-managed limited liability company, the name and address of each manager, as well as the name and address of each member who owns a 20% or greater interest in the company’s capital or profits.
(b) The name and address of each member of the company if it is a member-managed limited liability company.
C. The articles of organization may include statements other than those required by subsection B of this section, but they may not vary or otherwise affect the provisions specified in sections 29-3105, C, and D in a way that is inconsistent with section 29-3105.
D. When the articles of organization become effective, a limited liability company is formed.
E. At the same time, a parent limited liability company and its subsidiary limited liability companies can be formed.
F. The commission’s filing of the articles of organization is conclusive proof that all conditions precedent that must be met by the organizers have been met and that the limited liability company has been legally organized and formed under this chapter.
G. Either of the following must occur within sixty days of the commission filing the articles of organization:
1. For three consecutive publications, a notice of the filing of the articles shall be published in a newspaper of general circulation in the county of the statutory agent’s street address, containing the information required in subsection B of this section. The commission may be served with an affidavit proving publication.
2. If the statutory agent’s street address is in a county with a population of more than 800,000 people, the commission must enter the approval information into the database as required by section 10-130.
What This Means: Key Points*
The Arizona LLC statute specifies the procedures for establishing (or forming) an LLC. To meet these requirements, the State of Arizona provides both online and hard copy LLC filing.
The following information is required for the formation of an Arizona LLC:
The name of LLC (Must meet Arizona LLC naming requirements)
The street and mailing addresses of the LLC’s principal office
Name and address of the statutory agent in Arizona
Whether the LLC is managed by members or by managers
If the LLC is managed by a manager, provide the name and address of each manager and each member who owns a 20% or greater interest in the company’s capital or profits.
Provide the name and address of each member of the LLC if it is member-managed.
A Notice of LLC Formation must be published in an approved newspaper in the statutory agent’s county for three consecutive weeks within 60 days of the commission filing the Articles of Organization.
The only exception is if the statutory agent’s address is in a county with a population of more than 800,000 people (i.e., Maricopa and Pima Counties). In this case, the Arizona Corporation Commission will publish a public notice of your LLC’s formation on their website.
Statutory Agent Responsibilities and Appointment
The duties and appointment of the LLC statutory agent are defined by Arizona LLC laws. A registered agent is another term for a statutory agent.
Statutory Agent Statute in Arizona
The Arizona Limited Liability Company Act contains the following statutory agent statutes:
Statutory agent, Section 29-3115
A. Each limited liability company and registered foreign limited liability company must appoint and keep a statutory agent in this state. The appointment of a statutory agent is not effective until the agent or the company delivers a record to the commission signed by the agent accepting the appointment, unless the statutory agent signed the document making the appointment.
B. A limited liability company or registered foreign limited liability company’s statutory agent must have a place of business or residence in this state. A statutory agent must be a resident of this state, a domestic corporation, a limited liability company, a foreign corporation, or a foreign limited liability company licensed to do business in this state.
C. A statutory agent who has complied with this chapter has only the following duties:
1. To forward any process, notice, or demand pertaining to the company or foreign company that is served on or received by the agent to the limited liability company or registered foreign limited liability company at the address most recently supplied to the agent by the company or foreign company.
2. If the statutory agent resigns, the company or foreign company must receive the notice required by section 29-3117, subsection C at the address most recently supplied to the agent by the company or foreign company.
3. To keep the information about the agent in the articles of incorporation or foreign registration statement up to date.
What This Means: Key Points*
The role of a statutory agent is to accept service of process (legal summons to a lawsuit).
A statutory agent in Arizona must:
Keep a registered office in Arizona (i.e., no P.O. Boxes)
Be an individual, an Arizona corporation or LLC, or a foreign corporation or LLC with the same business address as the registered office.
Sign the appointment acceptance form.
The State of Arizona keeps statutory agent information on file. You must file a change of statutory agent form if you change your statutory agent or if your statutory agent resigns.
Operating Contracts
Arizona LLC laws outline the steps required to create and maintain an LLC operating agreement.
The Arizona Limited Liability Company Act contains the following operating agreement statutes:
29-3105 Section Scope, function, and limitations of the operating agreement
A. Except as otherwise provided in this section’s subsections C and D:
1. The following are governed by the operating agreement:
(a) Relationships among members and between members and the limited liability company.
(b) A person in the capacity of manager’s rights and duties under this chapter.
(c) The company’s activities and affairs, as well as the conduct of those activities and affairs.
(d) The procedure and terms for amending the agreement.
2. Any provision that is not illegal may be included in the operating agreement.
3. If a provision of the operating agreement and this chapter conflict, the provision of the operating agreement takes precedence.
B. If the operating agreement does not address a matter described in subsection A of this section, this chapter takes precedence.
C. An operating agreement may not include:
1. Change the law that applies under Section 29-3104.
2. Change the capacity of a limited liability company under section 29-3109 to sue and be sued in its own name.
3. Change any requirement, procedure, or other provision in this chapter that relates to:
Statutory agents (a)
(b) The commission, including provisions relating to records authorized or required to be delivered to the commission for filing pursuant to this chapter.
4. Section 29-3204’s provisions can be changed.
5. Section 29-3409 repeals the contractual obligation of good faith and fair dealing, as well as the duty to refrain from wilful or intentional misconduct.
6. Limit or eliminate a person’s liability for any breach of the contractual obligation of good faith and fair dealing, as well as wilful or intentional misconduct.
7. The operating agreement may impose reasonable restrictions on the availability and use of information obtained under section 29-3410 and may define appropriate remedies, including liquidated damages, for a breach of any reasonable restriction on use.
8. Change the dissolution causes specified in sections 29-3701, subsection A, paragraph 4, subdivision (b), and 29-3701, subsection A, paragraph 5.
9. Unreasonably restrict a member’s right to bring an action under this chapter’s article 8, except that the operating agreement may require a member bringing a direct action under section 29-3801 to plead and prove an actual or threatened injury that is not solely the result of any injury suffered or threatened to be suffered by the company.
10. Change the provisions of Section 29-3805, but the operating agreement may state that the company is not required to have a special litigation committee.
11. Change the required contents of a merger plan, an interest exchange plan, a conversion plan, a domestication plan, or a division plan under article 10 of this chapter.
12. Except as otherwise provided in sections 29-3106 and 29-3107, subsection B, restrict the rights of a person other than a member or manager under this chapter.
13. Reduce or eliminate the distribution restrictions imposed by section 29-3405, subsection A.
D. Without limiting other terms that may be included in an operating agreement, the following apply subject to subsection C, paragraphs 5 and 6 of this section:
1. To the extent that a member, manager, or other person has duties, including the duty of care, the duty of loyalty, and any other fiduciary duty, to a limited liability company, another member or manager, or another person who is a party to or otherwise bound by an operating agreement, the operating agreement may expand, limit, or eliminate those duties.
2. An operating agreement may provide for the limitation or elimination of any or all liabilities for breach of the operating agreement or breach of duties, including the duty of care, the duty of loyalty, and any other fiduciary duty, as expanded, limited, or eliminated in the operating agreement, of a member, manager, or other person to a company or another member, manager, or other person who is a party to or otherwise bound by the operating agreement.
3. An operating agreement may specify a method for authorizing or ratifying a specific act, omission, or transaction, or a specific category of acts, omissions, or transactions, that would otherwise violate a duty, including the duty of care, the duty of loyalty, and any other fiduciary duty, as expanded, limited, or eliminated in the operating agreement. Without more, a general provision in an operating agreement providing for management by one or more members or managers is insufficient to specify a method for authorization or ratification under this paragraph.
4. An operating agreement may specify a method for a member, manager, or other person to be reimbursed, indemnified, or held harmless, or a method for limiting or eliminating a member’s, manager’s, or other person’s liability, for a specific act, omission, or transaction, or a specific category of acts, omissions, or transactions, that would otherwise violate a duty, including the duty of care, the duty of loyalty, and any other fiduciary duty Without more, a general provision in an operating agreement that provides for management by one or more members or managers is insufficient to specify a method for reimbursing, indemnifying, or holding harmless a person, or limiting or eliminating a person’s liability under this paragraph.
E. Subject to the limitations of subsection C, paragraphs 5 and 6, an operating agreement may define some or all of the fiduciary duties of a member, manager, or other person who is a party to or is otherwise bound by an operating agreement to be the same as the fiduciary duties of a director, officer, or shareholder of a corporation formed under the laws of this state, in which case, unless the operating agreement provides otherwise, all laws of evidence and procedure apply.
29-3106 Section Operating agreement; impact on limited liability companies and new members; performance agreement
A. Whether or not the company has manifested assent to the operating agreement, a limited liability company is bound by it and may enforce it.
B. When a person becomes a member, they are deemed to have agreed to the operating agreement.
C. Two or more individuals who intend to become the initial members of a limited liability company may enter into an agreement stating that the agreement will become the operating agreement upon the formation of the company. One person intending to become the initial member of a limited liability company may agree to terms that will become the operating agreement upon the formation of the company.
What This Means: Key Points*
An LLC operating agreement enables LLC members to establish ground rules for how their particular LLC will operate. These rules are frequently referred to as “terms” or “provisions.”
Operating agreements are governed by state law. If the statute states that LLC members cannot dissolve an LLC unless all members agree, LLC members cannot change or override the statute with an operating agreement.
It is easier to navigate situations involving the operation of the LLC when an operating agreement is in place. In the event of a lawsuit or dispute, LLC members (or the courts) will have something to refer to.
If an LLC member cannot resolve a dispute and there is no operating agreement, the courts will use LLC statute to resolve the dispute.
Making an Operating Contract
Some LLCs, such as professional or real estate LLCs, may require unique terms, whereas others may only require standard provisions:
Responsibilities of each member
How will new members be admitted?
How can existing members transfer or cancel their membership?
How will profits and dividends be distributed?
The procedure for making changes to the operating agreement
