2007 Arizona LLC & Corporate Law Changes

During the 2006 legislative session, the Arizona legislature passed bills that modify existing corporate and LLC laws. The following summarizes changes to Arizona limited liability company laws and Arizona corporate laws that become effective January 1, 2007.

Changes Affecting Arizona Limited Liability Companies:

Extends the amount of time a filer has to resubmit LLC filings that have been rejected by the Commission from 20 days to 30 days in order to retain the original delivery date as the effective date of the documents. (Arizona Revised Statute §§ 29-634, 29-802)
Amends ARS §29-633 and ARS §29-781 so that an LLC wanting to amend its articles of organization or execute a dissolution does not have to include the entity’s original filing date. This requirement was originally placed in statute to aid the Division in locating records. The original filing date is no longer needed and places an unnecessary burden on the filing entity to locate the information.
Amends ARS §29-633 to clarify that Articles of Amendment do not need to be published if changes in the amendment could have been accomplished with a Statement of Change.
Removes the requirement that an applicant submit TWO copies of documents delivered to the Commission for filing. This is an outdated requirement and only one copy is needed. (Arizona Revised Statute §§ 29-633, 29-634, 29-803, 29-841.01)
Removes the requirement that an LLC file a Notice of Winding Up with the Commission. Now, LLC’s will only be required to file Articles of Termination and will only pay one fee, $35 for Articles of Termination. (Arizona Revised Statute §§ 29-681, 29-781, 29-781.01, 29-783, 29-851)
Creates a system whereby a foreign LLC can submit amendments to their applications for authority pertaining to information that they are not required to file/amend in their domiciling state. (Arizona Revised Statute § 29-805)

Entity Names, Name Reservations and Name Registrations:

Clarifies that that a business corporation cannot use the phrase “limited liability company” (or abbreviations of the phrase) in its name. (Arizona Revised Statute §§ 10-1506, 10-3401, 10-11506, 29-602)
Amends the LLC naming statute to mirror the restrictions in the corporate statutes limit the use of the words “bank”, “deposit”, “trust” and “trust company” to the name of those companies that will engage in the banking or trust business. Before an entity can form a corporation using one of these restricted words, they must obtain clearance from the Department of Financial Institutions. Also adds the term “credit union” to the list of limited words in both Title 10 and Title 29. (Arizona Revised Statute §§ 29-601, 29-602, 29-609, 10-401, 10-1506, 10-3401, 10-11506)
Allows an applicant or an authorized agent of the applicant to execute a name reservation for both Corporations and LLCs. (Arizona Revised Statute §§ 10-402, 10-3402, 29-603)
Creates a system of annual renewal based on the anniversary date of applications for name registrations. (Arizona Revised Statute §§ 10-403, 10-3403)
Amends statutes for cooperatives (ARS §10-2054 and §10-2124) to reflect the new “distinguishable” naming standard created last year in SB1051.
Amends the naming statute for professional corporations to include abbreviations of the required endings (i.e. “P.C.”) without periods between the characters. (Arizona Revised Statute § 10-2215)
Clarifies that the name of a professional limited liability company must meet the same name requirements as all other LLC’s authorized to transact business in this state. The existing statute does not explicitly require PLLC names to meet the requirements of all other LLC names outlined in ARS § 29-602. (Arizona Revised Statute § 29-845)

Changes to Annual Reports:

Clarifies ARS § 10-1622, pertaining to the assessment of penalties for failure to file an annual report. This proposed change will remove any confusion that may exist over how the penalty will be assessed.
o The current statute requires that the penalties accrue until (1) the payment is made (2) the domestic entity is administratively dissolved or (3) the foreign entity’s authority to transact business is revoked. There has been some confusion over which of these events should take precedence. HB2273 clarifies that the penalties will accrue until any one of these events occurs.

Changes Affecting Arizona Corporations:

Allows a filer to resubmit articles of incorporation, articles of domestication or an application for authority that have been rejected by the Commission within 30 days of the rejection date in order to retain the original delivery date as the effective date of the documents. (Arizona Revised Statute §§ 10-124, 10-3124)
Adds two new sections of law that allow for an “easy withdrawal” of foreign corporations. If a foreign corporation hasn’t issued shares or transacted business in this state, the entity can use an application for withdrawal that does not require publication or the withdrawal or a tax clearance letter from the Arizona Department of Revenue. (Arizona Revised Statute §§ 10-1521, 10-11521)
Updates ARS §10-11506 (foreign non-profit corporations) to require a “duly authorized officer”, instead of a corporate secretary, to certify a resolution by the board of directors adopting a fictitious name. In some instances, a corporation may not have a secretary – the updated language will allow any of the foreign corporation’s authorized officers to certify the action of the board.

Other Changes:

Repeals the existing service of process statutes in Title 10 and replaces them with language mirroring the more expansive and detailed provisions found in Title 29. In addition, all statutes referencing service of process on the Commission now clarify that the Commission will accept service of process for entities that are (or should be) registered with the Commission. This should alleviate the current situation that arises when we are forced to accept service of process for entities that are not registered (sole proprietors and partnerships, for example). (Arizona Revised Statute § 10-504 is the primary statute; references are contained in ARS §§ 10-1510, 10-3504, 10-11510, 29-606)
Last year, HB2161 increased the penalty for knowingly filing false documents with the Commission. The legislation did not include nonprofit corporations and HB2273 would address the issue by amending ARS §10-11632 to reflect the increase in penalty from a class five felony to a class four felony.

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This page was last modified on April 10, 2008.

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