A client called and said his banker refused to open a bank account because the Articles of Organization filed with the Arizona Corporation Commission does not list the name of a person who owns 10% of the LLC.  The banker insisted that my client file an amendment to the Articles of Organization that names the 10% owner as a member.  Here is the text of an email message I sent to my client about the bank’s unreasonable and ignorant request:

I understand that your bank wants you to commit a felony and file a false document with the Arizona Corporation Commission that misrepresents the ownership of your LLC. Specifically your bank wants the Articles of Organization of <name omitted>, LLC, to show that Homer and Marge Simpson are members of the LLC despite the fact they together own only 10% of the company.

Arizona Revised Statutes Section 29-3502.D states: ‘A person that signs a record, or causes another to sign it on the person’s behalf, knowing that the record contains inaccurate information at the time it is signed, is liable to the limited liability company and to each member of the company for damages resulting from the inaccurate information.

ARS Section 13-2702 states: “A person commits perjury by making either: 1. A false sworn statement in regard to a material issue, believing it to be false. 2. A false unsworn declaration, certificate, verification or statement in regard to a material issue that the person subscribes as true under penalty of perjury, believing it to be false.  Perjury is a class 4 felony.

Your LLC is manager managed therefore Arizona LLC law prohibits naming anybody as a member of the LLC unless the member owns 20% or more of the LLC. I understand that your banker wants you to file a false document with the Arizona Corporation Commission that names Homer and Marge Simpson as members of the LLC. You should not do that because it is a felony to file a document with the Arizona Corporation Commission that you know contains a misrepresentation of the facts.

Because of this law knowledgeable bankers and others always ask to see the Operating Agreement of a manager managed Arizona LLC because an Operating Agreement signed by all of the members is the only way to verify all of the owners of a manager managed Arizona LLC and their percentage ownership of the LLC.

Bottom Line:  Do not file documents with the Arizona Corporation Commission that contain false statements.