Today, September 1, 2019, is the day that Arizona’s new LLC law replaces entirely the LLC law that was adopted in 1992. I’ve written extensively about the new law. I think it sucks for two reasons:
- It replaced a law that was not broken and did not need to be replaced.
- It replaces Arizona’s limited liability company act with what I call the liability company act because the new law creates many new ways that members and managers of an Arizona LLC can be sued.
One Example of a New Way a Member of an Arizona LLC Can be Sued
B. The fiduciary duty of loyalty of a member in a member-managed limited liability company includes the following duties:
4. to disclose to each of the other members that are considering or voting on a decision or transaction regarding the company or one or more of the members’ interests in the company both of the following:
(a) any material conflict of interest on the part of the disclosing member with respect to the decision or transaction.
(b) if a material conflict of interest exists, all material facts relating to the decision or transaction that are within the disclosing member’s knowledge and not known or reasonably available to the affected members.
Fortunately most of the liability creating provisions in the new LLC act can be eliminated or minimized by a well drafted Operating Agreement signed by all of the members.
What You Need to Know About Arizona’s New LLC Act
The good news is that new LLC act does not significantly affect single member LLCs or PLLCs or companies that are owned by a married couple because the single member won’t sue himself or herself and the married couple won’t sue themselves. The new LLC act has major negative consequences to multi-member LLCs and PLLCs other than those owned solely by a married couple.
All multi-member Arizona LLCs and PLLCs
should must have an Operating Agreement that is written to eliminate or minimize some or all of the liability creating provisions in the new LLC act.
Effective Date of the New Law
Arizona’s new LLC law applies to all Arizona LLCs and PLLCs created on or after September 1, 2019. Prior Arizona LLC law applies to all Arizona LLCs and PLLCs created before September 1, 2019, but the new law will apply beginning of September 1, 2020.
My Three Types of Operating Agreements
I give people a choice between three different Operating Agreements unlike almost all other Operating Agreement preparers who offer a one size fits all Operating Agreement. My three types of Operating Agreements are:
- $$297 for a one member LLC or an LLC owned solely by a married couple.
- $$797 for multi-member LLCs other than an LLC owned solely by a married couple.
How to Purchase an Operating Agreement for an Arizona LLC
To hire us to prepare an Operating Agreement for your Arizona LLC complete and submit our online Operating Agreement questionnaire. You may also call me, Arizona LLC attorney Richard Keyt (480-664-7478) or my son Arizona LLC attorney and former CPA Richard C. Keyt (480-664-7472) if you have questions (we don’t charge to answer) and give us your LLC information over the phone.