ARS Section 29-3407 Management of Limited Liability company

ARS Section 29-3407 Management of Limited Liability company2018-05-23T12:52:02+00:00

A. Management of a limited liability company is reserved to its members unless the Articles of Organization provide that the company is managed by one or more managers.

B. In a member-managed limited liability company, the following apply:

1. except as expressly provided in this Chapter, the management and conduct of the company are vested in the members.

2. within the ordinary course of the company’s activities and affairs, each member has the right to manage and conduct the company’s activities and affairs.

3. except as otherwise provided in this Chapter, a majority in interest of the members shall decide any of the following:

(a) matters that are outside the ordinary course of the company’s activities and affairs but within the company’s purpose.

(b) matters on which there exists a known difference among members.

(c) whether to make an interim distribution before dissolution and winding up.

(d) whether to make an advance to a member or manager under Section 29-3408.C.

4. the affirmative vote or consent of all the members is required to do any of the following:

(a) undertake, or authorize a member or other person to undertake, an act outside the scope of the company’s purpose, as stated in the operating agreement, or that otherwise violates the operating agreement.

(b) amend the operating agreement.

(c) authorize an amendment to the Articles of Organization that changes the company from a member-managed limited liability company to a manager-managed limited liability company.

(d) issue a transferable interest in the company to any person.

(e) take any action requiring the approval of all members under this Chapter.

C. In a manager-managed limited liability company, the following apply:

1. except as expressly provided in this Chapter, the right to manage the company is vested in the manager or managers.

2. within the ordinary course of the company’s activities and affairs, each manager has the right to manage and conduct the company’s activities and affairs.

3. except as otherwise provided in this Chapter, a majority of the managers shall decide any of the following:

(a) matters that are outside the ordinary course of the company’s activities and affairs but within the company’s purpose.

(b) matters on which there exists a known difference among managers.

(c) whether to make an interim distribution before dissolution and winding up.

(d) whether to make an advance to a member or manager under Section 29-3408, subsection C.

4. the affirmative vote or consent of all members is required to do any of the following:

(a) undertake, or authorize a manager, member or other person to undertake, an act outside the scope of the company’s purpose, as stated in the operating agreement, or that otherwise violates the operating agreement.

(b) amend the operating agreement.

(c) authorize an amendment to the Articles of Organization that changes the company from a manager-managed limited liability company to member-managed limited liability company.

(d) issue a transferable interest in the limited liability company to any person.

(e) take any action requiring the approval of all members under this Chapter.

5. a manager may be chosen at any time by the affirmative vote or consent of a majority in interest of the members and remains a manager until a successor has been chosen, unless the manager at an earlier time resigns, is removed or dies or, in the case of a manager that is not an individual, terminates. a manager may be removed at any time by the affirmative vote or consent of a majority in interest of the members without notice or cause.

6. a person is not required to be a member to be a manager, but the dissociation of a member that is also a manager removes the person as a manager. if a person that is both a manager and a member ceases to be a manager, that cessation does not by itself dissociate the person as a member.

7. a person’s ceasing to be a manager does not discharge any debt, obligation or other liability to the limited liability company or members that the person incurred while a manager.

D. An action requiring the vote or consent of members or managers under this Chapter may be taken without a meeting if the action is approved by the minimum number of members or managers required to approve the action. A member may appoint a proxy or other agent to vote, consent or otherwise act for the member by signing an appointing record, personally or by the member’s agent.

E. The dissolution of a limited liability company does not affect the applicability of this Section. however, a person that wrongfully causes dissolution of the company loses the right to participate in management as a member and a manager and that person may not be included in determining whether a majority in interest of the members or, in the case of a manager-managed limited liability company, a majority of the managers has voted for or consented to any matter or action.

F. A limited liability company shall reimburse a member for an advance to the company beyond the amount of capital the member agreed to contribute.

G. A member is not entitled to remuneration for services performed for a member-managed limited liability company except for reasonable compensation for services rendered in winding up the activities of the company.

Note:  This statute is effective for all Arizona LLCs formed after August 31, 2019, and all Arizona LLCs after August 31, 2020.  The text above shows the statute as of April 10, 2018.  To see if the Arizona legislature modified this statute after April 10, 2018, go the the Arizona legislature's website for Title 29, Chapter 7.