Arizona Corporation Commission Needs More Money

Today I received a troubling email from Jeff Grant, Director of the Corporations Division of the Arizona Corporation Commission.  On September 4, 2009, Governor Brewer vetoed SB 1025 that would have provided an additional $2.8 million in funding for the ACC’s Corporations Division.  As a result, the ACC is underfunded by 40 percent and it’s ability to service the new and continuing businesses of Arizona will be severely degraded.  Wait times for approval of new entities could exceed hundreds of days, which would delay the creation of new businesses and jobs in Arizona.

The Arizona Corporation Commission needs our help to contact our state legislative representatives and senators and ask them to fully fund the ACC immediately.  Please take the action Jeff Grant recommends at the end of his email message.

Contents of Jeff Grant’s email to me of September 25, 200

My name is Jeff Grant and I’m the Director of the Corporations Division of the Arizona Corporation Commission. You are receiving this email because you were on a user group list that a former director, Dave Raber created to be able to communicate with you at various times. This is another one of those times.

Many of you may already know that we are facing a serious funding crisis. The attached document gives you the history behind this issue and provides you with the impacts to the Division if the fees we are currently collecting are not appropriated back to the Corporations Division.

As of today, when we issued payroll, my budget is now in the red. In order to to be able to pay our bills, serious cuts in staffing along with furloughs will have to be implemented.

We are looking at cuts and furloughs that will greatly impact our turnaround times. If the legislature doesn’t act to restore the $2.8 million in annual report fees to the Division’s $4.5 million budget, turnaround times, in just a matter of months, could explode to well into the hundreds of days for non-expedited documents and approaching 50 days for expedites.

We need your help. After reading the attached document, please call or email your legislator and the President of the Senate, Speaker of the House and Governor’s Office.

If you have any questions, you can reach me at 602-542-0776. Thank you for your help with this serious problem.

Jeff Grant, Director
Corporations Division
Arizona Corporation Commission

The following was attached to Mr. Grant’s email message and it sheds more light on the reason there is a funding problem, what you can do to help prod the legislature to action and why it is important to restore the inadvertent funding cuts.

How the problem arose:

On Friday, September 4, 2009, the Governor vetoed SB 1025 (for reasons unrelated to the ACC), which included language that would have avoided the ACC’s funding problem.  The Governor signed the general appropriation bill for the ACC, but that Bill did not include an appropriation from the general fund to the ACC.

Why?  Until this year, the money to run the Corporations Division came from both the general fund (60%) and the public access fund.  This year, the legislature, the Governor and the ACC worked together to shift the funding to come entirely from the public access fund.

Because the funding was being shifted from the general fund to the public access fund in SB 1025, the ACC agreed this fiscal year to have the Corporations Division appropriation shifted, from being reliant on both general fund and public access fund revenue, to being entirely funded by revenue from the public access fund.  Roughly 40% of the Corporations Division funding would have come from the general fund and 60% from the public access fund, without this funding shift.

In order to accomplish the shift to entire dependency on the public access fund, SB 1025 provided that annual fees paid by profit and business corporations were to be redirected for deposit to the public access fund.  When the Governor vetoed SB 1025, the action left no statutory funding mechanism to shift revenue from these fees to the public access fund from the general fund.

The good news is both the Governor and legislature agreed to the funding shift and support it.  Unfortunately, without the statutory language to facilitate the funding shift, the Corporations Division lacks the funds to operate adequately.

Simply stated, $2.8 million in anticipated revenue for FY 2010 cannot currently be shifted to the ACC to help fund the operations of the Corporations Division without additional action by the legislature.

What you can do:

We urge you to call your legislator, and call the offices of President Burns—602-926-5993 and Speaker Adams—602-926-5495 ([email protected]). Please also call the Chairmen of the Senate and House Appropriations Committees—Senator Russell Pearce ([email protected]) in the Senate—602-926-5760, and Representative John Kavanagh ([email protected])—602-926-5170 in the House and call the chairs at the Senate and House Commerce Committees: Barbara Leff—(602) 926-4486 ([email protected]) and Michele Reagan—(602) 926-5828 ([email protected]).  We have provided you with a link to the phone numbers and key bullet points below.

Here is a link to a directory of legislators in the Arizona Senate and House:

Here are some key points which help to emphasize the adverse impact this funding problem will likely have on customer service at the ACC:

  • On average 4,700 corporations and limited liability companies are formed each month
  • If the Legislature does not act to remedy the situation by September 30, 2009, those citizens wishing to start a business — businesses that employ people, pay taxes, buy property and provide products and services to the people of Arizona — will more than likely see a huge increase in processing turnaround times — by several weeks — by the end of October. 
  • As each month goes by, and if no legislative action is taken, processing turnaround times will continue to grow exponentially and the work queue of documents waiting to be examined and approved will explode.
  • If the Legislature waits until the next Regular Session in January to address the ACC funding issue the effect will be devastating, because it takes 90 days from the end of the session for legislation to become effective (absent an emergency clause or special session); this would mean the ACC would not have access to $2.8 million in anticipated revenue to fund its operations for the entire fiscal year.

Below is a copy of the press release the ACC sent out on this issue.

Once again, I encourage you to please call and email your legislators and to also let legislative leadership know how crucial this issue is to the people of Arizona.

If you have questions concerning this issue, you can reach me at 602-542-0776.

I want to thank you all in advance for your help on this issue.

2017-10-07T07:58:56-07:00September 25th, 2009|AZ Corporation Commission, LLCs & Corporations|0 Comments

Budget Cuts Significantly Impact Arizona Corporation Commission’s Ability to Process New Companies & Prevent Civil Securities Fraud

Arizona Corporation Commission Press Release:

PHOENIX, AZ—The Arizona Corporation Commission (ACC) today urged the legislature to adequately fund the Securities and Corporations divisions of the Commission in order to avert possible negative impacts to Arizona’s economy.

Under the budget recently passed by the Arizona legislature and approved by Governor Brewer, funding for the Corporations division of the ACC, which processes all new corporation formations in Arizona, will run out in ninety days and funding for the Securities division, responsible for enforcing civil securities fraud in the state of Arizona, will also be impacted within three months.

“The Commission believes that the legislature and Governor should quickly act on a 2010 budget to avoid unnecessary impacts to Arizona’s economy,” said Commission Chairman Kris Mayes.  “Halting the formation of thousands of new businesses and hindering the prosecution of civil securities fraud would further impact an already distressed economy.”

In FY 09, the ACC’s Corporations Division formed approximately 4,693 new corporations and LLC’s per month, for a total of 56,310.  With this number as an example, without adequate funding, thousands of businesses will be significantly delayed—often months—in forming in Arizona.

The scenario for the ACC’s Securities Division would also be bleak without the passage of a 2010 budget.  The Securities Division protects investors—many of whom are elderly and least able to absorb financial losses through fraud—through Commission investigations and the issuance of orders of restitution and imposition of penalties.

In order to protect the mission of the Commission, three critical components must be restored to the budget in order to maintain existing services:

The Corporations Division must be allowed to move Annual Report fees from the General Fund to the Public Access Fund (PAF) (to match a like amount of appropriation transferred from the GF to the PAF).  Without this allowance, the Division can fund expenses with existing cash flow for only the first quarter of the fiscal year. After September 30, 2009, if no correction is made, this will cause a significant cut (over 50%) to the Corporations Division.

The budget must contain Securities Division Fee language allowing the Commissioners to set dealer and salesman fees with a 4/5 or better vote.  This ability is critical to providing revenue to cover the Divisions expenditures and appropriation.  Since, the Feed bill moved $800,000 of appropriation from the General Fund to the Securities Regulatory Enforcement Fund (SRF), any existing revenue, with no change, would be used to cover current expenditure levels.  In other words, if the Fee language is not restored, the division would need to continue its 25% vacancy rate.

The Commission requests restoration of a Securities Mutual Fund provision, which temporarily shifts revenue from the General Fund to the SRF.  This provision is critical as the Division receives almost all revenue in January each year.  If this language is not restored, the Securities division will lack cash flow to meet even current expenditure levels from October through December.

2017-10-07T07:58:56-07:00September 25th, 2009|LLCs & Corporations|0 Comments

How to Keep an Arizona LLC in Good Standing

Question:  How do I keep my Arizona LLC in good standing with the Arizona Corporation Commission?

Answer:  Once you start your Arizona limited liability company (LLC), there are some very important issues to consider to keep the LLC in good standing with the Arizona Corporation Commission. When an LLC is not in good standing, the ACC will first classify the LLC as delinquent and then administratively dissolve or revoke the LLC’s existence if the LLC does not correct the problem within the time period listed on the ACC’s delinquency notice.

Here’s how to keep your LLC in good standing with the Arizona Corporation Commission:

  • Publish your Notice of Publication if Required! Arizona LLC law requires that within 60 days of the date the Arizona Corporation Commission approves the Articles of Organization, a Notice of Publication  must be published for three consecutive publications in a newspaper of general circulation in the county of the LLC’s known place of business in Arizona.  Publication in a newspaper is not necessary if the LLC’s known place of business is in Maricopa County or Pima County.  The LLC may be dissolved if it does not publish and file an Affidavit of Publication with the ACC when publication is required.
  • If your LLC moves, tell the Arizona Corporation Commission! Always notify the Arizona Corporation Commission of any change of address of the business or its members or managers.  If you move the known place of business address for your LLC, or if your Statutory Agent’s address changes, you must submit a Statement of Change of Known place of Business or Statutory Agent. You may also use this form to update your member/manager addresses. However, adding or removing members and/or managers requires an amendment to be filed. Please note that the ACC does not allow the Postal Service to forward mail, so once you move you will no longer receive critical documents from the Arizona Corporation Commission. Therefore, it is extremely important that you notify the ACC of any address changes.
  • If any member or manager moves, tell the Arizona Corporation Commission!  If the address of a member or manager in the LLC’s Articles of Organization changes, the LLC must notify the Arizona Corporation Commission of the new address.  To change the address of a member or manager complete and submit a Statement of Change of Manager or Member Addresses to the Arizona Corporation Commission.
  • Maintain a Statutory Agent at all times! If your statutory agent has resigned, you must appoint a new agent immediately. The form, Statement of Change of Known place of Business or Statutory Agent, can be downloaded by clicking here. There is a $5.00 fee to file this form and it may also be expedited for an additional $35.00.
  • Make sure that your LLC’s duration has not expired! Every LLC that we form has a perpetual duration, but some people create LLCs with a specified dissolution date.  When you originally organized your LLC, you may have chosen a specified period of time that your LLC would exist. If you intend to operate your LLC beyond that original life span, you must file an Amendment to the Articles of Organization with the Corporate Filings Section of the ACC to extend the life period of the LLC. You may obtain the amendment form by clicking here. The fee to file an amendment is $25.00. Expedited service is available for an additional $35.00.
  • Make good on any Non-sufficient funds (NSF) checks! If you bounced a check payable to the Arizona Corporation Commission, you must submit the payment amount plus a $10.00 fee, which is imposed on all NSF checks.  The payment you submit cannot be a personal check or business check. The payment must be a cashier’s check, money order, or cash (accepted only at the ACC’s counter).

If your LLC has been dissolved or its authority revoked for any of the above reasons, you have six years from the dissolution date to correct the deficiency.  This may be accomplished by filing the necessary documents, paying all fees that are due, and including the proper reinstatement fee. The reinstatement fee is $100.00.

Note: Your LLC’s name will only be held for six months after the date of delinquency.  After that time anybody can create an Arizona entity with the exact name of the dissolved company.

2019-07-04T10:25:38-07:00September 19th, 2009|FAQs, LLCs & Corporations|0 Comments

Beware of Scams Targeting LLCs and Corporations

As a legal assistant for a law firm that creates hundred of entities (limited liability companies “LLCs”) and corporations) each year, I receive quite a bit of correspondence addressed to our LLC and corporation clients in care of our office. I have become very familiar with the Arizona Corporation Commission (the “ACC”), Arizona’s agency that regulates LLCs and corporations, and the Arizona Secretary of State. I can recognize suspicious correspondence when I see it. Some scam correspondence is strikingly similar to that which is official, even to the trained eye, so it’s important that business owners be vigilant for suspicious official looking correspondence.

Only the ACC, Arizona Secretary of State, an Arizona County Assessor, the Internal Revenue Service and bona fide government agencies send notices regarding your Arizona entity.   Beware of  correspondence that looks too much like a government form sent by an outfit  of which you have never heard that asks you to send money.  If you are not sure an official looking notice is  legitimate, spend some time to investigate and  identify the sender of the correspondence.

Do a Google search for the name of the sender, its phone number and address.  Try to find the sender’s website.  If the sender does not have a website that contains real substance, think twice before sending money to the sender.  Contact the sender directly to verify that it did indeed send the correspondence.   See this article on our website for more information on large-scale scams targeting Arizona entities as well as a joint statement by Arizona attorney general Terry Goddard and the ACC.

Arizona entity owners should beware of the following characteristics of scammers and their correspondence:

  1. Scammers produce very official-looking notices or invoices.  Remember, the only reason for sending correspondence nearly identical to that which is authoritative is to deliberately deceive or mislead company owners.  If these pieces of correspondence were simply notices, offers or legitimate marketing attempts with no intent of deception, they would not imitate official authoritative correspondence by attempting to utilize its language, layout and color scheme;
  2. Scammers will ask for money or confidential information.  Let’s get this straight – they’re not giving out courtesy compliance notices!  They want company owners to pay for a product or service that they may or may not provide, or use the information obtained for their own purposes.  Even if one of these parties does provide the product or service promised, many times the service they provide is over priced or even worse – not required by Arizona law, as is implied by the correspondence;
  3. Most scams or misleading correspondence can be traced to a P.O. Box or other type of mailbox whose owner is difficult or impossible to determine;
  4. Many of these notices contain vague or unverifiable claims (“Included is a $17,000 “We Pay the Fine” Reimbursement Guarantee”);   urgent due dates; “file” or “corporation” numbers;  conflicting, confusing or missing information (several contact addresses, no actual distributing entity name) and even excerpts from the Arizona Revised Statutes in an apparent effort to confuse, legitimize or intimidate;
  5. The fact that these parties have your company name, file number and address means nothing.  All Arizona entities must provide certain information to the ACC, which is then displayed on the ACC’s website where is may be seen by anyone with internet access.  Scammers routinely check the ACC website to build their mailing lists, much like they do with new homeowner information found on the Maricopa County Recorder’s website.

The bottom line is beware of any correspondence with these characteristics and read each piece of correspondence carefully before paying money or providing information to the sender.

If you receive a notice specifically claiming that some sort of action is required to keep your Arizona entity from being terminated or dissolved, call the ACC at 602-542-3026 to check on the standing of your LLC or corporation and deal directly only with the ACC or your business attorney to ensure reinstatement of your entity if necessary.

2017-04-02T10:04:15-07:00September 18th, 2009|AZ Corporation Commission, LLCs & Corporations|0 Comments
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