1.0Arizona LLC Lawhttps://www.keytlaw.com/azllclawRichard Keythttps://www.keytlaw.com/azllclaw/author/1llclawyer/rich600338<blockquote class="wp-embedded-content" data-secret="QW0zr5gifn"><a href="https://www.keytlaw.com/azllclaw/2018/05/act-29-3407-b/">New LLC Law Warning: Beware of Baffling Section 29-3407.B</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://www.keytlaw.com/azllclaw/2018/05/act-29-3407-b/embed/#?secret=QW0zr5gifn" width="600" height="338" title="“New LLC Law Warning: Beware of Baffling Section 29-3407.B” — Arizona LLC Law" data-secret="QW0zr5gifn" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script type="text/javascript"> /* <![CDATA[ */ /*! This file is auto-generated */ !function(d,l){"use strict";l.querySelector&&d.addEventListener&&"undefined"!=typeof URL&&(d.wp=d.wp||{},d.wp.receiveEmbedMessage||(d.wp.receiveEmbedMessage=function(e){var t=e.data;if((t||t.secret||t.message||t.value)&&!/[^a-zA-Z0-9]/.test(t.secret)){for(var s,r,n,a=l.querySelectorAll('iframe[data-secret="'+t.secret+'"]'),o=l.querySelectorAll('blockquote[data-secret="'+t.secret+'"]'),c=new RegExp("^https?:$","i"),i=0;i<o.length;i++)o[i].style.display="none";for(i=0;i<a.length;i++)s=a[i],e.source===s.contentWindow&&(s.removeAttribute("style"),"height"===t.message?(1e3<(r=parseInt(t.value,10))?r=1e3:~~r<200&&(r=200),s.height=r):"link"===t.message&&(r=new URL(s.getAttribute("src")),n=new URL(t.value),c.test(n.protocol))&&n.host===r.host&&l.activeElement===s&&(d.top.location.href=t.value))}},d.addEventListener("message",d.wp.receiveEmbedMessage,!1),l.addEventListener("DOMContentLoaded",function(){for(var e,t,s=l.querySelectorAll("iframe.wp-embedded-content"),r=0;r<s.length;r++)(t=(e=s[r]).getAttribute("data-secret"))||(t=Math.random().toString(36).substring(2,12),e.src+="#?secret="+t,e.setAttribute("data-secret",t)),e.contentWindow.postMessage({message:"ready",secret:t},"*")},!1)))}(window,document); //# sourceURL=https://www.keytlaw.com/azllclaw/wp-includes/js/wp-embed.min.js /* ]]> */ </script> Why LLCs Must Have an ALLCA Compliant Operating Agreement: Reason #4 Your Arizona LLC needs an Operating Agreement that eliminates or clarifies new Arizona Revised Statutes Section 29-3407.B that is effective September 1, 2019.  This statute applies to member managed LLCs and states: In a member-managed limited liability company, the following apply: 1. . . . 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. . . . 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. The first thing to know about this statute is that without an Operating Agreement that defines how members vote, a majority in interest of the members is determined by counting the number of members (husband and wife are two members) then asking what number is a majority of the total number of members?  See New LLC Law Warning: Beware of Section 29-3404.A, which explains the new law’s definition of majority in interest.  For example, if an Arizona LLC has two members, Homer who owns 90% and Ned & Molly, a married couple, who own 10%, Section 29.3404.A provides that there there are three members so Ned and Molly’s two votes overrule Homer’s one vote. Subsection 3 of Section 29-3407.B creates [...]