{"version":"1.0","provider_name":"Arizona LLC Law","provider_url":"https:\/\/www.keytlaw.com\/azllclaw","author_name":"Richard Keyt","author_url":"https:\/\/www.keytlaw.com\/azllclaw\/author\/1llclawyer\/","title":"New LLC Law Warning: Operating Agreement Should Limit Managers' Powers","type":"rich","width":600,"height":338,"html":"<blockquote class=\"wp-embedded-content\" data-secret=\"RNqGJQY7jf\"><a href=\"https:\/\/www.keytlaw.com\/azllclaw\/2018\/05\/manager-powers\/\">New LLC Law Warning: Operating Agreement Should Limit Managers&#8217; Powers<\/a><\/blockquote><iframe sandbox=\"allow-scripts\" security=\"restricted\" src=\"https:\/\/www.keytlaw.com\/azllclaw\/2018\/05\/manager-powers\/embed\/#?secret=RNqGJQY7jf\" width=\"600\" height=\"338\" title=\"&#8220;New LLC Law Warning: Operating Agreement Should Limit Managers&#8217; Powers&#8221; &#8212; Arizona LLC Law\" data-secret=\"RNqGJQY7jf\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" class=\"wp-embedded-content\"><\/iframe><script type=\"text\/javascript\">\n\/* <![CDATA[ *\/\n\/*! This file is auto-generated *\/\n!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);\n\/\/# sourceURL=https:\/\/www.keytlaw.com\/azllclaw\/wp-includes\/js\/wp-embed.min.js\n\/* ]]> *\/\n<\/script>\n","description":"Why LLCs Must Have an ALLCA Compliant Operating Agreement: Reason #6 New Arizona Limited Liability Company Act (ALLCA) Section 29-3407.C.3 provides: &#8220;a majority of the managers shall decide . . . (a) matters that are outside the ordinary course of the company&#8217;s activities and affairs but within the company&#8217;s purpose. (b) matters on which there exists a known difference among managers. This is a troubling statute that I recommend be amended or deleted in Arizona LLCs&#8217; Operating Agreements.\u00a0 The problem with subsection (a) is ALLCA does not define: (i) the ordinary course of the company&#8217;s activities, and (ii) the company&#8217;s purpose. If the manager managed LLC does not have an Operating Agreement that defines the ordinary course of the company&#8217;s activities or the company&#8217;s purpose then subsection (a) is meaningless.\u00a0 Few LLC Operating Agreements define the LLC&#8217;s purpose. The practical significant of Section 29-3407.C.3(a) is that an LLC manager cannot exercise any power under this subsection unless the LLC has an Operating Agreement that defines the LLC&#8217;s ordinary course of activities and\/or the company&#8217;s purpose, but very few LLCs have an Operating Agreement with that kind of language. Another problem with Section 29-3407.C.3 is subsection (b), which provides &#8220;a majority of the managers shall decide . . . matters on which there exists a known difference among managers.&#8221;\u00a0 This provision could be interpreted to mean that any time the managers differ on a proposed action a majority of the managers can decide to adopt or reject the action despite contrary language in the LLC&#8217;s Operating Agreement.\u00a0 This provision is too broad and potentially dangerous to some of the members.\u00a0 It should be eliminated by an ALLCA compliant Operating Agreement. An Arizona LLC&#8217;s Operating Agreement should [...]"}