{"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: Majority in Interest Nightmare","type":"rich","width":600,"height":338,"html":"<blockquote class=\"wp-embedded-content\" data-secret=\"Q25o7K4U3E\"><a href=\"https:\/\/www.keytlaw.com\/azllclaw\/2018\/05\/voting\/\">New LLC Law Warning:  Majority in Interest Nightmare<\/a><\/blockquote><iframe sandbox=\"allow-scripts\" security=\"restricted\" src=\"https:\/\/www.keytlaw.com\/azllclaw\/2018\/05\/voting\/embed\/#?secret=Q25o7K4U3E\" width=\"600\" height=\"338\" title=\"&#8220;New LLC Law Warning:  Majority in Interest Nightmare&#8221; &#8212; Arizona LLC Law\" data-secret=\"Q25o7K4U3E\" 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 # 3 Current Arizona LLC law Section 29-681.E provides a default method for determining what constitutes a majority of the members when an LLC lacks an Operating Agreement that defines members&#8217; voting rights.\u00a0 Current LLC law Section 29-681.E states: a majority consists of more than one-half of the members The new Arizona Limited Liability Company Act (ALLCA) contains a bizarre and potentially unfair method for determining which members constitute a majority in interest who have control of the LLC.\u00a0 ALLCA Section 29-3101.12 states: &#8220;Majority in Interest of the Members&#8221; means, at any particular time, one or more Members that hold in the aggregate a majority of the interests in the limited liability company&#8217;s profits held at that time by all Members . . . . The Members&#8217; respective interests in the Company&#8217;s profits are in proportion to their rights to share in distributions that exceed the repayment of their contributions on dissolution and winding up of the Company. This troubling statute says that the majority in interest of the members is derived from how the members &#8220;share in distributions.&#8221;\u00a0 ALLCA Section 29-3404.A states: &#8220;Any distribution made by a limited liability company . . . must be in equal shares among Members.&#8221; When you apply Section 29-3404.A (equal distributions to members) to Section 29-3101.12 (members&#8217; profits equal how they share distributions) the result is a majority in interest of members of an Arizona under ALLCA is the same as current LLC law Section 29-681.E, i.e., a majority in interest consists of more than one-half of the members. Multi-member LLCs whose members share profits equally don&#8217;t need an ALLCA Operating Agreement that defines how members vote because [...]"}