Chapter 4 Arizona Limited Liability Companies

Chapter 4 Arizona Limited Liability Companies2018-11-17T13:26:34+00:00

Section 4.1 General Information About Arizona Limited Liability Companies

I would like to give you some general information about Arizona limited liability companies and operating the new company. Limited liability companies have been authorized in Arizona since October 1, 1992. The Arizona limited liability company (“LLC”) is not a partnership or a corporation. The LLC is a specific type of entity created pursuant to Arizona statutes. The LLC is distinct from and not to be confused with other entities such as corporations or partnerships.

You may hear people refer to “limited liability corporations.” That is a misnomer. There is no such thing in Arizona as a limited liability corporation. There are Arizona corporations and Arizona limited liability companies, but there are no Arizona limited liability corporations.

Section 4.2 The Two Types of LLCs: PLLCs vs. LLCs

Arizona law provides for two types of limited liability companies, the common garden variety limited liability company (“LLC”) (by far the most frequently formed type) and the professional limited liability company (“PLLC”). A professional limited liability company is a special type of LLC that is organized to render one or more categories of “professional services.” A.R.S. Section 29-841.4. A professional service is “a service that may be lawfully rendered only by a person licensed or otherwise authorized by a licensing authority in [Arizona] to render the service.” A.R.S. Section 10-2201.6. “Licensing authority” means “the officer, board, agency, court or other authority in [Arizona] empowered by law to license or otherwise authorize the rendition of a professional service.” A.R.S. Section 10-2201.4.

Arizona law does not specify the professions that must form PLLCs instead of LLCs. Arizona Revised Statutes Section 29-842.A states:

“Nothing contained in this article shall alter the right of persons licensed to perform professional services from rendering those professional services. Those persons may render those professional services in any other business form or entity, including a limited liability company formed under a general law of this state other than this chapter, unless the use of the form or entity is expressly prohibited by the licensing law of this state that is applicable to the profession or by the board that has jurisdiction over the profession.”

A person who provides professional services may do so through an LLC unless the licensing authority for the profession in Arizona requires the use of a PLLC.

Licensed Arizona real estate agents may be the only Arizona professionals that must use a professional limited liability company or a professional corporation. It is the Arizona Department of Real Estate that imposes this requirement, not Arizona statutory law.

Section 4.3 Statutory Difference between LLCs and PLLCs

Professional limited liability companies are almost identical in every way to the “nonprofessional” or “standard” limited liability company except for the following statutory differences:

a. The Articles of Organization must state that the company is a PLLC. A.R.S. Section 29-841.01.A.1.

b. The Articles of Organization must state the professional service or services that the PLLC is organized to provide. A.R.S. Section 29-841.01.A.2. A PLLC may render a category of professional services in Arizona only through its members, managers, officers, agents and employees who are themselves licensed persons qualified in Arizona to perform that category of professional services.

c. LLCs do not have any restrictions on who may own an interest in the LLC, but a PLLC may issue membership interests only to:

(i) Individuals who are licensed by law in Arizona or another state to render a professional service described in the Articles of Organization of the PLLC.

(ii) General partnerships, registered limited liability partnerships, other partnerships and joint ventures, domestic or foreign, in which all of the partners are licensed persons with respect to the profession to be conducted by the professional limited liability company and in which at least one partner is authorized by law in Arizona to render a professional service described in the Articles of Organization of the PLLC.

(iii) Professional corporations, PLLCs and other persons, domestic or foreign, authorized by law in Arizona to render a professional service described by the Articles of Organization of the PLLC.

(iv) Other persons, if after the issuance of voting membership interests, the other persons in the aggregate do not hold more than forty-nine percent of the membership interests entitled to vote for the election of officers and managers of the PLLC, unless a greater or lesser percentage is prescribed by the board.

A.R.S. Section 29-844.B.

d. Notwithstanding the restrictions stated in the preceding subsection 3, an interest in a PLLC may be owned by:

(i) An unlicensed person who is married to a licensed member/owner if the couple owns their interests as community property, but the unlicensed spouse may not have any voting rights with respect to his or her the membership interest.

(ii) A trust established for the benefit of a licensed individual or members of the licensed individual’s immediate family in which the licensed individual has the right to vote the membership interest and the trust and the members of the licensed individual’s immediate family do not have the right to vote the membership interest.

A.R.S. Section 29-844.C.

e. There are restrictions on the transfer and pledging of membership interests in PLLCs. Membership interests and rights or options to purchase membership interests of a PLLC held by persons described in subsection 3, subparagraphs a, b and c may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons qualified under subsection 3 to be issued voting membership interests and to the PLLC. Voting membership interests and rights or options to purchase voting membership interests of a PLLC held by persons described in subsection 3, subparagraph d may be transferred or pledged, whether voluntarily, involuntarily, by operation of law, by court judgment or otherwise, only to persons who are qualified under subsection 3, to be issued voting membership interests and to the professional limited liability company. A.R.S. Section 29-844.F.

f. A transfer or pledge made in violation of subsection 5 is void. A.R.S. Section 29-844.G.

g. A PLLC may adopt a name consisting of the full or last name of one or more of its members or, if not otherwise prohibited by law or the canons of ethics of the profession concerned, may adopt a fictitious name. A.R.S. Section 29-845.

h. The name of a PLLC must contain the words “professional limited liability company” or the abbreviations “P.L.L.C.,” “P.L.C.,” “PLLC” or “PLC.” A.R.S. Section 29-845.

i. Rendering services through a PLLC does not mean that the professional who provides the services is immune from liability for negligence. Each member, manager or employee performing professional services will be personally liable for any results of the negligent or wrongful acts, omissions or misconduct committed by him or she or by any person under his or her direct supervision and control while performing professional services on behalf of the PLLC. A.R.S. Section 29-846.

j. The good news with respect to liability is that the PLLC does protect an innocent member from the negligence of others performing services for the PLLC. The liability of a member, manager or employee of a limited liability company is several only (translation: liability is not joint among all members, managers or employees), and a member, manager or employee of a limited liability company is not vicariously responsible for the liability of another member, manager or employee unless such other member, manager or employee was acting under his direct supervision and control while performing professional services on behalf of the limited liability company. A.R.S. Section 29-846.

k. No PLLC may do any act that is prohibited to be done by individuals licensed to perform professional services that are rendered by the PLLC. A.R.S. Section 29-847.A.

l. Each member, manager, officer, agent and employee of a PLLC who is a licensed person in the jurisdiction in which the person performs professional services is subject to the rules and regulations adopted by and the disciplinary powers of the board or boards regulating the professional services rendered by the PLLC in the jurisdiction in which he or she performs professional services. A.R.S. Section 29-847.B.

m. If an interest in a PLLC held by a licensed person is not acquired by a person or persons qualified to own the interest within 180 days following the death, insanity, bankruptcy, retirement, withdrawal, expulsion or other legal disqualification of the member, the member shall be entitled to receive distributions in accordance with A.R.S. Section 29-707 in liquidation of the member’s entire interest in the PLLC. Until the transfer is effected, the interest in the PLLC may not be voted. A.R.S. Section 29-847.C.

If you have a PLLC and want to change it into an LLC or if you have an LLC and want to change it to a PLLC, its simple to do.  Just prepare and file an amendment to the Articles of Organization with the Arizona Corporation Commission.  See Section 4.10 When the LLC Must Amend Its Articles of Organization to hire KEYTLaw to amend Articles of Organization.

Section 4.4 Professional Real Estate Service PLLCs

If you are an Arizona real estate agent for whom we created an Arizona professional LLC, this Section applies to you and your PLLC. The Arizona Department of Real Estate requires that the following provision be contained in the Articles of Organization of the real estate services professional limited liability company:

“The sole purpose of the professional limited liability company is to render professional real estate services only.”

If your professional limited liability company will be a real estate services PLLC, the ADRE takes the position that the PLLC cannot engage in any activities other than render professional real estate services. For example, a real estate PLLC cannot own real estate or operate a retail store.

To obtain a license from the Arizona Department of Real Estate for the Company, you must complete and submit ADRE form LI-231 to the ADRE. You must submit with the form LI-231 a copy of the Articles of Organization approved by the Arizona Corporation Commission with the Filed” stamp on the top of the document.

Section 4.5 Members

Owners of an Arizona LLC are called “members.” A member is equivalent to a shareholder of a corporation or a partner of a partnership. The LLC members can be individuals, partnerships, trusts, corporations, or any other type of entity. The general rule is that a member of an Arizona LLC, like a shareholder of corporation, is not liable for the debts and obligations of the LLC. However, there are exceptions to this general rule. A member may, if the member elects, personally guaranty a debt of the LLC, in which case the member voluntarily assumes liability for the obligations of the LLC that are guaranteed. Members are also liable for harm caused by their own acts or omissions. For example, if a member of an LLC installs a water heater in the LLC’s rental home and somebody is injured or killed when the water heater blows up, the member may be sued and found liable because the member is the person who caused the harm.

Stockholders of a corporation own stock, but members of an Arizona LLC own “membership interests” in the company. A membership interest consists of a percentage ownership of the capital, profits and losses of the company, the rights set forth in an Operating Agreement, the right to vote on matters affecting the company and other rights granted by Arizona statutes. An Arizona LLC is not required to issue certificates to its members to evidence their membership interests in the company. A written Operating Agreement is the document that evidences who owns all membership interests in an Arizona LLC. If the company borrows money from a financial institution or buys or sells land, the financial institution and the title insurance company, respectively, will require a copy of the company’s signed Operating Agreement.

Section 4.6 Management: Member Managed or Manager Managed

Arizona limited liability companies are either: (i) member managed, or (ii) manager managed. If the company is member managed, all members have management responsibility. In a member managed LLC, all members are automatically vested with management powers, which means that all members have the power to cause the LLC to enter into contracts and incur debts and obligations. In a manager managed LLC, only the designated manager(s) have management powers. In a manager managed LLC, the members select one or more managers and a manager does not have to be a member. A manager has powers similar to a general partner of a partnership. Managers can be a person or an entity and reside inside or outside Arizona.

The Articles of Organization of an Arizona LLC must state the type of management adopted by the LLC. The new LLC is a manager managed LLC. Only the person or persons selected by the members to hold the title of manager will be responsible for managing the new LLC. The Operating Agreement should specify the manager(s) of the company.

Section 4.7 Fiduciary Duties of Members and Managers

As a general proposition limited liability company members, managers and agents have three basic duties that they must follow in performing their functions.

The first can be described as a “duty of diligence.” This means that a member, manager or agent must act with the care a reasonably prudent person would exercise under similar circumstances. Members and managers must act at all times in good faith and in a manner that is in the best interest of the company. This duty is an affirmative one that requires not only good faith and reasonable conduct on matters brought to the attention of a member or a manager, but also requires that members and managers make reasonable inquiries and monitor company affairs. While managers, members and agents are not insurers of the integrity of their subordinates, they are required to promote appropriate company conduct and use reasonable care to identify improper conduct.

A second basic duty is a “duty of loyalty.” Loyalty means that members and managers should refrain from engaging in personal activities that would damage or take advantage of the company. Members, managers and agents hold a position of trust and confidence with the company and they cannot use their position to further their own private interests. Members and managers have an obligation to not create a conflict of interest with the company. For example, members and managers cannot:

a. realize secret profits or gains through personal transactions with the company;

b. compete with the company in such a manner that hurts the company; or

c. usurp a company opportunity.

Members and managers must avoid even the appearance of a conflict of interest with the company.

Members, managers and agents have a “duty of obedience.” This duty requires that members and managers perform their company responsibilities in accordance with Arizona law, the Articles of Organization and an Operating Agreement signed by the members. Members and managers may be liable if they authorize an act that is beyond the powers conferred upon the company by its Articles of Organization, its Operating Agreement or Arizona statutes. Therefore, it is important that the members and managers acquaint themselves with the Articles or Organization and the signed Operating Agreement, as well as Arizona laws that define their responsibilities with respect to the company.

Section 4.8 Business Judgment Rule

Members and managers are presumed to have complied with these three basic duties described in the preceding Section if they comply with a legal doctrine known as the “Business Judgment Rule.” This rule is unique and recognizes that not all management decisions will benefit the company. The rule holds that members and managers will not be personally liable for their actions if they comply with its four elements:

a. Business Decision. The rule protects members and managers against claims for wrongful acts, but not against claims for failing to act. Inaction is protected only when the inaction is unintentional.

b. Disinterestedness. Members and managers are protected when their action reflects disinterested and independent conduct. Disinterested members and managers are those who do not appear on both sides of a transaction and who do not expect to derive any personal financial benefit through self-dealing.

c. Due Care. Members’ and managers’ decision-making must result from a reasonable effort to obtain all relevant information so their decision reflects an informed judgment.

d. Good Faith. The rule will protects members and managers with respect to a decision if they acted in the good faith belief that the decision is in, or at least not opposed to, the best interests of the company.

Section 4.9 Annual Meetings of Members and Managers

Arizona law does not require that a limited liability company hold annual meetings of members or managers, file annual reports with the Arizona Corporation Commission, Arizona Secretary of State or other state agency or that the limited liability company pay any annual fees. Although meetings are not required, I encourage the manager(s) and member(s) to do the following:

a. Hold optional meetings at least once a year and more often if necessary to discuss and vote on important company decisions. All meetings of members should be documented by written minutes signed by the members. All meetings of managers should be documented by written minutes signed by the managers.

b. In lieu of actually holding meetings to vote on important matters, the members or managers may sign a resolution adopting action without holding a meeting.

A good Operating Agreement such as the one we prepare will contain rules applicable to calling meetings and voting on proposed action. Take care to follow the procedures for meetings and approving action stated in the Operating Agreement. Copies of minutes and resolutions of the members should be distributed to all members. Copies of minutes and resolutions of the managers should be distributed to all managers and members. All minutes and resolutions should be kept in a safe place because they are important company documents that evidence approved actions.

We recommend that you purchase our editable Word version of various resolutions and meeting minutes from our forms website called Keyt Forms.  If your LLC is member managed you should purchase the Meeting Minutes & Action by Consent of Members Bundle of meeting documents.  Manager managed LLCs need the Meeting Minutes & Action by Consent of Members & Managers Bundle of meeting documents.

Section 4.10 When the LLC Must Amend Its Articles of Organization

Arizona law requires that the LLC amend its Articles of Organization within thirty days after the happening of any of the following events:

a. The company obtains a new manager or a manager named in the Articles ceases to be a manager;

b. A person or entity acquires more than twenty percent of the capital or profits of the company (for example: if a five percent owner becomes a twenty percent owner);

c. A person or entity named in the Articles as owning a twenty percent or greater interest in the capital or profits interest of the company ceases to own at least twenty percent; or

d. Any statement in the Articles of Organization becomes inaccurate (other than a change in the address of the company’s known place of business or the name or address of the company’s statutory agent).

Within sixty days after the ACC approves the filing of an amendment to the Articles of Organization, the company must publish a copy of the articles of amendment in a newspaper of general circulation in the county of the known place of business for three consecutive publications. Although the company is not required to file an affidavit evidencing publication with the ACC, I recommend that the company always do so. Publication is not required for an amendment to the articles of organization that only changes:

  • The name or address of members or managers.
  • The known place of business address.
  • The name or address of the statutory agent.

If you need to amend the Articles of Organization in the future and want me to assist you, hire us to prepare and file the amendment.  We charge $195 plus the $60 ACC filing fee to prepare and file an Articles of Amendment to the Articles of Organization.  If the amendment must be published in a newspaper, the publication expense is extra. When hired we: (1) prepare an amendment to the Articles of Organization, (2) file the amendment with the ACC, (3) arrange to publish the amendment (if necessary), and (4) file the affidavit of publication with the ACC.

To learn more about amending the Articles of Organization of an Arizona LLC read “When an LLC Must Amend its Articles of Organization” and “How to Change the Name of an Arizona LLC.”  The first step to hire us is to complete and submit the following online questionnaire:

Note: If the address of a member or manager listed in the Articles of Organization changes, the company must notify the ACC of the change by sending the ACC a written change of address form signed by a manager and pay a $5 fee. To change a member or manager’s address, complete and submit to the ACC its change of address form.

Section 4.11 Why It Is Important to Document Changes of Members and Their Percentage Interests in the Company

Many companies do not remain static over time. Members may come and go or their percentage interests in the company may change. New managers may be appointed and old managers may resign. These types of changes should be memorialized in written documents to prevent problems in the future.

If the company adds a new member, a member ceases to be a member, members change their percentage ownership of the company or if there are any changes with respect to the rights or obligations of a member, the change should be evidenced by having the parties sign appropriate documents. It is important that changes with respect to members and their percentage interests be documented in writing to avoid disputes and complications in the future.

I formed an Arizona limited liability company in 1994 and prepared a comprehensive Operating Agreement for the members to sign, but they never signed it. Nine years later the members could not agree on much of anything, including who the members were and what their percentage interests were. Over time, members had terminated their membership interests and some members transferred portions of their interests to other members. Nobody ever prepared any documents to evidence the termination of a member, the transfer of a membership interest to another person or the admittance of a new person as a member of the company. Because the members never signed an Operating Agreement that governed bringing in new members and transfers of membership interests, they lost control of the company. It was a nightmare. The result was two years of very expensive litigation.

You should minimize the chance of disputes when members change or their interests in the company change by making sure that the changes are approved by the members, if required by a signed Operating Agreement, and documenting all changes in writing.

To learn more about how to document the addition or removal of a member read my article called “What to Do When Your LLC Adds or Deletes a Member or if a Member’s Interest in the Company Changes.”

Hire KEYTLaw to Document a Member Change

We make it easy to document the addition or removal of a member or a change in the membership interest in an Arizona LLC.  The first step is to complete and submit our online change of member questionnaire located here:

Section 4.12 Arizona Statutory Requirements to Become a Member of an Arizona LLC

You probably would not be surprised to learn that members of an Arizona limited liability company are not created by spontaneous combustion nor do members magically appear out of thin air. Arizona law is very explicit as to how a person or entity becomes a member of an Arizona LLC.

Arizona Revised Statutes Section 29-731 states:

A. At the time the limited liability company is formed, a person becomes a member by either of the following:

1. Being identified as a member in the initial articles of organization.

2. If the members are not identified in the initial articles of organization, being identified as a member in and signing in person or by an attorney-in-fact an operating agreement that exists at the time the initial articles of organization are filed or being identified as a member in a written statement certified, before or after the filing of the initial articles of organization, by each of the managers identified in the initial articles of organization.

B. After a limited liability company’s initial articles of organization are filed, a person may be admitted as an additional member as follows:

1. If a person is acquiring an interest in the limited liability company directly from the limited liability company, on the limited liability company’s written acknowledgment or acceptance of the person’s admission under the applicable provisions of an operating agreement, or if an operating agreement does not so provide, on the consent of all members.

2. If the person is an assignee of all or part of a member’s interest in a limited liability company, on the terms provided in an operating agreement or, if an operating agreement does not so provide, on the approval or consent of all members.

3. If the person is an assignee of an interest in the limited liability company of a member who has the power under an operating agreement to grant the assignee the right to become a member, on the exercise of the power in compliance with all conditions limiting the member’s exercise of the power.

4. If there are no members and all of the assignees consent in writing to the admission of one or more persons as a member or members, unless otherwise provided in the operating agreement.

If your Arizona limited liability company has a member that was not named in the initial Articles of Organization filed with the Arizona Corporation Commission or if it has a member who became a member after the company was formed, did the LLC comply with ARS Section 29-731? If not, that member has a problem and is technically not a member of the LLC and will not legally become a member until the require of ARS Section 29-731 is satisfied.

Note:  The different procedures for admitting a member depending on whether the member becomes a member AS OF THE DATE OF FORMATION OF THE LLC or later. The method is different depending on the point in time when a person or entity is to become a member.

A POTENTIAL PROBLEM FOR MANAGER MANAGED LLCS

Arizona law says that a manager managed LLC must name in the initial Articles of Organization members who own 20% or more of the capital or profits of the LLC. If your manager managed Arizona LLC’s Articles of Organization does not list all of the initial members in the initial Articles of Organization filed with the Arizona Corporation Commission, did the LLC comply with ARS Section 29-731 with respect to the less than 20% members? If not, it should do so immediately.

A POTENTIAL PROBLEM FOR NEW MEMBERS

If your LLC added a member after the initial Articles of Organization were filed with the Arizona Corporation Commission, did your LLC comply with ARS Section 29-731 with respect to the member(s) added later? If not, it should do so immediately.

Section 4.13 How to Add or Delete a Member or Change the Percentage Interests of Members

If a member ceases to be a member of the company, that member should sign a document in which the member assigns the member’s interest in the company to the company, to another member(s) or to a third party. If the terminating member does not sign a written document transferring the member’s interest, the terminating member might claim in the future when the company is worth more money that the member never ceased to be a member. The lack of a written assignment document also increases the risk of a dispute over who received the interest of the departing member, the effective date of the transfer and if any money was to be paid for the membership interest.

Normally, whenever there is a change with respect to any member of an Arizona LLC, the change should be evidenced by the following documents:

a. Membership Interest Purchase Agreement: A buyer and seller (in a transaction that involves a purchase and sale) or an assignor and assignee (in a transaction that does not involve a sale) should sign a Membership Interest Purchase Agreement that states the percentage interest being sold or transferred, how much money, if any, will be paid for the interest, the effective date, and any other terms and conditions applicable to the purchase. This document creates a legally binding contract between the parties to sell or transfer the membership interest. It is especially important when the transfer involves a substantial amount of money.

b. Assignment of Membership Interest Agreement: A buyer and seller (in a transaction that involves a purchase and sale) or an assignor and assignee (in a transaction that does not involve a sale) should sign an Assignment of Membership Interest Agreement that states the seller/assignor is assigning the interest to the buyer/assignee as of the effective date of the transfer. This document is equivalent to a Deed or Bill of Sale. It is the document that actually evidences the change of ownership from the seller/assignor to the buyer/assignee. You would not buy a home without getting a Deed and you should not acquire or transfer an interest in an Arizona LLC without an Assignment of Membership Interest Agreement.

c. Resolution of Members: All the members should sign a Resolution that evidences their approval to the change in membership interest and addition of a new member, if applicable. If all the members will not approve a transfer of a membership interest, and the LLC has an Operating Agreement that allows less than all of the members to approve a transfer, the members should have a formally noticed and called meeting to vote on the proposed transfer.

d. Amendment to the Operating Agreement: Because the Operating Agreement is the primary document that evidences the ownership of the company and rights and obligations of the members, all members, including all new members, should sign an Amendment to the Operating Agreement. The Amendment to the Operating Agreement should contain any changes resulting from the sale/assignment such as removing the names of terminated members, adding the names of new members, adding the addresses for notices of any new members, stating the revised percentage ownership of all members, changes in managers, if any, and any other changes resulting from the sale/assignment.

e. Amendment to the Articles of Organization: Arizona law requires that the company file an Amendment to the Articles of Organization with the ACC if: (i) a person who was not named in the Articles of Organization acquires 20% or more of the percentage interests, (ii) a person who was named in the Articles of Organization ceases to own 20% or more of the percentage interests, or (iii) the company adds or deletes a manager.

Section 4.14 How to Hire Richard Keyt to Document the Addition or Removal of a Member

We make it easy to document the addition or removal of a member for an Arizona LLC.  Complete and submit our change of member questionnaire located here:

Section 4.15 How to Change the Name of an Arizona LLC

An Arizona limited liability company may change its legal name at any time by doing the following:

a. Check the Arizona Corporation Commission’s LLC name database to make sure that the desired new name is available.  Click on the text that says “Name – Forms for entity name reservations.”  Next Click on the text that says “Check Entity Name Availability.”  Next type the desired name in the field under the text “Name.”  Under “Entity Type” select LLC.  Click on the “Check Name” icon.  The database will now tell if the name is available or already in use.

b. You may want to check the U.S. Patent and Trademark office database and search to see if your proposed new name might infringe on a registered federal trademark or service mark. Caution: Don’t use a famous trademark like Coke or Playboy in your name. Check the U.S. Patent and Trademark office trademark database.

c. If you have a multi-member LLC (other than husband and wife s the only members) the members should hold a duly called and noticed meeting and vote on the name change or have all of the members sign an Action by Unanimous Consent by which the members approve the name change.

d. Prepare and file an Articles of Amendment to the Articles of Organization with the Arizona Corporation Commission to change the name.

e. After the Arizona Corporation Commission approves the amendment to the Articles of Organization, publish the name change in an ACC approved newspaper in the county of the company’s place of business in Arizona.

For more on this topic read my article called “How to Change the Name of an Arizona LLC.”

Hire KEYTLaw to Change the Name of Your Arizona LLC

We make it very easy to change the name of an AZ LLC.  Just submit our online questionnaire at the below link:

Section 4.16 The Company’s Known Place of Business

The Articles of Organization states the company’s known place of business in Arizona. The company must maintain a known place of business in the State of Arizona at all times. The company may change its known place of business in Arizona at any time, but if it does, a manager should immediately notify the ACC of the new known place of business by downloading a change of address form found on the internet at:

If an Arizona LLC changes its known place of business in Arizona a member of a manager managed LLC or a manager of a manager managed LLC must notify the ACC of the change by sending the ACC a written change of address form signed by a member or manager and pay a $5 fee. To change an Arizona LLC’s known place of business address, complete and submit to the ACC its company change of address form.

It is important that the company keep the ACC informed of its current known place of business at all times. The ACC uses the known place of business of the company as the address where the ACC will send legal documents and any notices to the company such as notices that the company has been served with a lawsuit.

IF THE COMPANY CEASES TO HAVE A KNOWN PLACE OF BUSINESS ON FILE WITH THE ACC OR IF THE COMPANY’S KNOWN PLACE OF BUSINESS ADDRESS IS NOT CORRECT, THE ARIZONA CORPORATION COMMISSION COULD TERMINATE THE COMPANY’S EXISTENCE. It is the responsibility of the company and its members and managers to insure that the company always has a correct known place of business on file with the ACC.

Section 4.17 What You Must Understand if Your Company Uses KEYTLaw’s Address as Its Known Place of Business in Arizona

This Section applies only to companies that have paid to use KEYTLaw’s address as their known place of business in Arizona. If you company is using the KEYTLaw address as the company’s known place of business solely to: (i) satisfy the Arizona law that requires an Arizona limited liability company to have a known place of business in Arizona, and/or (ii) avoid public disclosures of the company’s address or the address of member or manager. The primary purpose of Arizona’s law requiring the company to disclose its place of business is to give the Arizona Corporation Commission an address to which the it can send correspondence to the company. The company and its members and managers are not to use our office address for routine correspondence. Do not tell the IRS, Arizona Department of Revenue, your customers, clients, or others to send correspondence to the KEYTLaw address. Tell them to send correspondence directly to the address where you want to receive your mail.

If we receive what we think might be important correspondence addressed to the company (such as a letter from the IRS, Arizona Department of Revenue or service of process in connection with a lawsuit), we may mail it to you via certified mail, return receipt requested (and bill the cost to the company) so we can prove that you receive the correspondence.

If we receive correspondence addressed to the company we will charge you a $35 handling fee to compensate us for time spent by our staff to prepare a letter and mail the correspondence to the company.  We will not send the correspondence to our contact at the company until the company pays our $35 handling fee.  This may seem harsh, but we should not ever receive normal correspondence because our address service is not a mail forwarding service.

If we send you an invoice for handling and/or postage to mail correspondence to you that was mailed to us and you do not pay within thirty days of the invoice date, we will not send any further correspondence to you until you bring your account current.

Our fee to provide the known place of business service is $100 per year payable in advance. We may increase our annual known place of business fee from time to time. If the Company does not want to pay the Firm’s annual known place of business service fee or continue to use the Firm’s address as the company’s known place of business, the company may change its known place of business at any time by following the instructions set forth in the preceding section, but the company will not be entitled to any unused portion of the annual known place of business fee.

The Firm will bill the company for the known place of business service fee the month before the fee is due. The Firm may notify the Arizona Corporation Commission that the company no longer maintains the Firm’s address as the company’s known place of business and send a copy of the notice to the company at its last known address in our records if any of the following occurs: (i) the company does not notify the Firm of the company’s current mailing address, (ii) you or the company do not pay the annual known place of business service fee within thirty days of billing, or (iii) the Firm sends correspondence to the company at the address reflected in the Firm’s records and the correspondence is returned for any reason. If the Firm notifies the Arizona Corporation Commission that the company ceased to have its known place of business at the Firm’s address for any of the reasons in the preceding sentence, the Firm may retain any remaining amount of the annual known place of business service fee.

Waiver of Liability. The company releases Richard Keyt and the Firm from all harm the company may suffer arising from the Firm notifying the Arizona Corporation Commission for any reason that the company ceased using the Firm’s address as the company’s known place of business. If the Firm terminates the company’s use of the Firm’s address as the company’s known place of business, the company must immediately notify the Arizona Corporation Commission of the company’s known place of business in Arizona or the Arizona Corporation Commission may terminate the company’s existence, which means the company would cease to exist.

So long as the company uses the Firm’s address as the company’s known place of business, the company and/or it members and manager(s) agree to notify Richard Keyt in writing: (i) any time the company changes its address, and (ii) of the company’s current mailing address at all times. The company, its members and managers agree to send all changes of address to Richard Keyt via certified mail, return receipt requested addressed as follows:

Richard Keyt
KEYTLaw, LLC
7373 E. Doubletree Ranch Road, Suite 165
Scottsdale, AZ 85258

The Firm may notify the company in writing if the Firm changes its address in which case the Firm’s address for notices stated in the preceding sentence will change to the new address. Neither Richard Keyt nor KEYTLaw, LLC, will be responsible for any adverse consequences suffered or incurred by the company, its members or managers arising from KEYTLaw, LLC, notifying the Arizona Corporation Commission that the company ceased using the Firm’s address as the company’s known place of business or from the company failing to notify Richard Keyt of the company’s changes of address and/or current mailing address.

If the Firm receives any correspondence, service of process and/or any documents at its address addressed to the company or any of its members or managers, the company and its members and managers agree that the Firm’s only duty as statutory agent is to mail the correspondence, service of process and other documents (collectively “Company Documents”) to the company at the company’s address reflected in the Firm’s records. The members, managers and the company agree that the Firm is not obligated to notify any particular member or manager that the Firm has received any Company Documents or to send originals or copies of any Company Documents to any particular member or manager. Once the Firm mails the Company Documents to the company at its last known address in the Firm’s records, the Firm will not have any further responsibility to insure that the company receives the Company Documents. If the Firm mails Company Documents to the company at its address reflected in the Firm’s records and the envelope, letter or package is returned to the Firm for any reason, the Firm will is not obligated to research the correct address or make any further attempt to find the company’s correct mailing address.