Considerations before forming a LLC in Arizona
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This focus on considerations about the Arizona LLC form of business is provided to help people understand a limited liability company organization.

Introduction

This article focuses on preliminary considerations prior to forming a limited liability company in Arizona and maintaining its structure after it is formed.

Effective Organization, Lawful Purpose and Objectives

The LLC is an entity separate from its owners and managers and comes into existence when organizational documents (Articles of Organization) are filed with the ACC. The ACC’s processing time frame usually runs 5 to 10 business days, and the formation is effective retroactively to the date which the articles were delivered to the ACC. The articles contain certain information required be disclosed to create an LLC.

Except for certain statutory restrictions, Arizona allows an LLC to be organized for any lawful purpose. If restrictions on the company’s business objectives are desired, this should be stated in the Articles.

Numerous matters are to be considered before filing the articles; e.g., determining management structure, designating members and selecting the statutory agent.

Designating Company Members

The company is owned by members, who in most cases are listed in the articles. The articles designate the name and address of each member, unless the LLC is “manager-managed”. In that instance, the members who own a 20 percent or greater interest in the capital or profits of the company are listed. If membership changes, either by adding or removal of a member, an amendment is filed to effectuate the change.

Comparable to corporate shares, membership interests in an Arizona LLC are transferable. However, an operating agreement can restrict the transferability of these interests. For example, in the event of the death of a member, an Arizona Limited Liability Company Operating Agreement might provide that surviving members have first right of refusal to acquire the deceased member’s rights before they may be transferred to a successor member or owner.

Management of the Company

An Arizona LLC can be managed directly by the members, or by other persons designated as managers. Managers can, but do not have to be members of the company.

Management of the company will be stipulated in the articles by indicating “management is reserved to the members”, (meaning all members will exercise management rights), or by including a statement that management is “vested in a manager or managers”, (meaning only some of the members or non-members will posses management interests).

The latter instance is referred to as a manager-managed LLC and in this situation the name and address of each manager is included in the articles (as well as each member who owns a 20 percent or greater interest).

Company Address and Statutory Agent

The company’s address is given in the articles. If the LLC does not have a physical Arizona street address, then the address can be listed in care of the company’s statutory agent.

An agent located in Arizona must be appointed for the LLC to be compliant. Statutory agents have responsibility for receiving official notices for the company. The agent’s physical address is specified when the organizational documents are filed. The ACC requires the agent’s signature when the articles are filed.

Qualifications for LLC statutory agents are defined under ARS 29-604. Basically, the agent can be an individual resident of Arizona, or a corporation or limited liability company authorized to transact business in Arizona. Statutory agents need not possess any management or ownership rights in the LLC.

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