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FORMING A LIMITED LIABILITY COMPANY IN AZ A closer look at LLCs – Arizona’s most popular choice for business entities

by Tina L. Vannucci, Attorney, Fitzgibbons Law Offices, PLC


limited liability company (LLC) is a unique business entity permitted by state law. As a legal entity, an LLC is separate and distinct from its members and managers. Most people choose an LLC because it is simpler than a corporation to form and maintain while shielding the members and managers from liability for the LLCs debts, liabilities and other obligations.

Formation To form an LLC, Articles of Organization are filed with the Arizona Corporation Commission for approval, followed by publication in a Commission-approved newspaper. The Articles of Organization set forth the name and address of the LLC, its members and statutory agent, its general purpose, the term of the LLC, and whether the LLC will be managed by its members or a designated manager. There are no minimum limits on the number of members an LLC can have and one person may start the LLC and serve as the sole member, manager and statutory agent. There are no requirements in Arizona for an LLC to hold meetings or file annual reports. Formalities of maintaining an LLC include filing Articles of Amendment, when any of the information provided in the Articles of Organization changes, and securing necessary licenses from federal, state and local jurisdictions.

Management In a member-managed LLC, all members are responsible for management of its operations, while in a manager-managed LLC, the members designate



a person or persons who will control the LLC’s activities. A manager can also be a member of the LLC. Although not technically required, it is strongly recommended that members enter into an Operating Agreement regarding the LLC’s operation and management. In fact, an Operating Agreement is necessary if the members intend to operate the business in any manner different from the Arizona statutory default rules.

Fiduciary Duties Arizona LLC statutes are silent on the issue of whether members or managers owe fiduciary duties – a legal duty to act in the best interest of another, to each other or to the LLC when acting on behalf of the company. However, Arizona courts have found that fiduciary duties are owed in partnerships and by officers, directors and majority shareholders in corporations. Fiduciary duties are another matter that members may want to include in their Operating Agreement until there are clear standards provided by the Arizona courts or legislature.

Planning Ahead It is important for individuals wanting to form an LLC to decide at the outset how they would like the LLC to be managed and how the affairs of the business and the individuals involved will be addressed. This will assist the LLC and its members when dealing with any unanticipated matters or disputes. Tina Vannucci is an attorney with the Fitzgibbons Law Offices in Casa Grande. Her practice encompasses business law, real estate law and municipal law. THE THETRAVEL TRAVELEDITION EDITION

Golden Corridor Living Magazine  

Spring 2016

Golden Corridor Living Magazine  

Spring 2016