The statutes that govern limited liability company (“LLC”) have been updated in total. Chapter 7 of Title 10 now replaces the prior statutes in Chapter 4.
Publication when filing Articles of Organization or changing the statutory agent has been changed for some counties. If the statutory agent lives in a county with a population of 800,000 or more, instead of publishing notice three weeks consecutively, the Arizona Corporate Commission simply inputs the information in its database under A.R.S. 29-32-1(G).
The new statutes still allow Members to avoid probate of their membership interest in a trust or hold it with right of survivorship. Joint tenants with right of survivorship and community property with right of survivorship are both available and each member’s interest has to be equal. (One Member could not have 1/3 interest and one Member 2/3 interest and have right of survivorship apply).
The new statutes add a more detailed description of how the interest will pass upon survivorship, taking the guess work away from banks, title companies, and courts. This should allow for more ease in carrying on business when one of the Members have died.
However, if the Members do not have equal interests, then holding the Member’s interest in a revocable trust is still the best way to avoid probate. The Member’s interest is declared to be personal property under the new statutes. Thus, the Member’s interest is handled similarly to accounts or assets not titled in a trust or which do not have a beneficiary designation. If such assets have a total of more than $75,000 then a probate is needed.
The new LLC statutes also recognize that bigger businesses are using the LLC format instead of a corporation. There are new laws for derivative lawsuits to be used by minority ownership holders to protect their rights.
The LLC statutes still provide for statutes when a company does not adopt an Operating Agreement. However, Operating Agreements are still recommended to ease administration when dealing with the public.