GET YOUR ACT TOGETHER!LOOKING AHEAD TO 2019:Arizona’s New LLC Act

Recent Developments – Fall, 2018
See Recently Closed Deals Below
GET YOUR ACT TOGETHER!
LOOKING AHEAD TO 2019:
Arizona’s New LLC Act

Later next year, the newly enacted Arizona Limited Liability Company Act (the “Act”) will go into effect.  The Arizona State Legislature passed a new set of laws regarding the operation of Arizona limited liability companies (individually an “LLC” and collectively, “LLCs”) earlier this year that was signed into law by the Governor.  The new laws will affect any LLC that is formed on or after September 1, 2019 and will apply to all existing LLCs on or after September 1, 2020.  This Act will completely replace the current Arizona statutes relating to LLCs.Some of the key provisions in the new Act that change the existing law in Arizona are summarized in this update.

The new Act will impact relationships between members and managers in LLCs.  First, members and managers owe the company and other members certain fiduciary duties, including the duty of loyalty and the duty of care, but the operating agreement may limit or eliminate of any or all liabilities for a breach of these duties.  Members and managers must discharge their duties with the contractual obligation of good faith and fair dealing; this obligation, and any liability arising from a breach of that obligation, may not be limited or eliminated.

Second, members and managers have rights to review and copy company records that reasonably relate to the rights and duties of such party.  If a dispute arises in connection with a member’s or manager’s right to inspect records, a court may award the successful party reasonable expenses (including reasonable attorneys’ fees and costs).

Finally, a person’s contribution obligations are unenforceable unless in writing and signed, and will not be excused by such person’s death, disability, termination or other inability to perform personally.  This paragraph highlights some, but not all, of the important provisions in the Act that are notable for members and managers of LLCs.  With the comprehensive changes to the statutory regime for LLCs, a review of any existing LLC operating agreement is important to ensure compliance with the Act.

It is also important to point out that a provision in the new Act creates a cause of action for third parties arising out of reliance on inaccurate information submitted by an individual (including a member or manager of an LLC) to the Arizona Corporation Commission (“ACC”) if the party relying on such inaccurate information suffers a loss by virtue of such reliance.  Members and managers of LLCs are encouraged to regularly check their records on file with the ACC to confirm the accuracy of the information to avoid any recovery of damages that may be permitted under this new statute.

At Stein Law, our practice includes drafting, negotiating and reviewing organizational documents for limited liability companies and other entities.  For more information as to how we can be of service, please call (480) 889-8948, send an email to info@steinlawplc.com or visit www.SteinLawPLC.com.



Be sure to check out our affiliated website, www.arizonalegalopinions.com, which is focused on our practice area dedicated to delivering attorney opinion letters for all commercial real estate lending transactions. 

Stein Law, PLC is a boutique business and real estate deal firm focused on:
  • Real estate acquisitions and sales, development deals and leasing (both tenant and landlord);
  • Business transactions, operating agreements, joint venture structuring and corporate contracts;
  • Loans and Legal Opinions; and
  • Hospitality development, management and licensing matters.

The following is a link to our Stein Law, PLC Recent Developments Archives:

Recent Developments Archives

Below are some noteworthy Stein Law closed deals:
  • Outside General Counsel to ongoing national multi-family developer overseeing portfolio and coordinating with local counsel for purchase, finance and development matters, including $61MM Sacramento, CA acquisition, $44MM Houston, TX acquisition, $35MM Sacramento, CA acquisition, $31MM Jacksonville, FL sale and $29MM Chandler, AZ sale
  • Legal Opinions for $28MM agency multifamily loan, $8MM defeasance, $10MM agency multifamily loan, $7MM portfolio loan (retail), $20MM traditional loan (office)
  • Multi-family TIC purchase with private equity and Freddie financing (Casa Grande, AZ)
  • Assemblage shopping center acquisition, financing and lease-up and development (Phoenix, AZ)
  • Multiple pad portfolio purchase and redevelopment project with joint venture/private equity and financing
  
Scott J. Stein named Super Lawyers Rising Star
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