Member Fraudulently Amends Articles of Organization to Remove Other Member and more...


Member Fraudulently Amends Articles of Organization to Remove Other Member

From time to time a member of an Arizona LLC calls and tells me that another member of the LLC filed an amendment to the Articles of Organization with the Arizona Corporation Commission that removed the caller as a member of the LLC without the caller’s knowledge or consent.  There was no legal basis to file the amendment.

The caller always asks “what can I do?”  The simple answer is the caller should prepare and file another amendment to the Articles of Organization to correct the removal of the caller as a member.  This solution, however, is only a temporary band aid.  It does not solve the fundamental problem which is the members cannot get along.

Unfortunately this scenario is an all too common problem.  The Arizona Corporation Commission is, in actuality, a mere filing service.  If a person submits a document for filing and it satisfies the ACC’s filing requirements, the ACC will file the document.  The ACC does not confirm or verify that the information set forth in a document is correct.  Many times when members of an Arizona LLC can not agree on the management of the LLC one of the members will file an amendment to the Articles of Organization that removes another member without any legal basis for the removal.

People who file false documents with the ACC are usually unaware that they could be committing a felony.  Arizona Revised Statutes Section 29-613.A states:

“A person who . . . signs any articles, statement, report, application or other document filed with the [Arizona Corporation] commission that is known to the person as false in any material respect is guilty of a class 4 felony.”

The bottom line is that when this happens the members need to consummate a “company divorce,” i.e., a legal termination of their relationship as members of the same LLC.  The best solution occurs if the members agree on the terms and conditions of their company divorce and they sign documents that evidence their agreement.  If the members cannot agree, they have two options:

  • Continue their relationship as members of the LLC, which means ongoing disputes, problems and stress.
  • File a lawsuit in an Arizona Superior Court and ask the court to dissolve the LLC.  This option takes time and causes both members to pay large amounts of money to their lawyers.

As a result of this latest call, I revised my multi-member Operating Agreement (yes I have a single member and husband and wife owned Operating Agreement that is about 20 pages shorter) to include a section that obligates a member who causes a fraudulent amendment to the Articles of Organization to be filed with the ACC to pay each other member liquidated damages in the amount of $10,000.  If the liquidated damages are not paid within 30 days of the filing date the unpaid amount accrues interest at the rate of 10% per annum.  If the entire amount is not paid within one year of the filing date, the offending member’s membership interest in the LLC will be forfeited on the first anniversary of the date the false amendment to the Articles of Organization was filed with the ACC and the unpaid portion of the liquidated damages will be forgiven.

For more on this topic read my blog post called “Can One Member of an Arizona LLC Expel Another Member?

The post Member Fraudulently Amends Articles of Organization to Remove Other Member appeared first on Arizona Limited Liability Company Law.

    


How to Get a Certificate of Good Standing for an AZ LLC

Question:  How can I get a Certificate of Good standing for my Arizona LLC from the Arizona Corporation Commission?

Answer:  It is very easy.  First go to the link below and search for the LLC.

http://ecorp.azcc.gov/Search

Do the following:

  • Enter the name of the limited liability company in the name field.
  • Click on “Search.”
  • Click on the link that says “Check Corporate Status.”
  • Click on the link that says “Print Certificate.”
  • Click on the link that says “Payment Screen.”
  • Follow the instructions to pay $45 with your major credit card to buy the Certificate of Good Standing.
  • As soon as you pay print the Certificate of Good Standing.

The post How to Get a Certificate of Good Standing for an AZ LLC appeared first on Arizona Limited Liability Company Law.

    


Arizona Legislature’s HB 2447 Eliminates Newspaper Publication

On May 17, 2016, Arizona Governor Doug Ducey signed Arizona Legislature House Bill 2447.  This new law is a tremendous victory for the people and a huge defeat for Arizona newspapers.  HB 2447 eliminates the long standing rip off known as the publication of legal notices when corporations or limited liability companies are formed in Arizona.  Unfortunately, publication was eliminated only for entities with known places of business in Maricopa or Pima counties.

Beginning December 31, 2016, new Arizona LLCs and corporations with a known place of business in Maricopa and Pima Counties will not have to publish Articles of Incorporation (corporations) or Notices of Publication (LLCs) in a newspaper.  Instead, the Arizona Corporation Commission will enter information about the newly formed entities into a database it is obligated to create.

HB 2447 states that publication is eliminated only for entities that have a known place of business in a county that has a population greater than 800,000.  Currently only Maricopa County and Pima County have populations that exceed 800,000.

Entities that have known places of business in counties other than Maricopa and Pima must continue to donate money to the few Arizona Corporation Commission approved newspapers in the eleven counties with less than 800,000 people.  Publication is a total rip off.  For example, a few years ago we published Articles of Incorporation for a nonprofit corporation in a newspaper in a less populated county and it cost my client $600 after a 10% discount for the nonprofit corporation.  Outrageous!

 

The post Arizona Legislature’s HB 2447 Eliminates Newspaper Publication appeared first on Arizona Limited Liability Company Law.

    


5,000+ Arizona LLCs Formed by Richard Keyt

I formed my first Arizona LLC the day Arizona’s LLC law became effective in October of 1992.  I’ve been forming Arizona LLCs ever since.  I didn’t start counting my LLC formations until 2002.  Since I started counting in 2002 I have formed 5,000+ Arizona LLCs.  I created number 5,000 sometime during April of 2016.

There are a lot of reasons why I’ve formed so many LLCs, but here are the main reasons:

  • Silver & Gold LLC purchasers get online access to my 170 page ebook called the “Arizona LLC Operations Manual.”  Chapter 3 is checklist of 34 important tasks that must be performed within 75 days after the LLC is formed.
  • 30+ post formation email messages reminding you to perform post formation tasks.
  • We form LLCs the last business day of each week.  Your LLC is born and can start doing business the day we hand file the Articles of Organization.
  • People love my LLC formation services.  Watch and read some of our many testimonials.

The post 5,000+ Arizona LLCs Formed by Richard Keyt appeared first on Arizona Limited Liability Company Law.

    

Latest IRS Procedure for a Nonresident Alien to get an EIN

Question:  I am not a citizen or resident of the United States who wants to form a U.S. limited liability company.  Can I get a federal employer identification number (EIN) for my LLC and if so, how?

Answer:  The instructions to IRS Form SS-4, explain how a non-U.S. citizen who is a non-resident of the U.S. can get an EIN for his or her LLC.  The instructions say the following:

“Apply by telephone—option available to international applicants only. If you have NO legal residence, principal place of business, or principal office or agency in the U.S. or U.S. possessions, you may call 267-941-1099 (not a toll-free number), 6:00 a.m. to 11:00 p.m. (Eastern time), Monday through Friday, to obtain an EIN. The person making the call must be authorized to receive the EIN and answer questions concerning Form SS-4.

Note. It will be helpful to complete Form SS-4 before contacting the IRS. An IRS representative will use the information from Form SS-4 to establish your account and assign you an EIN. Write the number you’re given on the upper right corner of the form and sign and date it. Keep this copy for your records.

Apply by fax. Under the Fax-TIN program, you can receive your EIN by fax generally within 4 business days. Complete and fax Form SS-4 to the IRS using the appropriate fax number listed in Where To File or Fax, later. A long-distance charge to callers outside of the local calling area will apply. Fax-TIN numbers can only be used to apply for an EIN. The numbers may change without notice. Fax-TIN is available 24 hours a day, 7 days a week. Be sure to provide your fax number so the IRS can fax the EIN back to you.”

The post Latest IRS Procedure for a Nonresident Alien to get an EIN appeared first on Arizona Limited Liability Company Law.

    

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