If there are any descrepencies between your current LLC setup and the information in your Articles of Organization, be sure to read this page!
What is an Amendment and why do I need file one?
An Article of Amendment is filed to make a formal change to the original Articles of Organization on file with the AZ Corporation Commission (ACC). An LLC must amend its Articles of Organization if:
For instance, the following cases would require amendment to the Articles of Organization within 30 days of the event:
What is a Statement of Change?
A Statement of Change also makes changes or updates to the original Articles of Organization. In certain cases, a Statement of Change can be filed with the ACC instead of Articles of Amendment. This is less costly and only applicable in the following cases:
To find out more about using our easy online service for your Statement of Change, click here.
What is the process to file an Amendment?
1. Review the Operating Agreement 2. File an Article of Amendment with the ACC 3. Publication & Affidavit 4. Inform the appropriate agencies of the changes 5. Amend the Operating Agreement 6. Create additional documentation 7. Prepare Minutes or written resolution 8. Change company material
1. Review the Operating Agreement – Review the company’s Operating Agreement (OA) to determine the appropriate procedure and vote required to make an amendment. If the company does not have an Operating Agreement, then the Arizona statute must be reviewed for the appropriate voting requirement. Note: An amendment that is solely for the purpose of correcting a false or inaccurate statement in the Articles of Organization may be filed at any time by a manager (if manager-managed) or a member (if member-managed).
2. File an Article of Amendment with the ACC. The Articles must be signed by a manager (if the LLC is manager managed) or a member (if the LLC is member managed).
3. Publication & Affidavit – In some circumstances, the Articles of Amendment must be published in a newspaper of general circulation in the county of the LLC’s known place of business for three (3) consecutive publications within sixty (60) days after the Articles of Amendment are filed with the ACC. Upon completion of the publication, the publisher will provide an Affidavit of Publication confirming the dates of publication. This Affidavit must be filed with the ACC within 90 days of filing of the Articles.
4. Inform the appropriate agencies of the changes. For instance, if the company changes its address, the company needs to update its address with all licensing agencies.
5. Amend the Operating Agreement – Once the ACC approves the company’s Amendment, the company should amend their OA with the new change (i.e. new name, members added, members removed, etc.).
6. Create additional documentation – Depending on the type of Amendment, additional documentation may be required. It is very important to document any change in ownership for business, legal and tax reasons. If you have any questions, please consult a business attorney. Examples:
It is very important for the company to consider any security issues that may be involved by selling or assigning the interest to a new member. For a detailed discussion of securities issues, click here.
7. Prepare Minutes or written resolution – The members or managers should hold a meeting and prepare minutes or a written resolution which details the action that was taken pertaining to the amendment. Examples:
The Minutes/Resolution should approve:
The Minutes/Resolution should be signed in accordance with the Operating Agreement; if there is no OA or it does not provide direction in this case, all members must sign including new members.
8. Change company material – As appropriate, update your company material to reflect a new name/address, including your letterhead, business cards, invoices, marketing material, website, and all other materials and documents that contain the relevant information.
Consequences for Failure to Amend
If the LLC fails to amend its Articles of Organization as required by statute, the LLC may not file a lawsuit in the name of the LLC in any court in Arizona until it has first amended its Articles of Organization. As a practical matter, this means if the LLC wants to sue a third party for a breach of contract claim or to collect on an account or for any reason, it cannot do so until it amends its articles.
Under Arizona statute, a member will be protected from liability if the Articles are amended within thirty (30) days of the change of facts or circumstances requiring the amendment. However, if a person suffers a loss by relying on a false statement contained in the Articles of Organization, the person may recover damages from the LLC. Additionally, the injured party may recover damages from any person who executes the Articles, causes another to execute the Articles or any “responsible person” if that person knew or should have known the statement was false at the time the Articles were executed. A person who relies on a false statement may also recover damages from any responsible person who knows, or reasonably should have known, that any arrangement or fact described in the Articles has changed, making the statement inaccurate within a sufficient time before the statement was relied on to have enabled the responsible person to amend the Articles. A “responsible person” is defined as a manager of a manger managed LLC or a member of a member managed LLC. The important lesson to take from this is make sure you amend your articles within thirty (30) days of the change of facts or circumstances requiring the amendment!