Arizona Laws 29-3407. Management of limited liability company
A. Management of a limited liability company is reserved to its members unless the articles of organization provide that the company is managed by one or more managers.
Terms Used In Arizona Laws 29-3407
- Action: includes any matter or proceeding in a court, civil or criminal. See Arizona Laws 1-215
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Articles of organization: means the articles required by section 29-3201. See Arizona Laws 29-3102
- Majority in interest of the members: means , at any particular time, one or more members that hold in the aggregate a majority of the interests in the limited liability company's profits held at that time by all members, disregarding any profit interests held by persons that are not members. See Arizona Laws 29-3102
- Manager: means a person that under the operating agreement of a manager-managed limited liability company is responsible, alone or in concert with others, for performing the management functions stated in section 29-3407, subsection C. See Arizona Laws 29-3102
- Manager-managed limited liability company: means a limited liability company that qualifies under section 29-3407, subsection A. See Arizona Laws 29-3102
- Member: means a person that both:
(a) Has become a member of a limited liability company under section 29-3401 or was a member in a company when the company became subject to this chapter under section 29-3110. See Arizona Laws 29-3102
- Member-managed limited liability company: means a limited liability company that is not a manager-managed limited liability company. See Arizona Laws 29-3102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Operating agreement: means the agreement, whether or not referred to as an operating agreement and whether oral, implied, in a record or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning the matters described in section 29-3105, subsection A. See Arizona Laws 29-3102
- Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation or government or governmental subdivision, agency or instrumentality or any other legal or commercial entity. See Arizona Laws 29-3102
- Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and that is retrievable in a perceivable form. See Arizona Laws 29-3102
- Transferable interest: means the right, as initially owned by a person in the person's capacity as a member, to receive distributions from a limited liability company, whether or not the person remains a member or continues to own any part of the right, and applies to any fraction of the interest, by whomever owned. See Arizona Laws 29-3102
B. In a member-managed limited liability company, the following apply:
1. Except as expressly provided in this chapter, the management and conduct of the company are vested in the members.
2. Within the ordinary course of the company’s activities and affairs, each member has the right to manage and conduct the company’s activities and affairs.
3. Except as otherwise provided in this chapter, a majority in interest of the members shall decide any of the following:
(a) Matters that are outside the ordinary course of the company’s activities and affairs but within the company’s purpose.
(b) Matters on which there exists a known difference among members.
(c) Whether to make an interim distribution before dissolution and winding up.
(d) Whether to make an advance to a member or manager under section 29-3408, subsection C.
4. The affirmative vote or consent of all the members is required to do any of the following:
(a) Undertake, or authorize a member or other person to undertake, an act outside the scope of the company’s purpose, as stated in the operating agreement, or that otherwise violates the operating agreement.
(b) Amend the operating agreement.
(c) Authorize an amendment to the articles of organization that changes the company from a member-managed limited liability company to a manager-managed limited liability company.
(d) Issue a transferable interest in the company to any person.
(e) Take any action requiring the approval of all members under this chapter.
C. In a manager-managed limited liability company, the following apply:
1. Except as expressly provided in this chapter, the right to manage the company is vested in the manager or managers.
2. Within the ordinary course of the company’s activities and affairs, each manager has the right to manage and conduct the company’s activities and affairs.
3. Except as otherwise provided in this chapter, a majority of the managers shall decide any of the following:
(a) Matters that are outside the ordinary course of the company’s activities and affairs but within the company’s purpose.
(b) Matters on which there exists a known difference among managers.
(c) Whether to make an interim distribution before dissolution and winding up.
(d) Whether to make an advance to a member or manager under section 29-3408, subsection C.
4. The affirmative vote or consent of all members is required to do any of the following:
(a) Undertake, or authorize a manager, member or other person to undertake, an act outside the scope of the company’s purpose, as stated in the operating agreement, or that otherwise violates the operating agreement.
(b) Amend the operating agreement.
(c) Authorize an amendment to the articles of organization that changes the company from a manager-managed limited liability company to member-managed limited liability company.
(d) Issue a transferable interest in the limited liability company to any person.
(e) Take any action requiring the approval of all members under this chapter.
5. A manager may be chosen at any time by the affirmative vote or consent of a majority in interest of the members and remains a manager until a successor has been chosen, unless the manager at an earlier time resigns, is removed or dies or, in the case of a manager that is not an individual, terminates. A manager may be removed at any time by the affirmative vote or consent of a majority in interest of the members without notice or cause.
6. A person is not required to be a member to be a manager, but the dissociation of a member that is also a manager removes the person as a manager. If a person that is both a manager and a member ceases to be a manager, that cessation does not by itself dissociate the person as a member.
7. A person’s ceasing to be a manager does not discharge any debt, obligation or other liability to the limited liability company or members that the person incurred while a manager.
D. An action requiring the vote or consent of members or managers under this chapter may be taken without a meeting if the action is approved by the minimum number of members or managers required to approve the action. A member may appoint a proxy or other agent to vote, consent or otherwise act for the member by signing an appointing record, personally or by the member’s agent.
E. The dissolution of a limited liability company does not affect the applicability of this section. However, a person that wrongfully causes dissolution of the company loses the right to participate in management as a member and a manager and that person may not be included in determining whether a majority in interest of the members or, in the case of a manager-managed limited liability company, a majority of the managers has voted for or consented to any matter or action.
F. A limited liability company shall reimburse a member for an advance to the company beyond the amount of capital the member agreed to contribute.
G. A member is not entitled to remuneration for services performed for a member-managed limited liability company except for reasonable compensation for services rendered in winding up the activities of the company.