There are two bills pending in the current session of the Arizona Legislature which will be of interest to persons utilizing or contemplating utilizing limited liability companies to conduct business activities.
Ownership Interests: Senate Bill 1233 would authorize owning limited liability company interests as joint tenants with right of survivorship or as community property with right of survivorship as the circumstances dictate. This would enable a person to be a member in his or her name, but to hold the economic interest with one or more other persons or to have two or more persons owning the interest and being treated as members of the LLC for all purposes. In the event a member dies, the surviving member would own the ownership interest totally in his or her name and would either be be a member for all purposes or an assignee of the economic interest for all or part of the interest until admitted as a member.
Series: While states such as Delaware have long permitted limited liability companies to structure members in series, House Bill 2166 is under consideration in order to update Arizona’s statutes to permit Arizona limited liability companies to create one or more series of members and to effectively treat each series as a separate unit for all purposes, including liabilities. As an example, a person owning real estate would often form a separate limited liability company for each property owned because of liability and other reasons. This change would permit one limited liability company to be created in series, which would enable a separate series own each parcel and thereby segregate liabilities and allocations of profits and distributions of cash.
Michael W. Margrave