Two new legislative bills were enacted into law in May, 2016. SB1356 became effective August 6, 2016, and HB2447 will become effective January 1, 2017, continuing the update of company law by Arizona’s legislature started last year with the enactment of the Entity Restructuring Act. While most changes arising from the new 2016 legislation will affect corporations, some changes do impact limited liability companies as well.
This blog will point out some brief highlights contained in the new legislation with subsequent blogs offering more details.
The SB1356 changes mostly impact corporate governance. The following are just three examples of such changes:
- The certificate of disclosure required to be filed upon formation and with the annual disclosure reports has shortened the time frame for reporting mandated disclosures re criminal and bankruptcy matters from seven years to five years.
- Previously, taking corporate action through a written consent in lieu of an actual meeting of the shareholders required unanimous approval by all the shareholders. ARS§ 10-704 now permits majority approval provided that shareholders holding the minimum number of shares required to pass a matter if voted on at a regular meeting of the shareholders at which all shareholders entitled to vote are present to sign the consent approving the matter, except in a number of situations where all shareholders must approve by written consent. One example of where unanimous approval is required for the written consent to be effective involves the election or removal of directors. Another example is if the corporation was formed prior to the effective date of SB1356 and its bylaws or articles require unanimous vote and its articles or bylaws have not yet been amended to follow the provisions of the new law.
- ARS §10-140(21) provides a definition of “Electronic Transmission.” And the new law provides that for consents in lieu of a meeting of the shareholders or the board, the signatures may be either in writing or in electronic form. The minutes must be kept in paper format if written records are maintained and in electronic format if the minutes are maintained in electronic format.
HB2447 requires the Arizona Corporation Commission to establish a searchable database with respect to certain documents that current statues require to be published. This would impact both corporations and limited liability companies. As this legislation does not come into effect until January 1, 2017, much information will need to be provided by the Arizona Corporation Commission between now and then. However, ARS §10-130 points out the specific corporate and limited liability statutes that will be governed by new law. When implemented, the Arizona Corporation Commission will be precluded from charging any entity a fee for entering information.
Here is an interesting provision regarding who will be able to utilize the data base. It applies only to entities whose “known place of business” is in a county with a population of more than 800,000 people. This only includes Maricopa and Pima Counties at the present time.
Stay tuned for future blogs with more details on the new legislation.
Michael W. Margrave
Disclaimer: This blog is for information purposes only. Legal advice is provided only through a formal, written attorney/client agreement.