This is the third and final part on our summary of Arizona’s new Entity Restructuring Act (the “Act”). This Act creates a greater amount of flexibility for us in Arizona in today’s fast pace world to restructure all types of business entities and affairs without having to resort to other jurisdictions to meet those various entity needs. The Act permits restructuring interactions among various types of legal entities involving Arizona entities, as well as Arizona entities and entities from other states or countries where those foreign states or countries have similarly flexible statutes.
Parts 1 and 2 of my blog dealt with entity conversions, domestications, mergers and interest exchanges. This final installment will touch on entity divisions. Under ARS §§ 29-2601 though, the rules are laid out for an entity to adopt a Plan of Divisions whereby an entity can divide into multiple entities with the original entity being one of the resulting entities or with all new entities with the original entity dissolving.
Once the Plan of Division has been approved by the existing entity and its owners, a Statement of Division is delivered to the Arizona Corporation Commission for filing and, where a foreign state or country jurisdiction is involved and as may be required under the circumstances, with that state’s or country’s appropriate filing and regulatory body such as the secretary of state’s office. If the division involves multiple jurisdictions, then it is very important to review the statutes of the foreign state or country to determine that the transaction contemplated is feasible in light of that jurisdiction’s entity laws.
Michael W. Margrave