March 4, 2024

Image result for Here’s What You Need to Know About the New Arizona LLC Law

If you are operating a company in Arizona or you plan on forming one soon, there are some new changes to the laws that you should be aware of. As of April 10th, 2018, a new law was signed by Governor Ducey that changes that way that some companies work. The new Arizona LLC law is called the Arizona Limited Liability Company Act (“ALLCA”) and was filed under SB 1353. It’s the first time this mandate has been updated since 1992.

Many of the previous statutes in this law continue to stay in effect, but the new law does add some changes that you’ll want to be aware of. The new law does not officially take effect until August of 2019, and won’t fully replace the old law until 2020, but has some interesting updates that all business owners should understand.


Under the new provision, LLCs that are based in Arizona will still function as “partnerships,” but there are some differences that will take place, too. Namely, the operating agreement will change, with the new updates declaring that operating agreements can consist of either oral, written or both. If you’re operating an LLC that’s formed before the end of August, 2019, you can still use the old format. But for entities that are created after this date, you’ll need to abide by the new rules.

Updates to Managers & Members

New updates to how members and managers represent an LLC will also take effect. Namely, this represents how members and managers can act, stating that they must act in compliance with the company and not in a manner that would directly compete with the LLC. What’s more, members and managers must declare whether any known conflicts of interest exist.

Another key note from this new law is that members and managers are required to act with a “duty of care.” This means that they cannot knowingly engaged in conduct that would be considered detrimental or reckless to the company. In addition, the new law prevents creditors from using membership interest in levies and foreclosures but does allow them to collect on any monies that are disbursed to the members from the LLC.

Taxation & Liability

Finally, the new Arizona LLC law does not make any changes to taxation or liability. This means that a properly formed LLC will still offer many of the same protections it used to. But what this also means is that if you are looking to form an LLC or update the operating agreement of the one that you’re currently managing, you will want to first consult with an experienced attorney to gain actionable advice.