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Avoid having your Articles Rejected by the Division
During the past fiscal year, nearly 7,000 LLC documents delivered to the Commission for filing were initially rejected due to non-compliance with the statutory requirements. Five key reasons made up more than half of the rejections. The most common reasons and ways to avoid them are as follows:
- The entity name selected for the LLC was not distinguishable from an existing entity name (16% of rejections). Arizona law requires LLC names to be distinguishable from other entity names on the public record. (A.R.S. §29-602).
How can this error be avoided? Before choosing a name and delivering your articles for filing, thoroughly read the preliminary name search instructions and check the Name Search Screen to determine whether the name that you have selected for your LLC is available. At your discretion, you may also reserve the name that you have selected on-line for a $45 fee. This holds the name that you want for 120 days.
- The management structure was not indicated in the articles (13% of rejections). LLCs may have a manager or a member structure. The structure chosen by the LLC must be stated in the articles (A.R.S. §29-632).
How can this error be avoided? State clearly in the articles of organization whether the management of the LLC will be vested in a manager (or managers) or in the members. If a manager structure is selected, you must list all of the managers in the LLC as well as any members who own 20% or greater interest in the capital or profits of the LLC. If a member structure is selected, all of the members must be listed and you cannot list manager(s). Using the Articles of Organization form provided on this website will help, since the form requires you to select either the member or manager structure. Click here for Forms.
- The Statutory Agent’s signature was not contained in the Articles or a signed Letter of Acceptance from the Statutory Agent was not included with the Articles (10 % of rejections). Arizona law requires that the Statutory Agent consent to the appointment (A.R.S. §29-604).
How can this error be avoided? Remember to have the statutory agent sign the consent or provide a Letter of Acceptance. While the statutes do not indicate the exact verbiage of a consent letter, it can say something to the affect of “I, name of stat agent, having been designated to act as Statutory Agent, hereby consent to act in the capacity until removed or resignation is submitted in accordance with Arizona Revised Statutes”. This consent letter must be signed by the statutory agent. Our forms provide this language and a section for the statutory agent to sign. For a list of downloadable forms, click here.
- The Statutory Agent information does not include an address in the State of Arizona (10% of rejections). Arizona law requires that the Statutory Agent provide a street address in Arizona in order to ensure service of process (A.R.S. §29-632).
How can this error be avoided? Provide a street address along with a name of the Statutory Agent in the articles. A P.O. Box or Personal Mail Box is not sufficient.
- The name of the LLC does not include the required abbreviations (6% of rejections). Arizona law requires that all LLC names include the words "limited liability company" or "limited company" or the abbreviations "L.L.C.", "L.C.", "LLC" or "LC", in uppercase or lowercase letters (A.R.S.§29-602). Professional LLC names must include the words "professional limited liability company" or the abbreviations "P.L.L.C.", "P.L.C.", "PLLC" or "PLC", in uppercase or lowercase letters (A.R.S.§29-845).
How can this error be avoided? Be sure that the name listed in your Article of Organizations includes the required words.
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