Why and How to Choose a Statutory Agent in Arizona
January 11, 2021
Why and How to Choose a Statutory Agent in Arizona
All businesses need a reliable street address where legal documents can be delivered, including service of process if a business is sued. In addition, there needs to be a designated person or entity at that location whose job is to receive the documents and forward them to the appropriate individuals at the company.
For a corporation or limited liability company (LLC), a statutory agent is that person or entity. However, Arizona law limits a company’s choice of statutory agent. Below, we explain more about why and how to choose one.
Why Choose a Statutory Agent?
According to the Arizona Corporation Commission (ACC), a statutory agent in Arizona is “an individual or a business entity that a corporation or LLC appoints for the purpose of accepting service of process (lawsuit papers or legal documents) for the corporation or LLC.” Under A.R.S. § 29-3115, all registered LLCs and corporations must appoint a statutory agent in Arizona.
The statutory agent must accept their appointment by signing a statement of acceptance. In addition, the corporation or LLC must continually maintain a statutory agent with a valid street address in the ACC’s records. The corporation or LLC will be administratively dissolved if it fails to meet this requirement.
How to Choose a Statutory Agent
In Arizona, a statutory agent can be: a) an individual, b) a corporation or LLC registered in Arizona, or c) a foreign corporation or LLC that is authorized to do business in Arizona.
A corporation or LLC cannot serve as its own statutory agent. In other words, it must appoint a person or entity that is separate from itself. The statutory agent can be a member or manager of an LLC, as long as they are serving as the statutory agent in their individual capacity. However, there are several downsides to this approach in comparison with hiring an outside, commercial statutory agent. These include:
– The member or manager could be personally served with a lawsuit at the office, which could be awkward, especially in front of customers or employees.
– The member or manager may not be comfortable with their name and home address being on file with the business’s other public records.
– Statutory agents must always be available to receive official documents, which could be problematic if the designated member or manager is away from the office frequently.
– Someone located in Arizona will not be able to serve as the statutory agent in other states if the company does business outside of Arizona.
For these reasons, it often makes sense to hire a commercial statutory agent that has professional experience and will always be available to receive important documents. Commercial statutory agents specialize in and have considerable experience receiving service of process and other important documents and forwarding them to a designated address.
When choosing a statutory agent, select a person or entity that is reliable, has a reliable street address (a P.O. box is insufficient), is available at that address during normal business hours to receive documents on behalf of the business, and ideally has prior experience as a statutory agent. While a family member or friend can serve as a statutory agent, they typically do not meet these criteria and are not the best choice.
Choose a Statutory Agent That Is Reliable
Having a reliable statutory agent is crucial because they are responsible for forwarding service of process and important notices from the state to the appropriate members or officers of the company. Failing to do so can have serious consequences. For example, notices from the ACC, Arizona Department of Revenue, and other state agencies often state obligations that must be fulfilled by a certain date. Missing these deadlines can result in penalties and fees.
Even more seriously, if the statutory agent is served with a lawsuit and does not forward it to the appropriate individuals at the company, it can result in a default judgment if someone from the company is not in court to provide a defense.
The statutory agent must accept the appointment in writing by completing and submitting form M002i. The ACC provides that only the appointed statutory agent can sign the acceptance form. If the appointed agent is an individual, they sign the form. If an appointed agent is an entity, a designated authorized person signs the form.
Once the statutory agent signs the acceptance form, anyone may submit it to the ACC. Submit the form with whatever other document makes the appointment to ensure that both documents are accurately processed. Although there is no filing fee, if the acceptance is submitted separately from the document making the appointment (which is not recommended), the acceptance can be expedited for a fee ranging from $35 to $400. The fee depends on how soon processing is requested (regular expedited processing or two-hour, four-hour, same-day, or next-day service).
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