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Starting a business as a corporation or LLC requires having a Statutory Agent in Arizona. Learn what the Statutory Agent is, their job duties and the requirements to be one.
What is a Statutory Agent?
A Statutory Agent (typically referred to as a registered agent in most states) is an individual or company who is the central point of contact to receive important legal documents on behalf of a business.
Why is a Statutory Agent Required in Arizona?
A Statutory Agent is required by the Arizona Corporation Commission when filing for a business entity such as a corporation and Limited Liability Company. This appointment is first made in the entity formation documents (Articles of Organization or Articles of Incorporation), but can be changed at any time.
Sole proprietorships and general partnerships do not need a Statutory Agent.
The requirements for an entity to have a Statutory Agent are formed under Arizona Statutes Section 10-501 (corporation) or Section 29-604 (LLC) which mandate registered entities will have and continuously maintain a Statutory Agent and office within the state.
The reason for having one makes sense. If a business is owned by a single-person, it’s easy to determine who should be notified in the event of a lawsuit or tax notice. However, if a business has several owners, members or partners, it would be difficult to determine who the correct contact is. By requiring a central point of contact in the state there is no question that time-sensitive documents are going to the right person in a timely manner.
What Happens If You Don’t Have A Statutory Agent?
For starters the Corporation Commission won’t approve the formation of the entity without one.
Even after starting the business, a Statutory Agent and registered office must be continuously maintained. Not having one can result in issues such as:
- Not Receiving Legal Notices – If the listed Statutory Agent isn’t able to receive legal notices, this doesn’t mean a lawsuit can’t proceed. If a process server is unsuccessful in reaching the company’s Statutory Agent because of a lawsuit (they’ll try a few times), the court can proceed with the case. This could result in a judgement being placed against the business without the owners knowing.
- Administrative Dissolution – In Arizona, if the business doesn’t have a Statutory Agent, the Secretary of State can dissolve the entity.
- Penalties and Fees – By not maintaining a current Statutory Agent, penalties and fees can be levied against the entity and in some cases the owners too. Once an entity is no longer in good standing with the state, the owners have lost their liability protection and are at risk personally.
Who can be a Statutory Agent in Arizona?
A statutory agent in Arizona can be any resident of the state who is 18 years or older, a registered Arizona domestic business entity or a foreign business entity authorized to do business in the state. An entity may not be its own agent.
The statutory agent needs to have a physical address (often referred to as a registered office or principal office) in the state of Arizona. This can be your home address, the address of an accountant or attorney, the address of the business, or a statutory agent service. Any physical address in the state may be used, but PO Boxes and mail drop services are not acceptable, since someone has to be available to sign for documents.
The agent will also need to be available to receive Service of Process on behalf of the business during normal business hours. Service of process refers to the delivery of legal documents, often a summons, subpoena or lawsuit filed against a business entity.
An important requirement for a statutory agent is they must sign the Statutory Agent Acceptance form and file it with the Arizona Corporation Commission.
Can I be my own Statutory Agent in Arizona?
Yes! Any individual, owner, member, officer, director, etc of a business entity that meets the state requirements can be a Statutory Agent.
Why use a Commercial Statutory Agent Service?
Provided one of the members or officers live in Arizona, it’s may be more convenient and less expensive to act as your own agent rather than hiring a service. While this is the route many businesses take, there are a few reasons to consider hiring a service.
- Privacy – The address of the Statutory Agent becomes public record and is available for anybody to see. This can be especially concerning if someone is doing business on the side and they don’t want their employer knowing about the business. Also, if the business is sued, the notice will be delivered to the address on file. This could mean employees, customers or even neighbors witnessing the event. There is always the remote possibility a vindictive litigant or upset customer coming to your home.
- Availability – Arizona requires the Statutory Agent be available at the principal address during normal business hours. The biggest issue with availability, especially if a home address is used is if the agent goes on vacation or is otherwise away for some period of time and can’t be reached.
- If the Business Expands to Additional Locations – If the business will have a physical presence in multiple states (offices, warehouses, employees, etc.), a foreign entity registration will often need to be filed with those states. A Statutory Agent will need to be appointed with a physical address in each state.
- Annual Notices – Statutory Agent services provide reminders on the state requirements such as annual report filings.
How much does a Statutory Agent cost?If you act as your own Registered Agent, there is no cost. Depending on the services provided, a commercial Registered Agent service typically costs between $100-$150 per year. Northwest Registered Agent’s service is $125 per year and offers several extras. Some entity formation companies like IncFile, include a Registered Agent at no cost for the first year when you register your corporation or LLC with them.
Can I change my Statutory Agent?
A Statutory Agent can be changed by submitting the Statement of Change of Known Place of Business Address or Statutory Agent (corporation Form, LLC Form) along with the filing fee to the Arizona Corporation Commission.