Bill Text: AZ SB1114 | 2020 | Fifty-fourth Legislature 2nd Regular | Engrossed
Bill Title: Limited liability companies
Spectrum: Partisan Bill (Republican 1-0)
Status: (Engrossed - Dead) 2020-03-05 - House read second time [SB1114 Detail]
Download: Arizona-2020-SB1114-Engrossed.html
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Senate Engrossed |
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State of Arizona Senate Fifty-fourth Legislature Second Regular Session 2020
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SENATE BILL 1114 |
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AN ACT
amending sections 10‑122.01, 10-401, 10-1506, 10-3401, 10-11506, 20‑1098.04, 29-2105, 29-2406, 29‑3601, 29‑3708, 32-731, 32-747, 32‑1213 and 32-2125, Arizona Revised Statutes; relating to limited liability companies.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 10-122.01, Arizona Revised Statutes, is amended to read:
10-122.01. Public access fund; purpose; exemption; money on deposit account
A. The public access fund is established. The commission shall administer the fund. The fund consists of monies received pursuant to:
1. Section 10‑122, subsections E, F, G, H and K.
2. Section 10‑3122, subsections I and K.
3. Section 29‑851, subsections E and F.
4. 3. Section 29‑3213, subsections E and F.
B. Except as provided in subsection C of this section:
1. Monies in the fund are subject to legislative appropriation.
2. The commission shall spend monies in the fund for a part of the general administrative and legal expenses of the commission and to purchase, install and maintain an improved data processing system on the premises of the commission. The data processing system shall be designed to allow direct online access by any person at a remote location to all public records that are filed with the commission pursuant to this title and title 29, chapter 4 relating to limited liability companies.
3. When sufficient monies have been collected pursuant to section 10‑122, subsections F, G and H, and section 10‑3122, subsection I and section 29‑851, subsection E to pay for the purchase and installation of the data processing system, the commission shall not charge and collect the fees prescribed in section 10‑122, subsection H or section 10‑3122, subsection H.
4. Monies in the fund are exempt from the provisions of section 35‑190 relating to lapsing of appropriations, except that any unencumbered monies in excess of two hundred thousand dollars $200,000 at the end of each fiscal year revert to the state general fund.
C. The money on deposit account is established in the public access fund as a separate account consisting of monies received pursuant to section 10‑122, subsection K, section 10‑3122, subsection K, and section 29‑851, subsection F and section 29‑3213, subsection F. Monies in the money on deposit account:
1. Are held in trust by the commission.
2. May be withdrawn by the commission only:
(a) To cover fees that are due pursuant to this title or title 29, chapter 4 relating to limited liability companies on delivery of documents for filing or on a request for services by a person who advanced monies to the commission pursuant to section 10‑122, subsection K, section 10‑3122, subsection K, or section 29‑851, subsection F or section 29-3213, subsection F.
(b) To refund the monies advanced in subdivision (a) of this paragraph if the person who requested services pursuant to subdivision (a) of this paragraph requests the refund.
(c) For the disposition of unclaimed property pursuant to title 44, chapter 3.
3. Are not subject to either:
(a) Legislative appropriation.
(b) Reversion to the state general fund.
Sec. 2. Section 10-401, Arizona Revised Statutes, is amended to read:
10-401. Corporate name
A. A corporate name:
1. Shall contain the word "association", "bank", "company", "corporation", "limited" or "incorporated" or an abbreviation of one of these words or words or abbreviations of like import in another language.
2. Shall not contain language stating or implying that the corporation is organized for a purpose other than that permitted allowed by section 10‑301 and its articles of incorporation.
3. Notwithstanding paragraph 1 of this subsection, shall not include the words "bank", "deposit", "credit union", "trust" or "trust company" separately or in combination to indicate or convey the idea that the corporation is engaged in banking or trust business unless the corporation is to be and becomes actively and substantially engaged in the banking, credit union or trust business or the corporation is a holding company holding substantial interest in companies actively and substantially engaged in the banking or trust business.
4. Shall not contain the words "limited liability company" or "limited company" or the abbreviations "L.L.C.", "L.C.", "LLC" or "LC", in uppercase or lowercase letters.
B. Except as authorized by subsections C and D of this section, a corporate name shall be distinguishable from all of the following:
1. The corporate name of a corporation incorporated in this state or a foreign corporation authorized to transact business in this state.
2. A corporate name reserved under section 10‑402 or registered under section 10‑403.
3. A fictitious name adopted by a foreign corporation under section 10‑1506.
4. The corporate name of a nonprofit corporation incorporated under this title or a foreign nonprofit or not for profit corporation authorized to conduct affairs in this state.
5. The partnership name of a limited partnership organized and registered under the laws of this state or of a foreign limited partnership authorized to transact business in this state.
6. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited liability company authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
8. The name of a registered limited liability partnership registered under title 29, chapter 5, article 10 or a foreign registered limited liability partnership authorized to transact business in this state.
C. A corporation may apply to the commission for authorization to use a name that is not distinguishable from one or more of the names described in subsection B of this section. The commission shall authorize use of the name applied for if either:
1. The other entity consents to the use in writing and submits an undertaking in a form satisfactory to the commission to change its name to a name that is distinguishable from the name of the applying corporation.
2. The applicant delivers to the commission a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
D. A corporation may use the name, including a fictitious name, of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the proposed user corporation either has:
1. Merged with the other corporation.
2. Been formed by reorganization of the other corporation.
3. Acquired all or substantially all of the assets, including the corporate name, of the other corporation.
E. Chapters 1 through 17 of this title do not control the use of fictitious names.
Sec. 3. Section 10-1506, Arizona Revised Statutes, is amended to read:
10-1506. Corporate name of foreign corporation
A. If the corporate name of a foreign corporation does not satisfy the requirements of section 10‑401, to obtain or maintain a grant of authority to transact business in this state the foreign corporation:
1. Shall either:
(a) Add the word "association", "bank", "company", "corporation" or "incorporated" or an abbreviation of one of these words to its corporate name for use in this state.
(b) Use a fictitious name that satisfies the requirements of section 10‑401 to transact business in this state if its real name is unavailable and it delivers to the commission for filing a copy of the resolution of its board of directors, certified by its secretary, adopting the fictitious name.
2. Shall not include language in its corporate name stating or implying that the foreign corporation is organized for a purpose other than that permitted allowed by section 10‑301 and its articles of incorporation.
3. Notwithstanding paragraph 1, subdivision (a) of this subsection, shall not include the words "bank", "deposit", "credit union", "trust" or "trust company" separately or in combination in its corporate name to indicate or convey the idea that the foreign corporation is engaged in banking or trust business unless the foreign corporation is to be and becomes actively and substantially engaged in the banking, credit union or trust business or the foreign corporation is a holding company holding a substantial interest in companies actively and substantially engaged in the banking or trust business.
B. Except as authorized by subsections subsection C and D of this section, the corporate name, including a fictitious name, of a foreign corporation shall be distinguishable from:
1. The corporate name of a corporation incorporated in this state or a foreign corporation authorized to transact business in this state.
2. A corporate name reserved under section 10‑402 or registered under section 10‑403.
3. The fictitious name adopted by another foreign corporation under this section.
4. The corporate name of a nonprofit corporation incorporated under this title or a foreign nonprofit or not for profit corporation authorized to conduct affairs in this state.
5. The partnership name of a limited partnership organized and registered under the laws of this state or of a foreign limited partnership authorized to transact business in this state.
6. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited liability company authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
8. The name of a registered limited liability partnership registered under title 29, chapter 5, article 10 or a foreign registered limited liability partnership authorized to transact business in this state.
C. Notwithstanding subsection B of this section, The commission shall authorize the use of a name that is not distinguishable under subsection B of this section from one or more of the names described in subsection B of this section if the applicant delivers to the commission a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
D. If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of section 10‑401, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of section 10‑401 and obtains amended authority under section 10‑1504.
Sec. 4. Section 10-3401, Arizona Revised Statutes, is amended to read:
10-3401. Corporate name
A. A corporate name shall not contain language that states or implies that the corporation is organized for a purpose other than the purpose permitted allowed by section 10‑3301 and in its articles of incorporation.
B. Except as authorized by subsection subsections C and D of this section, a corporate name must be distinguishable from all of the following:
1. The corporate name of a corporation incorporated in this state or a foreign corporation authorized to conduct affairs in this state.
2. A corporate name reserved under section 10‑402 or 10‑3402 or registered under section 10‑403 or 10‑3403.
3. A fictitious name of a foreign corporation under section 10‑1506 or 10‑11506.
4. The corporate name of a business corporation incorporated under this title or a foreign business corporation authorized to transact business in this state.
5. The partnership name of a limited partnership organized and registered under the laws of this state or of a foreign limited partnership authorized to transact business in this state.
6. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited liability company authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
8. The name of a registered limited liability partnership registered under title 29, chapter 5, article 10 or a foreign registered limited liability partnership authorized to transact business in this state.
C. A corporation may apply to the commission for authorization to use a name that is not distinguishable from one or more of the names described in subsection B of this section. The commission shall authorize use of the name applied for if either:
1. The other corporation consents to the use in writing and submits an undertaking in a form satisfactory to the commission to change its name to a name that is distinguishable from the name of the applying corporation.
2. The applicant delivers to the commission a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
D. A corporation may use the name, including a fictitious name, of another domestic or foreign business or nonprofit corporation that is used in this state if the other corporation is incorporated or authorized to transact business or conduct affairs in this state and the proposed user corporation either has:
1. Merged with the other corporation.
2. Been formed by reorganization of the other corporation.
3. Acquired all or substantially all of the assets, including the corporate name, of the other corporation.
E. Chapters 24 through 42 of this title do not control the use of fictitious names.
Sec. 5. Section 10-11506, Arizona Revised Statutes, is amended to read:
10-11506. Corporate name of foreign corporation
A. If the corporate name of a foreign corporation does not satisfy the requirements of section 10‑3401, to obtain or maintain a grant of authority to conduct affairs in this state the foreign corporation shall use a fictitious name that satisfies the requirements of section 10‑3401 to conduct affairs in this state if its real name is unavailable and it delivers to the commission for filing a copy of the resolution of its board of directors, certified by a duly authorized officer, adopting the fictitious name. The foreign corporation shall not include language in its corporate name stating or implying that the foreign corporation is organized for a purpose other than that permitted allowed by section 10‑3301 and its articles of incorporation.
B. Except as authorized by subsection subsections C and D of this section, the corporate name, including a fictitious name, of a foreign corporation shall be distinguishable from:
1. The corporate name of a corporation incorporated under this title or a foreign nonprofit, not for profit, business or close corporation authorized to transact business or conduct affairs in this state.
2. A corporate name reserved under section 10‑402 or 10‑3402 or registered under section 10‑403 or 10‑3403.
3. The fictitious name of another foreign business or nonprofit corporation.
4. The partnership name of a limited partnership organized and registered under the laws of this state or of a foreign limited partnership authorized to transact business in this state.
5. The name of a limited liability company organized under title 29, chapter 4 or a foreign limited liability company authorized to transact business in this state.
6. The name of a registered limited liability partnership registered under title 29, chapter 5, article 10 or a foreign registered limited liability partnership authorized to transact business in this state.
7. A trade name registered pursuant to title 44, chapter 10, article 3.1.
C. A corporation may apply to the commission for authorization to use a name that is not distinguishable from one or more of the names described in subsection B of this section. The commission shall authorize use of the name applied for if either:
1. The other corporation consents to the use in writing and submits an undertaking in a form satisfactory to the commission to change its name to a name that is distinguishable from the name of the applying corporation.
2. The applicant delivers to the commission a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
D. A corporation may use the name, including a fictitious name, of another domestic or foreign business or nonprofit corporation that is used in this state if the other corporation is incorporated or authorized to transact business or conduct affairs in this state and the proposed user corporation either has:
1. Merged with the other corporation.
2. Been formed by reorganization of the other corporation.
3. Acquired all or substantially all of the assets, including the corporate name, of the other corporation.
E. Chapters 24 through 42 of this title do not control the use of fictitious names.
F. If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of section 10‑3401, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of section 10‑3401 and amends its application for authority under section 10‑11504.
Sec. 6. Section 20-1098.04, Arizona Revised Statutes, is amended to read:
20-1098.04. Formation of captive insurers; redomestication
A. An agency captive insurer or protected cell captive insurer shall be incorporated as a stock insurer with its capital divided into shares and held by the stockholders. Each owner of an agency captive insurer shall be licensed as an insurance producer.
B. A group captive insurer may be formed in any of the following ways:
1. Incorporated as a stock insurer with its capital divided into shares and held by the stockholders.
2. Incorporated as a mutual insurer without capital stock, the governing body of which is elected by the member organizations of its association.
3. Organized as a reciprocal insurer pursuant to article 2 of this chapter.
4. Incorporated as a nonprofit corporation pursuant to title 10, chapter 25.
C. A pure captive insurer may be formed in any of the following ways:
1. Incorporated as a stock insurer with its capital divided into shares and held by the stockholders.
2. Incorporated as a nonprofit corporation pursuant to title 10, chapter 25.
3. Incorporated as a limited liability company pursuant to title 29, chapter 4.
D. The capital stock of a captive insurer that is incorporated as a stock insurer may be authorized with no par value.
E. A captive insurer that is formed as a corporation shall have at least three incorporators, at least one of whom shall be a resident of this state. Notwithstanding subsection B, paragraph 3 of this section, a captive insurer that is formed as a reciprocal insurer may be organized by three or more subscribers, none of whom shall be required to be a resident of this state.
F. A pure captive insurer shall have at least one director. Any other kind of corporate captive insurer shall have at least three directors. Any group captive insurer formed as a reciprocal insurer shall have at least three subscribers' advisory committee members. In addition to independent directors, a group captive insurer may have as many directors as it has members.
G. A captive insurer that is formed as a corporation shall have at least one member of the board of directors who is a resident of this state. A captive insurer that is formed as a reciprocal insurer shall have at least one member of the subscribers' advisory committee who is a resident of this state.
H. The articles of incorporation or bylaws of a captive insurer that is formed as a corporation with more than one director may authorize a quorum of a board of directors to consist of at least one‑third of the fixed or prescribed number of directors, but at least two directors. The subscribers' agreement or other organizing document of a captive insurer formed as a reciprocal insurer may authorize a quorum of a subscribers' advisory committee to consist of at least one‑third of the number of its members, but at least two members.
I. Any foreign or alien insurer may become a domestic captive insurer by complying with the requirements of this article relating to the licensing of a domestic captive insurer and by complying with all applicable requirements of the laws of this state relating to the domestication of a corporation to this state. The effective date of a license that is issued to a foreign or alien insurer domesticated to this state shall be the date of filing its articles of domestication with the corporation commission.
Sec. 7. Section 29-2105, Arizona Revised Statutes, is amended to read:
29-2105. Status of filings; matters regarding filing
A. A filing under this chapter that is signed by a domestic entity becomes part of the public organizational document of the entity if the entity's governing statute provides that similar filings under the governing statute become part of the public organizational document of the entity.
B. Except as otherwise provided in this chapter, matters regarding the filing of documents pursuant to this chapter with the appropriate filing authority, including delivery for filing, effective dates and corrections, are governed by:
1. Title 10, chapter 1, article 2 for business corporations or business trusts.
2. Title 10, chapter 24, article 2 for nonprofit corporations.
3. Chapter 4 7, article 2 of this title for limited liability companies.
4. Chapter 3, article 2 of this title for limited partnerships.
Sec. 8. Section 29-2406, Arizona Revised Statutes, is amended to read:
29-2406. Effect of conversion
A. When a conversion becomes effective:
1. The converted entity is both of the following:
(a) Organized under and subject to the governing statute of the converted entity.
(b) The same entity without interruption as the converting entity.
2. All property, including rights, privileges, immunities and powers, of the converting entity remains vested in the converted entity without assignment, reversion or impairment.
3. All obligations of the converting entity continue as obligations of the converted entity except that only a governor of or interest holder in the converted entity may bring or maintain a claim for dissolution or receivership against the converted entity brought pursuant to any of the following:
(a) Section 10‑1430, subsection B.
(b) Section 10‑1815.
(c) Section 10‑11430, subsection B.
(d) Section 10‑11431, subsection C.
(e) Section 12‑1241.
(f) Section 29‑345.
(g) Section 29‑785.
4. Except as provided by law other than this chapter or the plan of conversion, all of the rights, privileges, immunities, powers and purposes of the converting entity remain in the converted entity.
5. The name of the converted entity may be substituted for the name of the converting entity in any pending action or proceeding except that only a governor of or interest holder in the converted entity may bring or maintain a claim for dissolution or receivership against the converted entity brought pursuant to any of the following:
(a) Section 10‑1430, subsection B.
(b) Section 10‑1815.
(c) Section 10‑11430, subsection B.
(d) Section 10‑11431, subsection C.
(e) Section 12‑1241.
(f) Section 29‑345.
(g) Section 29‑785.
6. If the converted entity is a domestic filing entity, its public organizational document is effective and is binding on its interest holders.
7. If the converted entity is a domestic limited liability partnership, its statement of qualification is effective simultaneously.
8. If the converted entity is to be a qualified foreign entity, the documents it filed to become a qualified foreign entity are effective simultaneously.
9. The private organizational documents of the converted entity that are to be in a record, if any, approved as part of the plan of conversion are effective and are binding.
10. The interests in the converting entity are converted and the interest holders of the converting entity are entitled only to the rights provided to them under the plan of conversion and to any appraisal rights they have under section 29‑2109 and the converting entity's governing statute.
B. Except as provided in the plan of conversion or in the governing statute or organizational documents of the converting entity, the conversion does not give rise to any rights that an interest holder, governor or third party would otherwise have on a dissolution, liquidation or winding up of the converting entity.
C. When a conversion becomes effective, a person that did not have interest holder liability with respect to the converting entity and that becomes subject to interest holder liability with respect to the domestic converted entity as a result of a conversion has interest holder liability only to the extent provided by the governing statute or organizational documents of the domestic converted entity, and then only for those obligations that arise after the conversion becomes effective.
D. When a conversion becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic converting entity with respect to which the person had interest holder liability is as follows:
1. The conversion does not discharge any interest holder liability under the governing statute or organizational documents of a domestic converting entity to the extent the interest holder liability arose before the conversion became effective.
2. The person does not have interest holder liability under the governing statute or organizational documents of the domestic converting entity for any obligation that arises after the conversion becomes effective.
3. The governing statute and organizational documents of the domestic converting entity continue to apply to the release, collection or discharge of any interest holder liability preserved under paragraph 1 of this subsection as if the conversion had not occurred.
4. The person has the same rights of contribution from any other person as are provided by the governing statute or organizational documents of the domestic converting entity with respect to any interest holder liability preserved under paragraph 1 of this subsection as if the conversion had not occurred.
E. When a conversion becomes effective, a foreign entity that is the converted entity:
1. May be served with process in this state for the collection and enforcement of any of its obligations that arise before the conversion becomes effective, including obligations arising out of the exercise of appraisal rights.
2. If it is not a qualified foreign entity, appoints the appropriate filing authority as its agent for service of process for collecting or enforcing those obligations.
F. When the conversion becomes effective, the authority, registration or other qualification granted by the appropriate filing authority to transact business or conduct affairs in this state of a converting entity that is a qualified foreign entity is automatically revoked or cancelled.
G. A conversion does not require the entity to wind up its affairs and does not constitute or cause the dissolution of the entity.
Sec. 9. Section 29-3601, Arizona Revised Statutes, is amended to read:
29-3601. Power to dissociate as member; wrongful dissociation
A. A person has the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will under section 29‑3602, paragraph 1.
B. A person's dissociation as a member is wrongful only if the dissociation either:
1. Is in breach of an express provision of the operating agreement.
2. Occurs before the completion of the winding up of the limited liability company and either:
(a) The person is expelled as a member by judicial order under section 29‑3602, paragraph 5.
(b) The person is dissociated under section 29‑3602, paragraph 7.
C. A person that wrongfully dissociates as a member is liable to the limited liability company and, subject to section 29‑3806, subsection D 29‑3807, to the other members for damages caused by the dissociation. The liability is in addition to any debt, obligation or other liability of the member to the company or the other members. The company may offset its damages against any amount otherwise distributable to the person.
Sec. 10. Section 29-3708, Arizona Revised Statutes, is amended to read:
29-3708. Administrative dissolution
A. The commission may commence a proceeding under subsection B of this section to dissolve a limited liability company administratively if the company does not do any of the following:
1. Pay any fee or penalty required to be paid to the commission not later than sixty days after the fee or penalty is due.
2. Have a statutory agent in this state for at least sixty consecutive days.
3. Have a principal address in this state for at least sixty consecutive days.
4. Notify the commission within sixty days after its statutory agent or principal address has changed or its statutory agent has resigned.
5. Amend its articles of organization or file a statement of change or a statement of correction as required by section 29‑3202.
6. Respond to interrogatories as prescribed in section 29‑3212.
B. If the commission determines that one or more grounds exist for administratively dissolving a limited liability company, the commission shall deliver to the company a notice in a record of the commission's determination by delivering the notice to the address of the company's statutory agent or, if the company does not have a statutory agent or the statutory agent's address is invalid, to the company's principal address.
C. If a limited liability company, not later than sixty days after delivery of the notice under subsection B of this section, does not cure or demonstrate to the satisfaction of the commission the nonexistence of each ground determined by the commission, the commission shall administratively dissolve the company by issuing a statement of administrative dissolution that recites the grounds for dissolution and the effective date of dissolution. The commission shall file the statement and deliver a copy to the company by delivering the statement to the address of the company's statutory agent or, if the company does not have a statutory agent or the statutory agent's address is invalid, to the company's principal address.
D. A limited liability company that is administratively dissolved continues in existence as an entity but may not carry on any activities except as necessary to wind up its activities and affairs and liquidate its assets under sections 29‑3702, 29‑3704, 29‑3705, 29‑3706 and 29‑3707 or to apply for reinstatement under section 29‑3709.
E. The administrative dissolution of a limited liability company does not terminate the authority of its statutory agent.
Sec. 11. Section 32-731, Arizona Revised Statutes, is amended to read:
32-731. Certified public accountant firm registration requirements; performance of attest services and compilation services; definition
A. Except as provided in section 32‑725, subsection G, once every two years each of the following shall pay the registration fee pursuant to section 32‑729 and register with the board as a firm:
1. A business organization that meets all of the following criteria:
(a) Has a simple majority of the ownership, in terms of direct and indirect financial interests and voting rights, that belong to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.
(b) Has an office in this state.
(c) Either:
(i) Provides attest services or compilation services.
(ii) Uses the CPA designation in its firm name.
2. A sole proprietorship that meets all of the following criteria:
(a) Has an owner that is a certified public accountant in good standing in this state.
(b) Has an office in this state.
(c) Either:
(i) Performs attest services or compilation services.
(ii) Uses the CPA designation in its firm name, unless the firm name is the name of the sole proprietor as registered with the board.
3. An individual who meets both of the following criteria:
(a) Is a certified public accountant in good standing in this state.
(b) Performs attest services or compilation services in this state, other than as an owner or employee of a sole proprietorship or business organization required to register under paragraph 1 or 2 of this subsection or in the capacity as an employee of a governmental entity.
B. Attest services or compilation services shall be provided only through a registered firm in good standing in this state. Any attest services or compilation services reports issued by a firm must be signed by a person who is certified pursuant to this chapter or qualified to exercise the limited reciprocity privilege pursuant to section 32‑725, subsection G.
C. An application or registration pursuant to this section shall be made by an owner of the firm who is a certified public accountant in good standing. A firm that is registered pursuant to this section may use the CPA designation in connection with its firm name as provided for by the board in its rules.
D. A firm that applies or registers pursuant to this section shall list in its application or registration all jurisdictions in which the firm has any disciplinary actions, other than for failure to timely renew a registration, license or permit, by any other jurisdiction.
E. Except as provided in subsection F of this section, an applicant for registration or a firm registered pursuant to this section shall notify the board in writing within one month of any change in owners that results in less than a simple majority of the ownership in terms of direct and indirect financial interests and voting rights that belong to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.
F. The board or the board's executive director may grant a reasonable period of time for the firm to take corrective action to maintain its qualifications as a firm.
G. Professional corporations composed of certified public accountants shall meet the requirements of title 10, chapter 20 and any additional nonconflicting requirements contained in this section.
H. Limited liability companies, professional limited liability companies and limited liability partnerships composed of certified public accountants shall meet the requirements of title 29, chapter 4 or 5 or 7 and any additional nonconflicting requirements contained in this section.
I. A registrant may not use any firm name other than the firm name that is registered with the board.
J. For the purposes of this section, "good standing" means:
1. For an individual, a status that allows the individual to use the CPA designation and to perform accounting services for a fee or other compensation.
2. For a firm, a status that allows the firm to use the CPA designation.
Sec. 12. Section 32-747, Arizona Revised Statutes, is amended to read:
32-747. CPA designation; title; use; unlawful use
A. A registrant or an individual or firm that qualifies for the limited reciprocity privilege under section 32‑725 shall be known as a certified public accountant or certified public accounting firm and may use the CPA designation unless the status of the registrant, individual or firm is canceled, expired, suspended, relinquished or revoked.
B. An individual or firm when referring to accounting or accounting practices shall not assume or use the CPA designation unless the individual or firm is qualified pursuant to subsection A of this section.
C. This section does not apply to or affect or limit the right to continuous use of a firm name, or a modification of a firm name, by successor firms formed by the remaining owner or owners or added owner or owners even though the individuals whose names are included in the firm name are not owners, but the successor firm shall conform to all other provisions of this chapter. This section does not apply to or affect or limit the right to continuous use of a professional corporation's name as provided pursuant to this chapter or title 10, chapter 20 or a professional limited liability company's name pursuant to this chapter or title 29, chapter 4.
D. The displaying or uttering by a registrant or an individual or firm that qualifies for the limited reciprocity privilege under section 32‑725 of any card, sign, advertisement or other printed, engraved or written instrument or device bearing a name and intended to be confused with the CPA designation is prima facie evidence in a prosecution, proceeding or hearing brought under this section that the registrant, individual or firm so displayed caused or procured the displaying or uttering of the card, sign, advertisement or other printed, engraved or written instrument or device.
E. A firm may not refer to itself as a CPA firm unless it has a simple majority of the ownership in terms of direct and indirect financial interests and voting rights that belong to holders in good standing of certificates or licenses as certified public accountants in any jurisdiction.
Sec. 13. Section 32-1213, Arizona Revised Statutes, is amended to read:
32-1213. Business entities; registration; renewal; civil penalty; exceptions
A. A business entity may not offer dental services pursuant to this chapter unless:
1. The entity is registered with the board pursuant to this section.
2. The services are conducted by a licensee pursuant to this chapter.
B. The business entity must file a registration application on a form provided by the board. The application must include:
1. A description of the entity's services offered to the public.
2. The name of any dentist who is authorized to provide and who is responsible for providing the dental services offered at each office.
3. The names and addresses of the officers and directors of the business entity.
4. A registration fee prescribed by the board in rule.
C. A business entity must file a separate registration application and pay a fee for each branch office in this state.
D. A registration expires three years after the date the board issues the registration. A business entity that wishes to renew a registration must submit an application for renewal as prescribed by the board on a triennial basis on a form provided by the board before the expiration date. An entity that fails to renew the registration before the expiration date is subject to a late fee as prescribed by the board by rule. The board may stagger the dates for renewal applications.
E. The business entity must notify the board in writing within thirty days after any change:
1. In the entity's name, address or telephone number.
2. In the officers or directors of the business entity.
3. In the name of any dentist who is authorized to provide and who is responsible for providing the dental services in any facility.
F. The business entity shall establish a written protocol for the secure storage, transfer and access of the dental records of the business entity's patients. This protocol must include, at a minimum, procedures for:
1. Notifying patients of the future locations of their records if the business entity terminates or sells the practice.
2. Disposing of unclaimed dental records.
3. The timely response to requests by patients for copies of their records.
G. The business entity must notify the board within thirty days after the dissolution of any registered business entity or the closing or relocation of any facility and must disclose to the board the entity's procedure by which its patients may obtain their records.
H. The board may do any of the following pursuant to its disciplinary procedures if an entity violates the board's statutes or rules:
1. Refuse to issue a registration.
2. Suspend or revoke a registration.
3. Impose a civil penalty of not more than two thousand dollars $2,000 for each violation.
4. Enter a decree of censure.
5. Issue an order prescribing a period and terms of probation that are best adapted to protect the public welfare and that may include a requirement for restitution to a patient for a violation of this chapter or rules adopted pursuant to this chapter.
6. Issue a letter of concern if a business entity's actions may cause the board to take disciplinary action.
I. The board shall deposit, pursuant to sections 35‑146 and 35‑147, civil penalties collected pursuant to this section in the state general fund.
J. This section does not apply to:
1. A sole proprietorship or partnership that consists exclusively of dentists who are licensed pursuant to this chapter.
2. Any of the following entities licensed under title 20:
(a) A service corporation.
(b) An insurer authorized to transact disability insurance.
(c) A prepaid dental plan organization that does not provide directly for prepaid dental services.
(d) A health care services organization that does not provide directly for dental services.
3. A professional corporation or professional limited liability company, the shares of which are exclusively owned by dentists who are licensed pursuant to this chapter and that is formed to engage in the practice of dentistry pursuant to title 10, chapter 20 or title 29, chapter 4, article 11 relating to professional limited liability companies.
4. A facility regulated by the federal government or a state, district or territory of the United States.
5. An administrator or executor of the estate of a deceased dentist or a person who is legally authorized to act for a dentist who has been adjudicated to be mentally incompetent for not more than one year from after the date the board receives notice of the dentist's death or incapacitation pursuant to section 32‑1270.
K. A facility that offers dental services to the public by persons licensed under this chapter shall be registered by the board unless the facility is any of the following:
1. Owned by a dentist who is licensed pursuant to this chapter.
2. Regulated by the federal government or a state, district or territory of the United States.
L. Except for issues relating to insurance coding and billing that require the name, signature and license number of the dentist providing treatment, this section does not:
1. Authorize a licensee in the course of providing dental services for an entity registered pursuant to this section to disregard or interfere with a policy or practice established by the entity for the operation and management of the business.
2. Authorize an entity registered pursuant to this section to establish or enforce a business policy or practice that may interfere with the clinical judgment of the licensee in providing dental services for the entity or may compromise a licensee's ability to comply with this chapter.
M. The board shall adopt rules that provide a method for the board to receive the assistance and advice of business entities licensed pursuant to this chapter in all matters relating to the regulation of business entities.
N. No An individual currently holding a surrendered or revoked license to practice dentistry or dental hygiene in any state or jurisdiction in the United States may not have a majority ownership interest in the business entity registered pursuant to this section. Revocation and surrender of licensure shall be limited to disciplinary actions resulting in loss of license or surrender of license instead of disciplinary action. Dentists or dental hygienists affected by this subsection shall have one year from after the surrender or revocation to divest themselves of their ownership interest. This subsection does not apply to publicly held companies. For the purposes of this subsection, "majority ownership interest" means an ownership interest greater than fifty per cent percent.
Sec. 14. Section 32-2125, Arizona Revised Statutes, is amended to read:
32-2125. Licenses for corporations, limited liability companies or partnerships
A. A corporation, limited liability company or partnership applying for a broker's license for the entity shall designate a natural person who is licensed as a broker and who is an officer of the corporation, manager of the limited liability company if management of the limited liability company is vested in one or more managers, member of the limited liability company if management is vested in the members or partner of the partnership who shall act as designated broker. The license shall extend no authority to act as designated broker to any other person. This subsection does not apply to a corporation or limited liability company applying for a license under subsection B of this section. An entity's broker's license issued pursuant to this subsection shall run concurrently with the corporation's, limited liability company's or partnership's designated broker's license.
B. An employing broker may engage the services of salespersons and associate brokers who act through and on behalf of professional corporations or professional limited liability companies that are licensed by the department. A designated broker who acts on behalf of an employing real estate entity is permitted allowed to become a professional corporation or a professional limited liability corporation company. Any person so engaged shall be separately licensed. The department shall issue to or renew a license under this subsection only for a professional corporation or a professional limited liability corporation company whose shareholders, members or managers hold active real estate licenses. A corporation licensed under this subsection shall meet the requirements of title 10, chapter 20. A limited liability company licensed under this subsection shall meet the requirements of title 29, chapter 4 7, article 11. A professional corporation or professional limited liability company shall not be licensed as an employing broker.
C. The license of a corporation or limited liability company licensed under subsection B of this section terminates only upon on the death of a shareholder, member or manager or any other change of shareholders, members or managers, except that any remaining shareholder, member or manager who was an authorized officer and shareholder prior to the change remains authorized to continue business under the corporation's or limited liability company's license for up to an additional ninety days pending the issuance of a new license.
D. The commissioner may suspend, revoke or deny renewal or the right of renewal of the license of a corporation, limited liability company or partnership licensed under this section if the corporation, limited liability company or partnership or any shareholder, officer, agent, partner or member of a corporation, limited liability company or partnership violates any of the provisions of this chapter.
E. Nothing in This section shall be construed to does not enlarge the functions of salespersons, to permit allow salespersons to assume any of the responsibilities or functions of brokers or to relieve the commissioner of any regulatory power or authority over salespersons or brokers.
F. A corporation, limited liability company or partnership licensed under subsection A of this section or a professional corporation or professional limited liability company licensed under subsection B of this section is exempt from the education requirements imposed pursuant to this chapter. The commissioner shall not charge a license fee or a renewal fee pursuant to section 32‑2132 to a corporation, professional corporation, limited liability company, professional limited liability company or partnership licensed or approved under this section.
G. A corporation, limited liability company or partnership licensed under this section shall report to the department within ten days:
1. Any change in officers, directors, members, managers or partners or any change of control of the entity.
2. Any amendment to its articles of incorporation or organization or to its partnership agreement.
3. If a corporation, when a person becomes an owner of ten per cent percent or more of the stock in the corporation.
4. The dissolution of the corporation, limited liability company or partnership.
Sec. 15. Effective date
This act is effective from and after August 31, 2020.
