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Margrave Celmins, P.C. Newsletter for March 2015

     The Conference Room  |  March 2015 Edition

Happy Spring!

I hope you’ve been enjoying our updated mclawfirm.com website and its easy navigation.  We’d like to remind you that we update our “News/Blog” information regularly, and a click on that tab will give you a choice of Articles, Blog, News and Newsletters.  All are by most recent date, and blogs are also broken down by practice for your convenience.

Shortly, we will make available several brochures that can give you brief information you might need on a variety of subjects. These brochures will be available in e-format as well as printed; all you have to do is contact me at pcopeland@mclawfirm.com and let me know what version you desire.  A sample of initial subjects are: “Who Should Care for Mom and Dad?” explaining Medical and Financial Powers of Attorney, as well as the roles of guardians and conservators; “Real Estate: His, Hers or Theirs?” regarding taking title to property; and “What to do When You Are in a Motor Vehicle Accident” with a simple checklist.  We also plan to produce a firm brochure and other subjects in the future to provide you with basic knowledge on a variety of subjects that may of interest to you.

If you have suggestions for a brochure, our newsletter or the website, I’d love to hear from you.  Meanwhile, enjoy our latest newsletter and the lovely Spring weather.

Patty Copeland, Editor

                                        ARIZONA ENTITY RESTRUCTURING ACT
                                    Part 1: Entity Conversions and Domestications

Arizona has made a big jump forward by enacting the Arizona Entity Restructuring Act (the “Act”), which just became effective on January 1, 2015. While the Act may be found in Title 29 PARTNERSHIP of the Arizona Revised Statutes in Chapter 6, it applies across the board to limited liability companies and corporations, as well as to limited partnerships and other forms of entities. The Act seeks to make Arizona a more business law friendly state when it comes to a wide variety of transactions, including mergers, ownership interest exchanges, divisions and two other subjects which will be dealt with in Part 1 of this article, those being domestication and conversion of entities.

Previous to the enactment of this statute, Arizona law was not permissive in allowing some of these entity transactions to occur, thus causing clients to look to the laws of other states, such as Delaware, Nevada and similar states, to effectuate certain business transactions. I would view this as a positive change for effectuating business transactions in Arizona. Prior Arizona corporate law was more focused on transactions involving the same types of entities and not, for example, corporations being involved in restructuring transactions with limited liability companies.

With respect to Article 5 of Chapter 6 dealing with domestication of entities, we frequently run into situations where someone moved to Arizona with an entity formed in another jurisdiction. When they arrive in Arizona, there are often many tax and non-tax reasons why they wish to keep the old entity alive. This usually resulted in their maintaining the entity in the former state and qualifying it to do business as a foreign entity in the state of Arizona, which often led to additional expense each year or forming a new entity in Arizona and merging the out-of-state entity into the newly-formed Arizona entity at considerable expense.


The Act now enables the out-of-state entity to be transformed into an Arizona domestic entity, eliminating its existence in its state of formation (provided that the foreign state recognizes domestications in its statutes).  The same concept applies to Arizona domestic entities being transformed to a domestic entity in another state. This greatly simplifies the ability to continue a previously formed entity regardless of changing its domicile from Arizona to that of another state which has appropriate legislation recognizing domestication of entities.   

With respect to Article 4 of Chapter 6 on conversion of entities, we have run into situations over the years where there were tax and other reasons for operating under a particular form of entity. One example involved an entity operating as a corporation that needed to be converted to a limited liability company taxable as a partnership. They needed to allocate cash distributions to the owners differently than in strict proportion to their ownership interests. As the corporate entity had been formed in Delaware, it was easy to effectuate the conversion from a corporation to a limited liability company under the Delaware statute. Previously, that fix was not available under Arizona law.  

Future articles will deal with the other transactions as permitted by the Act and can be  found on our website under Business Blogs.  But the two changes mentioned here have added a great deal of flexibility for Arizona entities.

Michael W. Margrave


Christopher D. Lonn

Christopher D. Lonn graduated magna cum laude from Arizona State University with a B.S. in Justice Studies and received his Juris Doctorate from the University of the Pacific, McGeorge School of Law. Chris practices in the areas of general and complex commercial litigation, arbitrations and administrative law with an emphasis on contractual and real estate disputes, construction litigation, securities and investment fraud litigation and arbitrations and corporate/partnership disputes.  He has conducted numerous trials and a wide variety of hearings in the United States District Court of Arizona, Arizona Superior Court and before various administrative agencies, including FINRA, the Arizona Securities Division, the Arizona Corporation Commission and the Securities and Exchange Commission. He is also admitted to practice law in California.

In 2011 Chris was awarded the rating of “AV Preeminent” from Martindale-Hubbell, which is the highest possible peer rating in both legal ability and ethical standards. He is a member of the Scottsdale Bar Association where he served as President for the 2004-2005 term.  Away from the practice, he is an avid guitar aficionado, guitar player and he also enjoys driving and working on his German vehicles.  Chris says it’s all about cars and guitars.

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