Authority to Conduct Affairs in Arizona for a Foreign Nonprofit

Under A.R.S. 10-11501, a nonprofit chartered outside Arizona may not conduct affairs in the state until the Corporation Commission grants it authority. Where the for-profit chapter says transacting business, the nonprofit chapter says conducting affairs. The rule covers charities, associations and membership groups alike.

Authority is a state permission, not a new organization. The nonprofit keeps its home charter and its home-state status, and it takes on the duties Arizona places on a domestic nonprofit of its kind. The Commission's public record will show the nonprofit's directors, officers and statutory agent, which is Arizona's word for a registered agent.

Federal tax exemption and any rules for soliciting donations are separate matters. This filing does not address them.

Like the for-profit chapter, the nonprofit chapter never defines the phrase. Section 10-11501(B) lists things that do not count, and subsection (C) states that the list is incomplete. They include maintaining, defending or settling a proceeding; meetings of the board or members and similar housekeeping; banking; offices that transfer memberships or securities; selling through independent contractors; taking orders that require acceptance outside Arizona to become contracts; borrowing, lending and taking liens; collecting debts or enforcing security interests; mere ownership of real or personal property; a single transaction wrapped up within thirty days and unlike a series of repeated ones; interstate activity; and serving as a limited partner or LLC member.

So a bank account, a board meeting held in the state or a building the nonprofit merely owns will not require authority on their own. Running programs, staffing an office or operating regularly here is a different matter, and none of those appears on the list.

The Commission says it will not decide which side of the line a particular nonprofit is on. That is the nonprofit's call, and an attorney is the right person for a close one.

A nonprofit files the same Commission form as a for-profit corporation, the Application for Authority, with the Nonprofit Corporation box checked. The fee is $175. That is the $150 statutory fee in A.R.S. 10-3122 plus a $25 data processing charge. It is nonrefundable, and the Commission's schedule has a single line for this application with no separate nonprofit rate. Expedited handling adds $35.

The Arizona Business Center is the Commission's online portal and the Commission recommends it. Cards paid there carry a 2.2% managed service fee with a $2 minimum. On paper, the application goes with a cover sheet to the Examination Section in Phoenix by mail, fax or hand delivery, and a mailed filing cannot be paid by card.

What the form asks for

• The home-state name, and the Arizona name if it differs
• Where and when the nonprofit was incorporated, and for how long
• The home-state principal office street address
• An Arizona known place of business
• The statutory agent and the agent's written acceptance
• Every director and officer, with business addresses that become public
• Whether the nonprofit has members, answered yes or no
• A short description of the affairs it will conduct in Arizona

The share questions on the form are for for-profits only. A board chair or an authorized officer signs.

Publication

After approval, the Commission either requires a published copy of the application within sixty days or enters the approval in its database. The database route is limited to a known place of business in a county with more than 800,000 residents. The approval letter says which applies, and the newspaper's affidavit may be filed but is not required.

Arizona requires evidence from the home state, and it expires quickly. The application needs a certificate of existence, a certificate of good standing or a comparable document from the state of incorporation, dated within 60 days before the Commission receives it. A.R.S. 10-11503(B) also calls for a copy of the articles and amendments, and the Commission's instructions say the copies must be certified.

Request them from your home filing office, which sets its own prices. Because the certificate must be recent, wait until the rest of the packet is ready before ordering it.

Certificate of Disclosure

A Certificate of Disclosure, Form C003, goes in at the same time. It is an Arizona form, not a home-state record. An officer answers questions about felonies, judgments and past corporate bankruptcies of the nonprofit's officers and directors, and dates it within 30 days before delivery. There is no separate fee.

The name

The Commission's instructions say a foreign nonprofit's name must satisfy the nonprofit naming statutes and avoid conflicts with the rules for professional and business corporations. When the home name is taken, the nonprofit may use a fictitious name for Arizona if it attaches a resolution adopting it, certified by a duly authorized officer. Words such as bank or trust draw review by the Department of Financial Institutions.

The statutory agent

Section 10-11507 requires a statutory agent in Arizona at all times, along with a known place of business. The agent may be an Arizona-resident individual, a domestic business or nonprofit corporation, a foreign business or nonprofit corporation authorized in the state, or an LLC formed or authorized here. The nonprofit cannot serve as its own agent.

• Address. An Arizona street address, with no PO box. The known place of business may be the same address.
• Acceptance. The agent accepts the job in writing on Form M002, and without it the application is rejected.
• Lapse. Sixty days without an agent or known place of business can lead to revocation.

Neither the statute nor the instructions require the agent to keep set hours.

Annual report

Each year the nonprofit sends the Commission an annual report. The fee for a nonprofit is $10, a good deal lower than the for-profit rate. The Commission assigns the due date, the corporation's record shows it, and an extension of up to six months is available when requested on time with the fee. The report restates the agent, the known place of business, the officers and directors, whether it has members, a Certificate of Disclosure and a statement that required corporate income tax returns have been filed. A report that never arrives is a ground for revocation.

Changes

Home-state amendments must reach the Commission as authenticated copies within sixty days, and filing late adds a $100 penalty. When the name, duration or home state changes, the nonprofit files Articles of Amendment for $25. A new agent or place of business goes on a Statement of Change, with the new agent's written consent.

Withdrawing

Leaving Arizona takes an Application for Withdrawal at $25. A nonprofit that conducted affairs here needs a Department of Revenue tax clearance certificate first, and the approved withdrawal is published. Overdue annual reports have to be filed before approval.

Section 10-11502 sets the consequences.

• Courts. The nonprofit cannot be a plaintiff in an Arizona court until authority exists. The bar reaches its successor and the assignee of a claim.
• Back fees and a penalty. Unauthorized years are billed at what authorized ones would have cost in fees and reports, plus penalties on those fees and a further charge of up to $1,000, which the Attorney General can collect.
• Injunction. Any person may petition a court to stop the activity, the Attorney General included. If authority arrives, the case ends and the plaintiff gets costs and attorney fees.

Acts of the nonprofit stay valid, and defending itself in court is still allowed.

The foreign qualification checkout at Mainstay Filing does not take nonprofit corporations. It is meant for LLCs and for-profit corporations. A nonprofit can still buy the registered agent for $149 yearly, with no step-up at renewal. Your agent's Arizona address is the one that appears on the application and the Commission's record. When someone serves the nonprofit, the papers are scanned and uploaded to your account that same business day, free, and three government mailings a year are scanned at no charge.

A nonprofit with another agent already on file can have Mainstay Filing submit the Statement of Change; the Commission charges no fee for it. The nonprofit, or its attorney, files the Application for Authority. A company may serve as agent in Arizona, so no board member has to move here. Mainstay Filing provides filing help and agent service rather than legal advice. See the Arizona registered agent page.