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USA Statutes : arizona
Title : Corporations and Associations
Chapter : BUSINESS DEVELOPMENT CORPORATIONS
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10-2251 Definitions
In this chapter, unless the context otherwise requires:
1. "Bank" means any banking corporation or national banking association.
2. "Corporation" means a business development corporation formed under the
provisions of this chapter.
3. "Member" means any bank or federal or state savings and loan association
authorized to do business within this state which shall undertake to lend money to the
corporation upon its call and in accordance with the provisions of this chapter.
4. "Shareholder" means a registered owner of shares in a corporation formed under
the provisions of this chapter.
5. "Shares" means units into which the shareholders' rights to participate in the
control of a corporation, in its surplus or profits, or in the distribution of its
assets, are divided.
10-2252 Purposes
The purposes of a corporation formed under the terms of this chapter shall be to:
1. Assist, promote, encourage and, through the cooperative efforts of the
shareholders and the members of the corporation, develop and advance the business
prosperity and economic welfare of ARIZONA.
2. Encourage and assist in the location of new business and industry in ARIZONA.
3. Rehabilitate existing business and industry in ARIZONA.
4. Stimulate and assist in the expansion of all kinds of business activity which
will tend to promote the business development and maintain the economic stability of the
state, provide maximum opportunities for employment, encourage thrift, and improve the
standard of living of the citizens of the state.
5. Cooperate and act in conjunction with other organizations, public or private,
the objects of which are the promotion and advancement of industrial, commercial,
agricultural or recreational development of the state.
6. Furnish money and credit to approved and deserving applicants for the promotion,
development and conduct of all kinds of business activity in the state, thereby
establishing a source of capital and credit not otherwise readily available therefor.
10-2253 General powers
A corporation formed under the provisions of this chapter shall have all of the
powers, rights, privileges and immunities available to any other corporation incorporated
under chapters 1 through 18 of this title, and in addition thereto and subject to the
restrictions and limitations set forth in this chapter, shall have power to:
1. Borrow money and otherwise incur indebtedness for any of its purposes, to issue
its bonds, debentures, notes, other evidences of indebtedness, whether secured or
unsecured therefor, and to secure the same by mortgage, pledge, deed of trust or other
lien on its property, franchises, rights and privileges, of every kind and nature, or any
part thereof.
2. Lend money to and guarantee, endorse or act as surety on the bonds, notes,
contracts or other obligations of, or otherwise assist financially, any person, firm,
corporation, joint stock company or association, and to establish and regulate the terms
and conditions with respect to any such loans or financial assistance and the charges for
interest and service connected therewith. No loan or financial assistance shall be made
available unless the loan or financial assistance applied for is not otherwise available
to the applicant from financial institutions on reasonable terms, it being the intent
hereof that customary sources of credit be utilized whenever possible.
3. Purchase, receive, hold, lease or otherwise acquire, and to sell, convey,
mortgage, lease, pledge or otherwise dispose of, upon such terms and conditions as its
board of directors may deem advisable, real and personal property, together with such
rights and privileges as may be incidental and appurtenant thereto, and the use thereof,
including but not restricted to any real or personal property acquired by such
corporation from time to time in the satisfaction of debts or enforcements of
obligations.
4. Acquire the good will, business rights, real and personal property and other
assets or any part thereof, of such persons' firms, corporations, joint stock companies
or associations as may be in furtherance of the corporate purposes provided herein, and
to assume, undertake, guarantee or pay the obligations, debts and liabilities of any such
person, firm, corporation, joint stock company or association; to acquire improved or
unimproved real estate for the purpose of constructing industrial plants or other
business establishments thereon, or for the purpose of disposing of such real estate to
others for the construction of industrial plants or other business establishments, and in
furtherance of the corporate purposes provided herein, to acquire, construct or
reconstruct, alter, repair, maintain, operate, sell, lease or otherwise dispose of
industrial plants or business establishments.
5. Acquire, subscribe for, own, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of the stock, shares, bonds, debentures, notes or other securities and
evidences of interest in or indebtedness of, any person, firm, corporation, joint stock
company or association and while owner or holder thereof to exercise all the rights,
powers, and privileges of ownership including the right to vote thereon.
6. Accept grants, loans, subsidies and other aids from and to enter into agreement
or other transactions with any state or federal agency and to participate with such state
or federal agency and with other corporations in making loans and rendering financial
assistance to any person, firm, corporation, joint stock company or association.
7. Cooperate with, and avail itself of, the facilities of the ARIZONA development
board or its successor and any other government agency, and to cooperate with and assist
and otherwise encourage other organizations in the state in the promotion, assistance and
development of the business, prosperity and economic welfare of the state.
10-2254 Capital stock
The capital stock of a corporation shall be not less than one hundred thousand
dollars to be evidenced by shares, having a par value of not less than ten dollars each.
10-2255 Loans by members
A. Notwithstanding the provisions of any other law, the notes or other
interest-bearing obligations of a corporation shall be legal investments for the members
of the corporation, subject to the applicable loan limits of subsection B.
B. As required by its loan agreement, a member shall lend funds to the corporation
as and when called upon by it to do so, but the total amount in which a corporation may
be indebted to a member at any one time shall not exceed:
1. If a bank, two per cent of the total of the bank's capital stock, surplus,
capital notes and capital debentures.
2. If a savings and loan association, one per cent of loans outstanding or two
hundred fifty thousand dollars, whichever is the lesser.
C. All loan limits shall be established at the thousand dollars nearest to the
amount computed on an actual basis. All calls of funds which members are committed to
lend to a corporation shall be prorated by the corporation among the members in the same
proportion that the lending commitment of each bears to the aggregate lending commitments
of all members of the corporation. Upon six months' prior written notice to the
corporation of its intention, a member may terminate its loan agreement and after the
effective date of withdrawal, the member shall not be obligated to make any loan to the
corporation, but shall remain a member so long as the corporation is indebted to it.
D. At no time shall the total obligations of a corporation exceed ten times the
amount of its paid-in capital and surplus.
10-2256 Authority to become shareholders
Notwithstanding any other rule or provision of law or any provision in their
respective charters, agreements of association, articles or organization, certificates or
articles of incorporation to the contrary, all persons, except banks and savings and loan
associations, organized for the purpose of doing or authorized to do business within this
state, including without implied limitation any railroad or transportation corporation or
other public utility, are authorized to acquire, purchase, hold, sell, assign, transfer,
mortgage, pledge or otherwise dispose of any bonds, securities, or other evidences of
indebtedness created by or the shares of the capital stock of a corporation, and while
owners of the stock, to exercise all the rights, powers and privileges of ownership
without the approval of any regulatory authority of this state.
10-2257 Temporary board of directors
Until the election of a board of directors under section 10-2258, all of the affairs
of the corporation shall be conducted by a temporary board of directors. The temporary
board shall consist of fifteen members who shall all be at least eighteen years of age
and citizens of the United States and who shall be designated by incorporators of the
corporation in the articles of incorporation. Upon the election and qualification of a
board of directors under section 10-2258, the temporary board of directors shall be
deemed dissolved.
10-2258 Board of directors
A. The affairs of a corporation shall be conducted by a board of directors,
consisting of fifteen persons, who shall all be at least eighteen years of age and be
citizens of the United States. In addition, the executive director of the ARIZONA
development board or its successor, shall act as a nonvoting ex officio member of the
board of directors.
B. At the first meeting of the shareholders and members of a corporation and at
each annual meeting thereafter, six directors shall be elected by the shareholders and
nine directors shall be elected by the members. Each member shall have one vote for each
one thousand dollars of the member's outstanding loans to the corporation and the
uncalled balance of the member's loan agreement with the corporation. A member shall be
entitled to cast his votes for directors on a cumulative basis.
C. The first meeting of the shareholders and members of the corporation shall be
held at a time and place to be fixed by the temporary board of directors, which shall be
as soon as reasonably possible after the certificate required by section 10-2261 has been
filed with the superintendent of financial institutions.
10-2259 Method of incorporation
A. A corporation may be formed by five or more residents of the state of ARIZONA
who each subscribe to at least one share of stock of the corporation.
B. The articles of incorporation shall set forth:
1. The name of the proposed corporation which shall include the words "business
development corporation".
2. The purpose for which it is to be formed which shall be within the purposes and
powers set forth in this chapter.
3. The location of the principal place of business of the corporation, but the
corporation may have offices in such other places in the state as may be fixed by the
board of directors.
4. The term of its existence.
5. The authorized capital stock of the corporation.
6. The names and addresses of the incorporators and the amount of their capital
stock subscriptions.
7. The names and addresses of eight temporary directors.
8. The name and address of the treasurer.
9. The names and addresses of five qualified banks which have obligated themselves
to become members of the corporation at the time of its incorporation.
10. Any other provisions not inconsistent with law which the proposed corporation
may adopt governing the regulation and conduct of its affairs.
C. A corporation formed under this chapter may amend its articles of incorporation
provided that prior to the filing of articles of amendment with the corporation
commission the same shall have been approved by the superintendent of financial
institutions in the manner and as provided for in section 10-2260.
10-2260 Approval of articles of incorporation; incorporation
A. The articles of incorporation required by this chapter shall be filed with the
superintendent of financial institutions. Within sixty days after the receipt of the
articles of incorporation, the superintendent shall approve or disapprove the articles of
incorporation.
B. If the superintendent disapproves the articles, the superintendent shall
promptly give notice of the disapproval to the incorporators, stating in detail the
reason for his action. Upon remedying the defect or defects, the incorporators may, in
the same manner, refile the articles.
C. If the superintendent finds that the articles of incorporation are in the form
prescribed by this chapter or have been made to conform with this chapter, the
superintendent shall conduct any investigation deemed necessary to ascertain from the
best sources of information available:
1. Whether the name of the proposed corporation is likely to mislead the public as
to its character or purposes.
2. Whether the convenience and advantage of the public will be served by the
proposed corporation.
3. Whether the economic condition of the area in which the corporation may be
expected to do most of its business affords reasonable promise of adequate support for
the activities of such corporation.
4. Whether the responsibility, character and general fitness for the business of
the incorporators, directors and officers named in the articles are such as to command
confidence and to warrant the belief that the business of the proposed corporation will
be honestly and efficiently conducted, in accordance with the intent and purpose of this
chapter.
D. If the superintendent finds, on the basis of the facts disclosed by the
superintendent's investigation, that the proposed incorporation meets all the
requirements of this chapter, the superintendent shall endorse approval on the articles
of incorporation and the articles may then be filed with the corporation commission. The
corporation commission shall not issue a certificate of incorporation to a business
development corporation without the approval by the superintendent endorsed on the
articles of incorporation.
E. If the superintendent finds, on the basis of the facts disclosed by the
superintendent's investigation, that the proposed incorporation does not meet all the
requirements of this chapter, the superintendent shall disapprove the articles and return
them to the incorporators stating in detail the reasons for doing so.
10-2261 Authorization to commence business
A corporation formed under this chapter shall not begin the transaction of any
business, except such as is incident to its organization or to the obtaining of members
of subscriptions to or payment for its shares, until it certifies to the superintendent
of financial institutions that there has been paid into the corporate treasury a minimum
of one hundred thousand dollars from the sale at par value of the capital stock of the
corporation.
10-2262 Surplus and dividends
Each year a corporation shall set apart, as earned surplus, all of its net earnings
until such earned surplus shall equal the total of the capital and paid-in surplus then
outstanding or ten per cent of the total outstanding borrowings of the corporation
whichever is greater. The earned surplus shall be held in cash, shall be invested in
United States government bonds or such other securities as may be legal investments under
section 10-2263 and shall be kept and used to meet losses and contingencies of such
corporation. Whenever the amount of earned surplus shall become impaired it shall be
built up again to the required amount in the manner provided for its original
accumulation. Net earnings and surplus shall be determined by the board of directors,
after providing for such reserves as the directors deem desirable and the directors'
determination made in good faith shall be conclusive on all persons. After setting aside
the required reserves the directors may declare dividends from the balance of net
earnings.
10-2263 Investment of excess funds
A. If the board of directors determines at any time that funds are available in
excess of the demands and needs of the corporation, the corporation may invest such funds
as follows:
1. In an account of any bank or savings and loan association authorized to do
business in ARIZONA.
2. In obligations of or fully guaranteed by the United States government.
3. Bonds or other direct obligations of or guaranteed as to principal and interest
by this state.
4. Bonds or other evidences of indebtedness which are direct general obligations of
any county, incorporated city or town, school district, or other political subdivision or
municipal corporation of this state.
B. A corporation shall not deposit or invest any of its funds in any bank or
savings and loan association unless such institution has been designated as a depository
by a vote of the majority of the directors of the corporation, exclusive of any director
who is an officer or director of the depository so designated. A corporation shall not
receive money on deposit.
C. A corporation shall not make any loan, directly or indirectly, to any of its
officers or directors or to any person, corporation or other form of organization in
which such officer or director is a member, director or officer or in which such officer
or director has any interest, direct or indirect, financial or otherwise, except when a
full and complete disclosure of the relationship is made at a regularly called meeting of
the board of directors of the corporation, entered upon the minutes, and voted on by
secret ballot with the officer or director making such disclosure refraining from voting
on the motion.
10-2264 Members as agents for corporations
A corporation may by contract authorize and empower any member to act as agent for
the corporation in the carrying out of the purposes for which such corporation was formed
and to render to the corporation such administrative auditing, collecting and other
related fiscal services as shall be deemed by the directors necessary for the proper and
efficient operation and management of the corporation.
10-2265 Supervision and reports
The superintendent of financial institutions may supervise, examine and control a
corporation in the same manner as financial institutions are so supervised, examined and
controlled by the superintendent pursuant to law, except that it shall not be the duty of
the superintendent to supervise the investment or lending policies of a corporation. In
addition to such other reports as are required by law, a corporation shall make an annual
report of its condition to the superintendent on or before March 1 of each year. An
audit report prepared by a certified public accountant shall accompany the annual report
of condition. The audit may be accepted by the superintendent in lieu of an examination.
10-2266 Dissolution or liquidation
In the event of dissolution or liquidation of a corporation none of the
corporation's assets shall be distributed to the shareholders until all sums due the
members of the corporation as creditors have been paid in full.
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