Arizona’s Corporations & Blockchain Technology Law, One Year On…

UPDATE: The Arizona Corporation Commission has informed us that, as of May 21, 2018, the new upgraded E-filing Database System (which will hopefully resolve some of the issues mentioned in this post) will be going live.

A year ago, Arizona Governor Doug Ducey signed HB 2417 into law. The law was intended to clean up confusion over the enforceability of transactions utilizing blockchain technology and smart contracts under Arizona law.  Specifically, the law aimed at transactions involving the sale of goods, leases, and documents of title governed respectively under Uniform Commercial Code (UCC) Articles 2, 2A and 7.

In doing so, Arizona took a major step forward relative to its sister states in supporting blockchain technology, including moving closer to allowing corporations to submit data through the decentralized, distributed ledger technology.

Blockchain, a “distributed ledger network”, was first conceived a peer-to-peer technology platform enabling the transfer of cryptocurrency Bitcoin without the need for an intermediary. However, blockchain now finds itself being implemented across a wide range of industries and applications beyond cryptocurrencies.

The Corporations/Blockchain Technology bill amended and supplemented existing legislation supporting signatures and records secured through blockchain technology, as well as so-called “smart contracts”.   Moreover, the new law legitimized data that might be stored or shared by corporations on the blockchain.

The goal behind the law was to allow for corporations to eventually submit their records on a blockchain in the coming years, according to bill sponsor and blockchain proponent Rep. Jeff Weninger.

As with any potentially transformative technology, on the corporate records issue anyway, there are still as many (if not more) questions posed by the new law than answered.

For example, articles of incorporation for Arizona domestic corporations, as well as articles of organization for LLCs, have been capable of being filed electronically for several years now.  I am not sure how important blockchain will be for those purposes.   For corporations in Arizona anyway, the only regular record that is filed with the Corporation Commission is the annual report, which as far as I know is not a process that has rampant forgery or tampering taking place.

As a Phoenix business and corporations lawyer who serves as corporate counsel or statutory agent for a number of Arizona corporations and LLCs, frankly I just would be happy if the Corporation Commission (or its contractor) would get its act together and allow attorneys and agents like myself to be able to make changes to statutory agent information online or for multiple entities at the stroke of a few clicks. They were supposed to have completed testing and fully launched this new program last year but apparently they’re still working out the kinks according to an (equally frustrated and unnamed) representative from the ACC I spoke with privately during PHX Startup Week in February.

Which isn’t to say that I think blockchain technology will not have eventual application to corporate law practice.  It isn’t too far fetched to imagine integrating “smart contract” language into, say, a set of corporate Bylaws or LLC operating agreement or even having resolutions of corporate board or special shareholder meetings immutably recorded on the blockchain.

And I have seen at least one occasion where an LLC member removed another member by forging a signature on articles of amendment filed with the ACC.  Having such a transaction somehow take place via distributed ledger technology might help to resolve (or eliminate?) such shenanigans.

We will continue to follow the legal and practical business aspects regarding blockchain as both our Arizona lawmakers and businesses leaders grapple with this potentially transformative way of doing business.


Ben Bhandhusavee is the Managing Attorney for BhandLaw, PLLC, a Phoenix business and technology law firm working with start-up companies, creative intellectual property, Internet and digital media matters, and complex corporate M&A and technology transactions.  Ben can be reached at (602) 678-2970 or by e-mail at