I was just trolling Title 10, the ANCA provisions and all, and I took notice of a subtle nuance that caught my eye. Now, I am not saying this adds up to a hill of beans, but I found something that made the bells go off, just a little. Membership Rights Arizona nonprofit corporations may choose to have members, but state law does not require them to do so. When a nonprofit establishes a membership structure, rights and privileges must be clearly defined in the Articles of Incorporation or bylaws (A.R.S. 10-3601). Voting members participate in major decisions, such as electing directors and approving mergers or dissolutions. Under A.R.S. 10-3708, nonprofits must provide members with meeting notices between ten and sixty days in advance. Bylaws dictate quorum requirements, ensuring a minimum percentage of members are present for valid decisions. Voting can occur in person, by mail, or electronically if permitted. Members may access certain records, including financial statements and meeting minutes (A.R.S. 10-11602). While Arizona law allows nonprofits discretion in determining what records are available, transparency helps maintain trust. Membership rights may also include receiving notices of major actions and proposing amendments to governing documents. So, then we come down to Article 3 of the Articles of Incorporation, So, and everything is clearly stated: The general nature of the business in which the Corporation is engaged is as follows: To do anything and everything lawfully necessary in the interest of the Members of the Corporation, including, without limitation, the following: 1. To establish and conduct a general social, cultural, recreational and amusement enterprise for the benefit of its Members and do anything lawfully necessary or convenient to accomplish such purpose, including, but not by way of limitation, to purchase, acquire, develop, sell, lease, own, operate, and manage theaters, playhouses, agricultural projects, riding stables and corrals, libraries, opera houses, golf courses, baseball and football games, tennis courts, dancing facilities, lawn bowling rinks, horseshoe pits, croquet courts, travel clubs, card games, shuffleboard, swimming pools, skating rinks, lecture and conference rooms, and facilities and equipment for such arts and crafts as ceramic work, sewing, woodworking, leathercraft, lapidary, photography, fine arts, jewelry, shellcraft, mosaics, etc., and any and all facilities necessary or incidental to accomplish the general purposes of the Corporation. 2. To coordinate, implement, and aid the various recreational and social clubs which are now, or which may become duly recognized as such by this Corporation. 3. To promote cooperation in all matters of interest and benefit to the residents and/or homeowners of the area within the bounds set out in Article I, who become and remain Members of this Corporation. 4. To contract, coordinate or operate, with other organizations, associations, corporations, or individuals in carrying out and conducting the activities and endeavors for which this Corporation is formed and in effecting the benefits and results sought to be gained. Now, I know I am not a specialist in corporate law, but I do know the Bylaws cannot defy the Articles of Incorporation, and it states as such within the Title. So, how can the board adopt bylaw changes that defy the Articles of Incorporation? The changes in the Arizona Revised Statutes I quoted include ANCA provisions, so why such drastic changes made to the bylaws, in the name of ANCA, and directly defy the Articles of Incorporation? Again, not a legal beagle on the topic, but by reading the legal definition of ANCA, the bylaw rewrites are in defiance of Act as written. Quote from the ANCA itself: Articles of Incorporation The Articles of Incorporation serve as the legal foundation of an Arizona nonprofit. These documents must be filed with the Arizona Corporation Commission (ACC) and include the nonprofit’s name, purpose, membership status, and statutory agent. Arizona law (A.R.S. 10-3202) mandates that the nonprofit’s purpose align with those allowable under federal tax-exempt status if seeking 501(c)(3) designation. Taxable status 501c3. Now taking this to the letter of the law, the RCSC is a 501c4 corporation. The law nor ANCA have any expansion to any other tax status except as quoted. I see several areas that the bylaw amendments are in clear defiance of the ANCA that is being quoted as the reason for the rewrites. Title 10 states the benefits of the members and the bylaws rewrites removes them. Then there is the matter of the not correct tax identifier. If taking this to the letter of the law, ANCA is not applicable due to the tax code the RCSC operates under. So we have the description of legal foundation of the nonprofit is its AOI, we have a single tax code identifier, never modified with the Arizona Revised Statutes, and these rewrites claiming to be done in accordance with ANCA. There exists a huge disconnect here and its with the submitted bylaw rewrites. Simply put the AOI are the driver for the corporation and these bylaws do not meet the standards set by the AOI. As highlighted above, per ANCA the Articles of Incorporation are the legal foundation. These bylaws are not in accordance with ANCA or Title10 of the Arizona Revised Statutes. As always, just my opinion but this time I tried to provide fact based information.
The previous post I made is directly attributed to Arizona Revised Statutes current through 11/13/2025. Also please Note: 10-130. Powers; duties; database A. The commission has the power and authority reasonably necessary to enable it to administer this title efficiently and to perform the duties imposed on it by this title, including the power and authority to make rules for those purposes. This is the duty of the Arizona Corporation Commission to exercise its authority to administer the title to the letter of the law, as written.
Additional information and I promise, I will stop. From the Harvard Law School Forum on Corporate Governance Amending Corporate Charters and Bylaws "The purpose of our paper, Amending Corporate Charters and Bylaws, is to examine the contractarian principle as applied to charter and bylaw amendments. The paper foremost draws on how contract law deals with contract modifications and the problems that arise when one party grants the other the right of unilateral modification. Under the existing law, amending a contract is subject to various statutory and judicial restrictions. Probably the most relevant doctrine is the duty of good faith and fair dealing. Even when exercising a contractually granted right to unilaterally modify the contract, the party with the right must exercise it in good faith and deal fairly with the counterpart. Building on these differences, with the lessons learned from contract law, the paper argues that there is a policy-based justification to be more vigilant against charter and bylaw amendments and, in particular, against unilateral bylaw amendments. The policy goal should be to preserve flexibility in amending bylaws and charters while policing opportunism by directors and shareholders."
John, This one is for you and your topic: Can a Board of Directors place exclusions on members from being a board member In general, a board of directors cannot unilaterally exclude a member from being a board member. Exclusions typically require a formal process, such as a motion or vote, and must be in accordance with the organization's governing documents and applicable laws. The board must ensure that the exclusion is not arbitrary or discriminatory and that all members are fairly treated. There are no applicable laws that allow for the exclusions of any person from any such activity. I looked. Thought as long as I was being long winded on legal topics, I would include this one too.
Carol, Thanks. The ANCA allow the governing documents to define the qualifications for being a director. That is how they justify excluding snowbirds and sun birds. John
John, The writing of the ANCA references tax code 501c3 only. There is no reference to the ability to be expancded byond any advancement or updates of the tax code. The letter of the law places the code as written, the RCSC is a 501c4, and has been prior to the adoption of this act. Grandfathering being dismissed, and no updates to the language or definition of the ANCA, it is not applicable to the RCSC. the tax structures differ enough to place serious concerns to applying a tax code of one Act to an entire corporation that has had the same tax status, prior to the adoption of the Act. If applying the letter of the law, the ANCA does not apply to the RCSC.
