A.R.S. 44-1841 Interpretation
In Ariz. Corp. Comm'n v. Media Prods., Inc., 158 Ariz. 463, 465-67, 763 P.2d 527 (App. 1988), the Commission brought an action against a Delaware corporation to enjoin the sale of unregistered securities, alleging the sale would be made within or from Arizona in violation of A.R.S. 44-1841. Id. at 464.
The corporation asserted that, because it was incorporated in Delaware and did not offer the securities in Arizona or to Arizona residents, the sales were not made within or from the State of Arizona. Id.
Therefore, it contended, the registration requirement of A.R.S. 44-1841 was inapplicable to its offering. Id. at 464-65.
The Court found, however, the corporation's principal place of business and base of operations were in Arizona, its officers and directors operated from and resided in Arizona, the stock certificates were prepared and issued by an agent in Arizona, the board meetings were held in Arizona, the escrow agreement designated an Arizona bank as the escrow agent, and the sale documents identified an Arizona address as the place for notices to be provided. Id. at 465-66.
Noting the corporation's Arizona activities were "more than ministerial," this Court concluded the securities were sold within or from Arizona under A.R.S. 44-1841. Id. at 466-67.
The Court ultimately held the application of A.R.S. 44-1841 to the corporation was unconstitutional because it would have created a direct burden on interstate commerce. Id. at 469. Because the corporation sold securities registered in other states and with the Securities Exchange Commission (SEC) to non-Arizonans, the Court identified no Arizona interest justifying further regulation of the sale. Id.