Bill Text: NY S00995 | 2023-2024 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relates to the disclosure of beneficial owners of limited liability companies and foreign limited liability companies and certain information about such beneficial owners; requires the secretary of state to maintain a public database of all business entities organized in the state and all foreign business entities with authority to do business in the state.

Spectrum: Partisan Bill (Democrat 12-0)

Status: (Passed) 2023-12-22 - APPROVAL MEMO.91 [S00995 Detail]

Download: New_York-2023-S00995-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         995--A

                               2023-2024 Regular Sessions

                    IN SENATE

                                     January 9, 2023
                                       ___________

        Introduced  by  Sens.  HOYLMAN-SIGAL,  BRISPORT, CLEARE, KRUEGER, MYRIE,
          RIVERA, SALAZAR -- read twice and ordered printed, and when printed to
          be committed to the Committee on Corporations, Authorities and Commis-
          sions -- committee discharged,  bill  amended,  ordered  reprinted  as
          amended and recommitted to said committee

        AN  ACT  to  amend  the  limited liability company law, the tax law, the
          administrative code of the city of New York, and the executive law, in
          relation to the disclosure of beneficial owners of  limited  liability
          companies

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "LLC transparency act".
     3    §  2.  Section  102 of the limited liability company law is amended by
     4  adding a new subdivision (ii) to read as follows:
     5    (ii) (1) "Beneficial owner" means the same as such term is defined  in
     6  31 C.F.R. § 1010.380 (d).
     7    (2)  "Initial  report"  means  the  same as such term is defined in 31
     8  C.F.R. § 1010.380 (b).
     9    (3) "Reporting company" means a limited liability  company  that  does
    10  not  meet  a  condition for exemption enumerated in 31 C.F.R. § 1010.380
    11  (c)(2).
    12    (4) "Exempt company" means a limited liability company  that  meets  a
    13  condition for exemption enumerated in 31 C.F.R. § 1010.380 (c)(2).
    14    (5)  For    the purposes of this subdivision and for any references to
    15  beneficial owners of  any  limited liability company, the term  "limited
    16  liability  company"  shall  include,  where  applicable, foreign limited
    17  liability companies and authorized foreign limited liability companies.
    18    § 3. Paragraphs 6 and 7 of subdivision  (e)  of  section  203  of  the
    19  limited  liability  company  law, as added by chapter 470 of the laws of
    20  1997, are amended to read as follows:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00252-07-3
        S. 995--A                           2

     1    (6) if all or specified members are to be liable in their capacity  as
     2  members  for  all  or specified debts, obligations or liabilities of the
     3  limited liability company as authorized pursuant to section six  hundred
     4  nine  of  this chapter, a statement that all or specified members are so
     5  liable  for  such debts, obligations or liabilities in their capacity as
     6  members of the limited  liability  company  as  authorized  pursuant  to
     7  section six hundred nine of this chapter; [and]
     8    (7)  in  the case of an exempt company, a statement signed by a member
     9  or manager indicating which exemption or exemptions the  company  claims
    10  against  its  obligation  to file an initial report, or in the case of a
    11  reporting company, an initial report; and
    12    (8) any other provisions, not inconsistent with law, that the  members
    13  elect to include in the articles [or] of organization for the regulation
    14  of the internal affairs of the limited liability company, including, but
    15  not limited to, (A) the business purpose for which the limited liability
    16  company  is  formed, (B) a statement of whether there are limitations on
    17  the authority of members or managers or a class or  classes  thereof  to
    18  bind  the  limited  liability  company  and  (C) any provisions that are
    19  required or permitted to be included in the operating agreement  of  the
    20  limited  liability company pursuant to section four hundred seventeen of
    21  this chapter.
    22    § 4. Paragraphs 8, 9, and 10 of subdivision (d) of section 211 of  the
    23  limited  liability  company  law, paragraph 10 as added by section 18 of
    24  part KK of chapter 56 of the laws of 2021, are amended and a  new  para-
    25  graph 11 is added to read as follows:
    26    (8) the discovery of a materially false or inaccurate statement in the
    27  articles of organization; [and]
    28    (9)  the  decision  to  change  any other statement in the articles of
    29  organization[.];
    30    (10) to specify, change or delete  the  email  address  to  which  the
    31  secretary of state shall email a notice of the fact that process against
    32  the limited liability company has been electronically served upon him or
    33  her[.]; and
    34    (11)  in  the case of a reporting company, a change in the information
    35  required to be included in an initial report or a change to the  benefi-
    36  cial  owners  of  such  limited  liability  company  or  the information
    37  required to be provided relating to each beneficial  owner  pursuant  to
    38  section two hundred three of this article.
    39    §  5.  The  limited  liability  company law is amended by adding a new
    40  section 215 to read as follows:
    41    § 215. Beneficial ownership  disclosure.    (a)  A  limited  liability
    42  company,  when  disclosing  its  beneficial  owners, shall identify each
    43  beneficial owner by: (1) full legal name; (2) date of birth; (3) current
    44  residential street address; (4) a  unique  identifying  number  and  the
    45  issuing  jurisdiction from one of the following documents: (i) a non-ex-
    46  pired passport issued to the individual by the United States government;
    47  or, if none, (ii) a non-expired identification document  issued  to  the
    48  individual by a state, local government, or Indian tribe for the purpose
    49  of identifying the individual; or, if none, (iii) a non-expired driver's
    50  license issued to the individual by a state; or, if none, (iv) a non-ex-
    51  pired passport issued by a foreign government to the individual; and (5)
    52  an  image  of  the  document from which the unique identifying number in
    53  paragraph four of this subdivision was obtained.
    54    (b) A limited liability company, when  filing  an  initial  report,  a
    55  portion  thereof,  or  any  amendment  or correction thereto pursuant to
    56  section two hundred three or two hundred eleven of this article, or when
        S. 995--A                           3

     1  disclosing its beneficial owners to the department of state  or  depart-
     2  ment  of  taxation  and  finance,  may  submit a copy of the report such
     3  company submitted to the federal government  pursuant  to  31  C.F.R.  §
     4  1010.380  in order to satisfy such reporting requirements, provided that
     5  such federal report is current and contains all information required  by
     6  state law.
     7    (c) The identification and disclosure of the name,  business  address,
     8  date  of  birth, and associated limited liability companies of a benefi-
     9  cial owner shall not be  deemed  an  unwarranted  invasion  of  personal
    10  privacy   pursuant  to  article  six  of the public  officers  law.  All
    11  other personal or  identifying  information  of  such  beneficial  owner
    12  shall    be    deemed    confidential   except   for the purposes of law
    13  enforcement. If confidential information associated with a    beneficial
    14  owner  is  held  electronically,  such  records shall be encrypted.
    15    (d) Any person who: (1) knowingly provides false or fraudulent benefi-
    16  cial  ownership  information; or (2) willfully fails to provide complete
    17  or updated information shall be guilty of a misdemeanor  and  liable  to
    18  the  state for a civil penalty of not more than ten thousand dollars and
    19  shall be prohibited from organizing, forming, registering,  or  managing
    20  any  limited  liability  company or partnership in the state of New York
    21  for a period not less than one year or greater than  five  years.    The
    22  department of state may withdraw or prohibit the authority of such enti-
    23  ty to do business within the state for at least two years.
    24    §  6.  Paragraphs  7  and  8  of subdivision (a) of section 802 of the
    25  limited liability company law are amended and a new paragraph 9 is added
    26  to read as follows:
    27    (7) a statement that the  foreign  limited  liability  company  is  in
    28  existence in the jurisdiction of its formation at the time of the filing
    29  of such application; [and]
    30    (8) the name and address of the authorized officer in the jurisdiction
    31  of  its  formation where a copy of its articles of organization is filed
    32  or, if no public filing of its articles of organization is  required  by
    33  the  law  of the jurisdiction of formation, a statement that the foreign
    34  limited liability company shall provide, on request, a copy thereof with
    35  all amendments thereto (if such documents are in a foreign  language,  a
    36  translation  in  English  thereof  under oath of the translator shall be
    37  attached thereto), and the name and post office address  of  the  person
    38  responsible for providing such copies[.]; and
    39    (9)  in  the case of an exempt company, a statement signed by a member
    40  or manager indicating which exemption or exemptions the  company  claims
    41  against  its  obligation  to file an initial report, or in the case of a
    42  reporting company, an initial report including a  document   identifying
    43  the  beneficial    owners    of the foreign limited liability company in
    44  accordance with subdivision (a) of section eight  hundred  ten  of  this
    45  article.
    46    §  7.  Section  804 of the limited liability company law is amended by
    47  adding a new subdivision (c) to read as follows:
    48    (c) Every reporting company that has received a filing receipt   enti-
    49  tled    "Certificate   of   authority   of .... (name of foreign limited
    50  liability company) under  section  eight  hundred  five  of  the Limited
    51  Liability Company Law," evidencing authority as  provided  herein  shall
    52  amend    its  application for authority upon a change in the information
    53  required to be included in an initial report or a change to the  benefi-
    54  cial    owners  of  such  limited  liability  company or the information
    55  required to be provided relating to each beneficial  owner  pursuant  to
        S. 995--A                           4

     1  section   eight   hundred   two   of  this article within ninety days of
     2  such change.
     3    §  8.  The  limited  liability  company law is amended by adding a new
     4  section 810 to read as follows:
     5    § 810. Beneficial ownership disclosure.  (a) A foreign limited liabil-
     6  ity company, when disclosing its beneficial owners, shall identify  each
     7  beneficial  owner  by:    (1)  full  legal  name; (2) date of birth; (3)
     8  current residential street address; (4) a unique identifying number  and
     9  the  issuing  jurisdiction  from  one  of the following documents: (i) a
    10  non-expired passport issued to  the  individual  by  the  United  States
    11  government;  or,  if  none,  (ii)  a non-expired identification document
    12  issued to the individual by a state, local government, or  Indian  tribe
    13  for  the  purpose  of  identifying  the individual; or, if none, (iii) a
    14  non-expired driver's license issued to the individual by a state; or, if
    15  none, (iv) a non-expired passport issued by a foreign government to  the
    16  individual; and (5) an image of the document from which the unique iden-
    17  tifying number in paragraph four of this subdivision was obtained.
    18    (b)  A  foreign  limited  liability  company,  when  filing an initial
    19  report, a portion thereof, or any amendment or correction thereto pursu-
    20  ant to this section or section eight hundred four of  this  article,  or
    21  when  disclosing  its  beneficial  owners  to the department of state or
    22  department of taxation and finance, may submit a copy of the report such
    23  company submitted to the federal government  pursuant  to  31  C.F.R.  §
    24  1010.380  in order to satisfy reporting requirements, provided that such
    25  federal report is current and contains all information required by state
    26  law.
    27    (c) The identification and disclosure of the name,  business  address,
    28  date of  birth, and associated limited liability companies of a  benefi-
    29  cial  owner  shall  not  be  deemed  an unwarranted invasion of personal
    30  privacy  pursuant  to  article  six  of the public  officers  law.   All
    31  other  personal  or  identifying  information  of  such beneficial owner
    32  shall   be   deemed   confidential   except   for the  purposes  of  law
    33  enforcement.  If  confidential information associated with a  beneficial
    34  owner  is  held  electronically,  such  records shall be encrypted.
    35    (d) Any person who: (1) knowingly provides false or fraudulent benefi-
    36  cial ownership information; or (2) willfully fails to  provide  complete
    37  or  updated  information  shall be guilty of a misdemeanor and liable to
    38  the state for a civil penalty of not more than ten thousand dollars  and
    39  shall  be  prohibited from organizing, forming, registering, or managing
    40  any limited liability company or partnership in the state  of  New  York
    41  for  a  period  not  less than one year or greater than five years.  The
    42  department of state may withdraw or prohibit the authority of such enti-
    43  ty to transact business within the state of New York for  at  least  two
    44  years.
    45    § 9. Paragraph 2 of subdivision (a) of section 1409 of the tax law, as
    46  amended  by  section  3  of part O of chapter 59 of the laws of 2021, is
    47  amended to read as follows:
    48    (2) When the grantor or grantee of a deed for a building used as resi-
    49  dential real property [containing up to four family dwelling units] is a
    50  limited liability company, the joint return shall not  be  accepted  for
    51  filing  unless  it  is  accompanied  by  a document which identifies the
    52  [names and business addresses of all members, managers,  and  any  other
    53  authorized  persons,  if  any, of such limited liability company and the
    54  names and business addresses or, if none, the business addresses of  all
    55  shareholders, directors, officers, members, managers and partners of any
    56  limited  liability  company  or other business entity that are to be the
        S. 995--A                           5

     1  members, managers or authorized persons, if any, of such limited liabil-
     2  ity company. The identification of such names and addresses shall not be
     3  deemed an unwarranted invasion of personal privacy pursuant  to  article
     4  six  of  the public officers law. If any such member, manager or author-
     5  ized person of the limited liability company is itself a limited liabil-
     6  ity company or other business entity other than a publicly traded  enti-
     7  ty,  a  REIT, a UPREIT, or a mutual fund, the names and addresses of the
     8  shareholders, directors, officers, members, managers and partners of the
     9  limited liability  company  or  other  business  entity  shall  also  be
    10  disclosed until full disclosure of ultimate ownership by natural persons
    11  is  achieved]  beneficial  owners  of  such limited liability company in
    12  accordance with section two hundred fifteen or eight hundred ten of  the
    13  limited  liability  company  law,  as  applicable.  For purposes of this
    14  subdivision, the terms  ["members",  "managers",  "authorized  person",]
    15  "beneficial owners" and "limited liability company" [and "other business
    16  entity"]  shall  have  the  same  meaning  as those terms are defined in
    17  section one hundred two of the limited liability company law.
    18    § 10. Subdivision h of section 11-2105 of the administrative  code  of
    19  the  city of New York, as amended by chapter 555 of the laws of 2022, is
    20  amended to read as follows:
    21    h. When the grantor or grantee of a deed for a building used as  resi-
    22  dential real property [containing up to four family dwelling units] is a
    23  limited  liability  company,  the joint return shall not be accepted for
    24  filing unless it is accompanied  by  a  document  which  identifies  the
    25  [names  and  business  addresses of all members, managers, and any other
    26  authorized persons, if any, of such limited liability  company  and  the
    27  names  and business addresses or, if none, the business addresses of all
    28  shareholders, directors, officers, members, managers and partners of any
    29  limited liability company or other business entity that are  to  be  the
    30  members, managers or authorized persons, if any, of such limited liabil-
    31  ity company. The identification of such names and addresses shall not be
    32  deemed  an  unwarranted invasion of personal privacy pursuant to article
    33  six of the public officers law. If any such member, manager  or  author-
    34  ized person of the limited liability company is itself a limited liabil-
    35  ity  company or other business entity other than a publicly traded enti-
    36  ty, a REIT, an UPREIT, or a mutual fund, the names and addresses of  the
    37  shareholders, directors, officers, members, managers and partners of the
    38  limited  liability  company  or  other  business  entity  shall  also be
    39  disclosed until full disclosure of ultimate ownership by natural persons
    40  is achieved] beneficial owners of  such  limited  liability  company  in
    41  accordance  with section two hundred fifteen or eight hundred ten of the
    42  limited liability company law, as applicable.    For  purposes  of  this
    43  subdivision,  the  terms  ["members",  "managers", "authorized person",]
    44  "beneficial owners" and "limited liability company" [and "other business
    45  entity"] shall have the same meaning  as  those  terms  are  defined  in
    46  section one hundred two of the limited liability company law.
    47    §  11. The tax law is amended by adding a new section 171-x to read as
    48  follows:
    49    § 171-x. Information sharing with the department  of  state  regarding
    50  beneficial owners of limited liability companies. Notwithstanding subdi-
    51  vision  (a)  of section fourteen hundred eighteen of this chapter or any
    52  other law, the commissioner shall release to  the  department  of  state
    53  information  regarding  beneficial owners of limited liability companies
    54  which is reported to the department either  on  a  form  issued  by  the
    55  department  or  any  other  method  of  report  to the department.   For
    56  purposes of this section, the terms  "beneficial  owners"  and  "limited
        S. 995--A                           6

     1  liability  company"  shall  have  the  same  meaning  as those terms are
     2  defined in section one hundred two of the limited liability company law.
     3    §  12.  The  executive law is amended by adding a new section 100-b to
     4  read as follows:
     5    § 100-b. Corporation and  business  entity  database;  information  on
     6  beneficial  owners.  1. The secretary of state shall assign each benefi-
     7  cial owner of a limited liability company an anonymized unique identify-
     8  ing number and publish such number in relation to any affiliated  compa-
     9  nies,  in  addition  to such beneficial owner's name, date of birth, and
    10  business address, in the corporation and business entity database or any
    11  subsequent database which is maintained by the division of  corporations
    12  within  the  department  of  state.   Data associated with every limited
    13  liability company registered to transact  business  in  New  York  state
    14  shall  be published online in a downloadable spreadsheet format at least
    15  once annually, or otherwise in any manner compatible with  the  require-
    16  ments of executive order ninety-five, dated March eleventh, two thousand
    17  thirteen. Such data shall also include the name, date of birth, business
    18  address,  and  anonymized  unique identifying number of every beneficial
    19  owner of each limited liability company. If a beneficial owner has  been
    20  issued  a  waiver  pursuant to subdivision two of this section, only the
    21  anonymized unique identifying number  associated  with  such  beneficial
    22  owner  shall be published in relation to each affiliated limited liabil-
    23  ity company. For purposes of this section, the terms "beneficial  owner"
    24  and  "limited  liability  company"  shall have the same meaning as those
    25  terms are defined in section one hundred two of  the  limited  liability
    26  company law.
    27    2.  The department shall establish, through regulations, procedures to
    28  allow beneficial owners with significant privacy interests to apply  for
    29  a waiver to withhold all personal or identifying information from public
    30  disclosure.  The issuance of a waiver shall be upon good cause shown and
    31  in the public interest. If  a  beneficial  owner  is  a  natural  person
    32  participating  in an address confidentiality program or is a member of a
    33  limited liability company acting as a relator in a qui tam action  filed
    34  pursuant  to  section  one hundred ninety of the state finance law or 31
    35  U.S.C. section 3729, such beneficial owner shall  be  presumed  to  have
    36  good  cause  and  privacy  in the public interest. The limited liability
    37  company may submit documentation indicating such status to  the  depart-
    38  ment,  and the department shall provide guidance on its website indicat-
    39  ing what documentation is acceptable as proof of such  status  or  other
    40  good  cause  for issuance of a waiver. The department shall also provide
    41  notice on its website that beneficial owners not in receipt  of  such  a
    42  waiver  may be publicly identified and guidance on its website regarding
    43  compliance with beneficial ownership disclosure requirements.
    44    § 13. By January 1, 2025, each reporting company created on or  before
    45  the  effective  date  of  this act shall file an initial report with the
    46  department of state and each exempt company shall file  with the depart-
    47  ment of state a statement signed by a member or manager  indicating  the
    48  specific  exemption or exemptions such exempt company claims against its
    49  obligation to file an initial report.
    50    § 14. This act shall take effect on the three hundred sixty-fifth  day
    51  after  it  shall have become a law. Effective immediately, the addition,
    52  amendment and/or repeal of any rule  or  regulation  necessary  for  the
    53  implementation  of  this  act on its effective date are authorized to be
    54  made and completed on or before such effective date.