A09670 Summary:

BILL NOA09670
 
SAME ASNo Same As
 
SPONSORLifton
 
COSPNSRGottfried, Simon
 
MLTSPNSRTitone
 
Amd 203, Lim Lil L; add 139-l, St Fin L
 
Requires that the identity of all direct and indirect owners of the membership interests in a limited liability company be included in the articles of organization and in state contracts.
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A09670 Actions:

BILL NOA09670
 
03/28/2016referred to corporations, authorities and commissions
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A09670 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9670
 
SPONSOR: Lifton
  TITLE OF BILL: An act to amend the limited liability company law and the state finance law, in relation to requiring the inclusion of the identity of all direct and indirect owners of the membership interests in a limited liability company in the articles of organization and in state contracts   PURPOSE: To increase transparency with respect to limited liability companies and contracts they enter into with the state.   SUMMARY OF PROVISIONS: The bill amends limited liability company law to require the inclusion of the identity of all direct and indirect owners of the membership interests in a limited liability company and the proportion of each direct or indirect member's ownership interest in the limited liability company be filed at time of organization, and further amends state finance law to require the inclusion of the identity of all direct and indirect owners of the membership interests in a limited liability company and the proportion of each direct or indirect member's ownership interest in the limited liability company be included when entering into contracts between a limited liability company and the state.   EXISTING LAW: Section 203-cc of the limited liability company law; section 139-1 of the executive law.   JUSTIFICATION: Currently, the individual(s) behind the formation of a limited liability company are not required to be disclosed on the articles of organiza- tion. As LLCs can be campaign contributors, it is impossible to know who is behind the contributions, which can result in a conflict of interest, or the appearance of a conflict of interest. The conflict is heightened if the state itself is leasing property from, or entering into a busi- ness contract with, an LLC, which then makes direct campaign contrib- utions. By requiring the inclusion of the identity of all direct and indirect owners of the membership interests in a limited liability company to be filed with the articles of organization and any state contracts, we would allow any New Yorker the access to important infor- mation that could, potentially, reveal a conflict of interest.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: The thirtieth day after it shall have become law.
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A09670 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9670
 
                   IN ASSEMBLY
 
                                     March 28, 2016
                                       ___________
 
        Introduced by M. of A. LIFTON -- read once and referred to the Committee
          on Corporations, Authorities and Commissions
 
        AN  ACT to amend the limited liability company law and the state finance
          law, in relation to requiring the inclusion of  the  identity  of  all
          direct  and  indirect  owners of the membership interests in a limited
          liability company  in  the  articles  of  organization  and  in  state
          contracts
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Paragraphs 6 and 7 of subdivision (e) of section 203 of the
     2  limited liability company law, as added by chapter 470 of  the  laws  of
     3  1997, are amended to read as follows:
     4    (6)  if all or specified members are to be liable in their capacity as
     5  members for all or specified debts, obligations or  liabilities  of  the
     6  limited  liability company as authorized pursuant to section six hundred
     7  nine of this chapter, a statement that all or specified members  are  so
     8  liable  for  such debts, obligations or liabilities in their capacity as
     9  members of the limited  liability  company  as  authorized  pursuant  to
    10  section six hundred nine of this chapter; [and]
    11    (7)  the  identity of all direct and indirect owners of the membership
    12  interests in the limited liability company and the  proportion  of  each
    13  direct  or indirect member's ownership interest in the limited liability
    14  company; and
    15    (8) any other provisions, not inconsistent with law, that the  members
    16  elect  to  include in the articles or organization for the regulation of
    17  the internal affairs of the limited liability  company,  including,  but
    18  not limited to, (A) the business purpose for which the limited liability
    19  company  is  formed, (B) a statement of whether there are limitations on
    20  the authority of members or managers or a class or  classes  thereof  to
    21  bind  the  limited  liability  company  and  (C) any provisions that are
    22  required or permitted to be included in the operating agreement  of  the
    23  limited  liability company pursuant to section four hundred seventeen of
    24  this chapter.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14532-02-6

        A. 9670                             2
 
     1    § 2. The state finance law is amended by adding a new section 139-l to
     2  read as follows:
     3    §  139-l. Contracts with limited liability companies.  Notwithstanding
     4  any other provision of law, any contract entered into by the state  with
     5  a limited liability company, including, but not limited to, lease agree-
     6  ments,  shall,  in addition to any other requirements for such contract,
     7  include the identity of all direct and indirect owners of the membership
     8  interests in the limited liability company and the  proportion  of  each
     9  direct  or indirect member's ownership interest in the limited liability
    10  company.
    11    § 3. This act shall take effect on the thirtieth day  after  it  shall
    12  have  become  a law and shall apply to all contracts entered into by the
    13  state on or after such effective date.
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