|SAME AS||SAME AS S07795|
|Amd §§102, 203 & 211, add §215, Lim Lil L|
|Relates to establishing beneficial ownership for limited liability companies.|
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NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9809 SPONSOR: Skoufis
TITLE OF BILL: An act to amend the limited liability company law, in relation to establishing beneficial ownership for limited liability companies   PURPOSE OR GENERAL IDEA OF BILL: Relates to establishing and publicly disclosing beneficial ownership for certain limited liability companies.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 adds a new subdivision of section 102 of the limited liability company law by creating and defining "beneficial owner." Section 2 adds additional criteria for the articles of organization of a limited liability company requiring the names and residence addresses of beneficial owners. Section 3 creates a new section in the limited liability company law that requires an LLC or corporation to disclose, update and verify bene- ficial ownership information with the Department of State routinely, while also creating a civil penalty for any person who provides fraudu- lent beneficial ownership information or willfully fails to provide complete or updated information.   JUSTIFICATION: Many individuals have taken advantage of New York's Limited Liability Company law to form anonymous or "shell" business entities that present- ly have no obligation to list natural persons who control and/or have a financial stake in the LLC. This legislation seeks to require LLCs to publicly disclose information pertaining to the true beneficial owners of the company alongside other data that is already made available on the Department of State's website. Exemptions exist in this legislation for LLCs with more than 20 employees and other LLCs that are clearly not "shell" business entities.   PRIOR LEGISLATIVE HISTORY: None.   FISCAL IMPLICATIONS: None to the state.   EFFECTIVE DATE: Immediately.
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STATE OF NEW YORK ________________________________________________________________________ 9809 IN ASSEMBLY April 12, 2016 ___________ Introduced by M. of A. SKOUFIS, ZEBROWSKI -- read once and referred to the Committee on Corporations, Authorities and Commissions AN ACT to amend the limited liability company law, in relation to estab- lishing beneficial ownership for limited liability companies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 102 of the limited liability company law is amended 2 by adding a new subdivision (d-1) to read as follows: 3 (d-1) "Beneficial owner" means a natural person who is a member, 4 manager or authorized person within a limited liability company. 5 § 2. Subdivision (e) of section 203 of the limited liability company 6 law, as added by chapter 470 of the laws of 1997, is amended to read as 7 follows: 8 (e) The articles of organization of a limited liability company shall 9 set forth: 10 (1) the name of the limited liability company; 11 (2) the county within this state in which the office of the limited 12 liability company is to be located or if the limited liability company 13 shall maintain more than one office in this state, the county in which 14 the principal office of the limited liability company is to be located; 15 (3) if the limited liability company is to have a specific date of 16 dissolution in addition to the events of dissolution set forth in 17 section seven hundred one of this chapter, the latest date on which the 18 limited liability company is to dissolve; 19 (4) a designation of the secretary of state as agent of the limited 20 liability company upon whom process against it may be served and the 21 post office address within or without this state to which the secretary 22 of state shall mail a copy of any process against the limited liability 23 company served upon him or her; 24 (5) if the limited liability company is to have a registered agent, 25 its name and address within this state and a statement that the regis- 26 tered agent is to be the agent of the limited liability company upon 27 whom process against it may be served; EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14137-07-6A. 9809 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) the names and residential addresses of all beneficial owners, if 9 any, of the limited liability company. If any member, manager or author- 10 ized person of such limited liability company is itself a limited 11 liability company or other business entity, the names and residential 12 addresses, or if none, the business address of all members, managers, 13 and authorized persons of the limited liability company or other busi- 14 ness entity shall be disclosed until full disclosure of ultimate owner- 15 ship by natural persons is achieved; and 16 (8) any other provisions, not inconsistent with law, that the members 17 elect to include in the articles or organization for the regulation of 18 the internal affairs of the limited liability company, including, but 19 not limited to, (A) the business purpose for which the limited liability 20 company is formed, (B) a statement of whether there are limitations on 21 the authority of members or managers or a class or classes thereof to 22 bind the limited liability company and (C) any provisions that are 23 required or permitted to be included in the operating agreement of the 24 limited liability company pursuant to section four hundred seventeen of 25 this chapter. 26 § 3. The limited liability company law is amended by adding a new 27 section 215 to read as follows: 28 § 215. Beneficial owners. (a) Any limited liability company formed 29 pursuant to this chapter shall disclose, update and verify beneficial 30 ownership information with the secretary pursuant to this section. 31 (b) Such information as required pursuant to subdivision (a) of this 32 section, shall include the beneficial owner's name, residential or busi- 33 ness address, and any additional information disclosed pursuant to para- 34 graph seven of subdivision (e) of section two hundred three of this 35 article. 36 (c) The information contained in subdivision (b) of this section shall 37 be updated with the secretary, no later than ninety days after any 38 change in information. Such information shall be retained for five years 39 after a limited liability company terminates. The department of state 40 shall establish and maintain a database of the information disclosed 41 pursuant to this paragraph and such database shall be made available to 42 the public on the department's website within ninety days after they 43 receive such information. 44 (d) Any person who (1) provides false of fraudulent beneficial owner- 45 ship information; (2) willfully fails to provide complete or updated 46 information; (3) discloses the existence of a subpoena, summons, or 47 other request for beneficial ownership information; or (4) in the proc- 48 ess of formation fails to obtain or maintain credible, legible and 49 updated beneficial ownership information shall be liable to the state 50 for a civil penalty of not more than five thousand dollars and may be 51 imprisoned for not more than three years or both. 52 § 4. Paragraphs 7, 8 and 9 of subdivision (d) of section 211 of the 53 limited liability company law are renumbered paragraphs 8, 9 and 10 and 54 a new paragraph 7 is added to read as follows: 55 7. a change in beneficial ownership, as defined in section one hundred 56 two of this article;A. 9809 3 1 § 5. This act shall take effect immediately.