A09809 Summary:

BILL NOA09809
 
SAME ASNo Same As
 
SPONSORSkoufis
 
COSPNSRZebrowski
 
MLTSPNSR
 
Amd 102, 203 & 211, add 215, Lim Lil L
 
Relates to establishing beneficial ownership for limited liability companies.
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A09809 Memo:

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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A09809 Text:



 
                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.
                                                                   LBD14137-07-6

        A. 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.
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