Amends the definitions of the terms "beneficial owner", "reporting company" and "exempt company" to set the scope of certain provisions relating to beneficial owners of limited liability companies; authorizes the department of state to further clarify any such definitions.
STATE OF NEW YORK
________________________________________________________________________
8432
2025-2026 Regular Sessions
IN SENATE
June 10, 2025
___________
Introduced by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
when printed to be committed to the Committee on Rules
AN ACT to amend the limited liability company law, in relation to the
scope of certain provisions relating to 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. Subdivisions (a), (b) and (c) of section 1106 of the limit-
2 ed liability company law, as added by chapter 102 of the laws of 2024,
3 are amended and a new subdivision (e) is added to read as follows:
4 (a) "Beneficial owner" shall [have the same meaning as defined in 31
5 U.S.C. § 5336(a)(3), as amended, and any regulations promulgated there-
6 under] mean, with respect to any entity or individual who, directly or
7 indirectly, through any contract, arrangement, understanding, relation-
8 ship, or otherwise:
9 (1) exercises substantial control over the entity; or
10 (2) owns or controls not less than twenty-five percent of the owner-
11 ship interests of the entity.
12 (b) "Reporting company" shall [have the same meaning as defined in 31
13 U.S.C. § 5336(a)(11), as amended, and any regulations promulgated there-
14 under, but shall only include limited liability companies formed or
15 authorized to do business in New York state]:
16 (1) mean a limited liability company that is:
17 (i) created by the filing of a document with the secretary of state;
18 or
19 (ii) authorized to do business in this state pursuant to article eight
20 of this chapter; and
21 (2) not mean or include:
22 (i) an issuer:
23 (A) of a class of securities registered under section twelve of the
24 federal securities exchange act of 1934 (15 U.S.C. 78l); or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13229-04-5
S. 8432 2
1 (B) that is required to file supplementary and periodic information
2 under section 15(d) of the federal securities exchange act of 1934 (15
3 U.S.C. 78o(d));
4 (ii) an entity that exercises governmental authority on behalf of a
5 municipality, agency, authority, political subdivision of the state;
6 (iii) a banking organization, as defined in:
7 (A) section 3 of the federal deposit insurance act (12 U.S.C. 1813);
8 (B) section 2(a) of the federal investment company act of 1940 (15
9 U.S.C. 80a-2(a));
10 (C) section 202(a) of the federal investment advisers act of 1940 (15
11 U.S.C. 80b-2(a));
12 (D) a federal credit union or a state credit union, as such terms are
13 defined by section 101 of the federal credit union act (12 U.S.C. 1752);
14 (E) a bank holding company as defined by section two of the federal
15 bank holding company act of 1956 (12 U.S.C. 1841), and as defined by
16 section one hundred forty-one of the banking law; a savings and loan
17 holding company as defined in section 10(a) of the federal home owners'
18 loan act (12 U.S.C. 1467a(a));
19 (F) a money transmitting business registered with the federal secre-
20 tary of the treasury under 31 U.S.C. § 5330; or a licensee as defined by
21 section six hundred forty of the banking law; or
22 (G) a broker or dealer, as such terms are defined by section three of
23 the federal securities exchange act of 1934 (15 U.S.C. 78c), that is
24 registered under section fifteen of such act (15 U.S.C. 78 o); or a
25 broker or dealer as defined by section three hundred fifty-nine-e of the
26 general business law;
27 (iv) an exchange or clearing agency, as such terms are defined by
28 section three of the federal securities exchange act of 1934 (15 U.S.C.
29 78c), that is registered under section six or 17A of such act (15 U.S.C.
30 78f, 78q-1);
31 (v) any other entity not described in subparagraphs (i), (vii), or
32 (viii) of this paragraph that is registered with the federal securities
33 and exchange commission under the federal securities exchange act of
34 1934 (15 U.S.C. 78a et seq.);
35 (vi) an entity that:
36 (A) is an investment company, as defined by section three of the
37 federal investment company act of 1940 (15 U.S.C. 80a-3) or an invest-
38 ment adviser, as defined by section two hundred two of the federal
39 investment advisers act of 1940 (15 U.S.C. 80b-2); and
40 (B) is registered with the federal securities and exchange commission
41 under the federal investment company act of 1940 (15 U.S.C. 80a-1 et
42 seq.) or the federal investment advisers act of 1940 (15 U.S.C. 80b-1 et
43 seq.);
44 (vii) an investment adviser:
45 (A) 1. described in section 203(l) of the federal investment advisers
46 act of 1940 (15 U.S.C. 80b-3(l)); and
47 2. that has filed item 10, schedule A, and schedule B of part 1A of
48 form ADV, or any successor thereto, with the federal securities and
49 exchange commission; or
50 (B) as defined in article twenty-three-A of the general business law.
51 (viii) an insurance company, as defined in section two of the federal
52 investment company act of 1940 (15 U.S.C. 80a-2);
53 (ix) an entity that:
54 (A) is an insurer that is authorized by the state and subject to
55 supervision by the commissioner of financial services; and
56 (B) has an operating presence within New York state;
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1 (x) (A) a registered entity, as defined in section 1a of the federal
2 commodity exchange act (7 U.S.C. 1a); or
3 (B) an entity that is:
4 1. (I) a futures commission merchant, introducing broker, swap dealer,
5 major swap participant, commodity pool operator, or commodity trading
6 advisor, as such terms are defined in section 1a of the federal commod-
7 ity exchange act (7 U.S.C. 1a); or
8 (II) a retail foreign exchange dealer, as described in section
9 2(c)(2)(B) of the federal commodity exchange act (7 U.S.C. 2(c)(2)(B));
10 and
11 2. registered with the federal commodity futures trading commission
12 under the federal commodity exchange act (7 U.S.C. 1 et seq.);
13 (xi) a public accounting firm registered in accordance with section
14 102 of the federal sarbanes-oxley act of 2002 (15 U.S.C. 7212);
15 (xii) a public utility corporation that provides telecommunications
16 services, electrical power, natural gas, or water and sewer services
17 within the state;
18 (xiii) a financial market utility designated by the federal financial
19 stability oversight council under section 804 of the federal payment,
20 clearing, and settlement supervision act of 2010 (12 U.S.C. 5463);
21 (xiv) any pooled investment vehicle that is operated or advised by a
22 person described in clause (A), (B), (C), (D) or (F) of subparagraph
23 (iii) or subparagraph (v) or (vi) of this paragraph;
24 (xv) any:
25 (A) organization that is described in section 501(c) of the federal
26 internal revenue code of 1986 (determined without regard to section
27 508(a) of such code) and exempt from tax under section 501(a) of such
28 code, except that in the case of any such organization that loses an
29 exemption from tax, such organization shall be considered to be contin-
30 ued to be described in this subclause for the one hundred eighty-day
31 period beginning on the date of the loss of such tax-exempt status;
32 (B) political organization, as defined in section 527(e)(1) of the
33 federal internal revenue code of 1986, that is exempt from tax under
34 section 527(a) of such code; or
35 (C) trust described in paragraph (1) or (2) of section 4947(a) of such
36 code;
37 (xvi) any limited liability company that:
38 (A) operates exclusively to provide financial assistance to, or hold
39 governance rights over, any entity described in subparagraph (xiv) of
40 this paragraph;
41 (B) is a United States resident;
42 (C) is beneficially owned or controlled exclusively by one or more
43 United States residents that are United States citizens or lawfully
44 admitted for permanent residence; and
45 (D) derives at least a majority of its funding or revenue from one or
46 more United States residents that are United States citizens or lawfully
47 admitted for permanent residence;
48 (xvii) any entity that:
49 (A) employs more than twenty employees on a full-time basis in the
50 United States;
51 (B) filed in the previous year federal income tax returns in the
52 United States demonstrating more than five million dollars in gross
53 receipts or sales in the aggregate, including the receipts or sales of:
54 1. other entities owned by the entity; and
55 2. other entities through which the entity operates; and
56 (C) has an operating presence at a physical office within the state;
S. 8432 4
1 (xviii) any limited liability company of which the ownership interests
2 are owned or controlled, directly or indirectly, by one or more entities
3 described in subparagraph (i), (ii), (iii), (iv), (v), (vii), (viii),
4 (ix), (x), (xi), (xii), (xiii), (xv) or (xvii) of this subparagraph;
5 (xix) any limited liability company:
6 (A) in existence for over one year;
7 (B) that is not engaged in active business;
8 (C) that is not owned, directly or indirectly, by a foreign person;
9 (D) that has not, in the preceding twelve-month period, experienced a
10 change in ownership or sent or received funds in an amount greater than
11 one thousand dollars, including all funds sent to or received from any
12 source through a financial account or accounts in which the entity, or
13 an affiliate of the entity, maintains an interest; and
14 (E) that does not otherwise hold any kind or type of assets, including
15 an ownership interest in any limited liability company; and
16 (xx) any entity or class of entities that the department of state, by
17 regulation, determined should be exempt from the requirements of section
18 eleven hundred seven of this article because requiring beneficial owner-
19 ship information from the entity or class of entities:
20 (A) would not serve the public interest; and
21 (B) would not be highly useful in national security, intelligence, and
22 law enforcement agency efforts to detect, prevent, or prosecute money
23 laundering, the financing of terrorism, proliferation finance, serious
24 tax fraud, or other crimes.
25 (c) "Exempt company" shall mean a limited liability company or foreign
26 limited liability company not otherwise defined as a reporting company
27 that meets [a condition for exemption enumerated in 31 U.S.C. §
28 5336(a)(11)(B)] one or more of the following conditions:
29 (1) a minor child, which shall mean an individual under the age of
30 eighteen;
31 (2) an individual acting as a nominee, intermediary, custodian, or
32 agent on behalf of another individual;
33 (3) an individual acting solely as an employee of a limited liability
34 company, and whose control over or economic benefits from such entity is
35 derived solely from the employment status of the person;
36 (4) an individual whose only interest in a limited liability company,
37 is through a right of inheritance; or
38 (5) a creditor of a limited liability company unless the creditor
39 meets the requirements of paragraph one of this subdivision.
40 (e) The department of state is hereby authorized to promulgate rules
41 and regulations to further clarify any definitions outlined in this
42 section.
43 § 2. This act shall take effect immediately; provided, however, that
44 if the provisions of chapter 772 of the laws of 2023 shall not have
45 taken effect on or before such date then section one of this act shall
46 take effect on the same date and in the same manner as such chapter of
47 the laws of 2023 takes effect.
