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S00995 Summary:

BILL NOS00995B
 
SAME ASSAME AS A03484-A
 
SPONSORHOYLMAN-SIGAL
 
COSPNSRBRISPORT, BROUK, CLEARE, KRUEGER, MAY, MYRIE, RAMOS, RIVERA, RYAN, SALAZAR, WEBB
 
MLTSPNSR
 
Amd 102, 203, 211, 802 & 804, add 215 & 810, Lim Lil L; add 100-b, Exec L
 
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.
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S00995 Actions:

BILL NOS00995B
 
01/09/2023REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
04/28/2023AMEND (T) AND RECOMMIT TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
04/28/2023PRINT NUMBER 995A
05/23/2023AMEND (T) AND RECOMMIT TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
05/23/2023PRINT NUMBER 995B
06/06/2023COMMITTEE DISCHARGED AND COMMITTED TO RULES
06/06/2023ORDERED TO THIRD READING CAL.1622
06/06/2023PASSED SENATE
06/06/2023DELIVERED TO ASSEMBLY
06/06/2023referred to ways and means
06/09/2023substituted for a3484a
06/09/2023ordered to third reading rules cal.753
06/20/2023passed assembly
06/20/2023returned to senate
12/12/2023DELIVERED TO GOVERNOR
12/22/2023SIGNED CHAP.772
12/22/2023APPROVAL MEMO.91
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S00995 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         995--B
 
                               2023-2024 Regular Sessions
 
                    IN SENATE
 
                                     January 9, 2023
                                       ___________
 
        Introduced  by  Sens.  HOYLMAN-SIGAL,  BRISPORT,  CLEARE,  KRUEGER, MAY,
          MYRIE, RAMOS, RIVERA, RYAN, SALAZAR, WEBER -- read twice  and  ordered
          printed,  and  when printed to be committed to the Committee on Corpo-
          rations, Authorities and Commissions  --  committee  discharged,  bill
          amended,  ordered reprinted as amended and recommitted to said commit-
          tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
          amended and recommitted to said committee
 
        AN ACT to amend the limited liability company law and the executive law,
          in  relation to the disclosure of beneficial owners of limited liabil-
          ity 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  four  new  subdivisions  (ii),  (jj),  (kk)  and (ll) to read as
     5  follows:
     6    (ii) "Beneficial owner" shall have the same meaning as defined  in  31
     7  U.S.C.  § 5336(a)(3), as amended, and any regulations promulgated there-
     8  under.
     9    (jj) "Initial report" shall mean  the  report  required  to  be  filed
    10  pursuant to 31 C.F.R. § 1010.380, as amended.
    11    (kk)  "Reporting company" shall have the same meaning as defined in 31
    12  U.S.C.  § 5336(a)(11)(A), as amended, and  any  regulations  promulgated
    13  thereunder,  but  shall  only  include  limited  liability companies and
    14  foreign limited liability companies.
    15    (ll) "Exempt company"  shall  mean  a  limited  liability  company  or
    16  foreign  limited  liability company not otherwise defined as a reporting
    17  company that meets a condition for exemption enumerated in 31  U.S.C.  §
    18  5336(a)(11)(B).
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00252-09-3

        S. 995--B                           2
 
     1    §  3.  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)  in  the case of an exempt company, a statement signed by a member
    12  or manager indicating  the  provision  or  provisions  of  31  U.S.C.  §
    13  5336(a)(11)(B),  excluding such company from the definition of a report-
    14  ing company to file an initial report, or in the  case  of  a  reporting
    15  company,  the  beneficial  ownership  disclosure information as required
    16  pursuant to section two hundred fifteen of this article; and
    17    (8) any other provisions, not inconsistent with law, that the  members
    18  elect to include in the articles [or] of organization for the regulation
    19  of the internal affairs of the limited liability company, including, but
    20  not limited to, (A) the business purpose for which the limited liability
    21  company  is  formed, (B) a statement of whether there are limitations on
    22  the authority of members or managers or a class or  classes  thereof  to
    23  bind  the  limited  liability  company  and  (C) any provisions that are
    24  required or permitted to be included in the operating agreement  of  the
    25  limited  liability company pursuant to section four hundred seventeen of
    26  this chapter.
    27    § 4. Paragraphs 8, 9 and 10 of subdivision (d) of section 211  of  the
    28  limited  liability  company  law, paragraph 10 as added by section 18 of
    29  part KK of chapter 56 of the laws of 2021, are amended and a  new  para-
    30  graph 11 is added to read as follows:
    31    (8) the discovery of a materially false or inaccurate statement in the
    32  articles of organization; [and]
    33    (9)  the  decision  to  change  any other statement in the articles of
    34  organization[.];
    35    (10) to specify, change or delete  the  email  address  to  which  the
    36  [secretary]  department  of  state shall email a notice of the fact that
    37  process against the limited liability company  has  been  electronically
    38  served upon him or her[.]; and
    39    (11) in the case of a reporting company, any change in the information
    40  required to be disclosed pursuant to section two hundred fifteen of this
    41  article,  or  where  a  reporting  company  has not filed the disclosure
    42  required by such section, such company shall file such disclosure at the
    43  time of filing such certificate of amendment.
    44    § 5. The limited liability company law is  amended  by  adding  a  new
    45  section 215 to read as follows:
    46    §  215. Beneficial ownership disclosure.  (a) When filing the articles
    47  of organization pursuant to section two hundred three of this article or
    48  filing an amendment of the articles of organization pursuant to  section
    49  two  hundred  eleven  of  this article, the reporting company shall file
    50  with the department of state a beneficial ownership disclosure, and  any
    51  updates  to  such  information,  as  may be applicable, identifying each
    52  beneficial owner by: (1) full legal name; (2) date of birth; (3) current
    53  business street address; and (4) a unique  identifying  number  from  an
    54  acceptable  identification  document defined in 31 U.S.C. § 5336 (a)(1).
    55  Provided, however, that where an initial report contains the information
    56  required herein, a reporting company may submit a copy  of  the  initial

        S. 995--B                           3
 
     1  report,  submitted  to  the  federal  government pursuant to 31 U.S.C. §
     2  5336, to satisfy the requirements of this section.
     3    (b)  All  personal  or  identifying  information  of beneficial owners
     4  provided to the department of state under this section not  required  to
     5  be  included  in  the  business  entity database pursuant to section one
     6  hundred-b of the executive law, shall be deemed confidential except  for
     7  the  purposes  of  law  enforcement,  or  as  otherwise  required  to be
     8  disclosed pursuant to a court order. If confidential information associ-
     9  ated with a beneficial owner is held electronically, such records  shall
    10  be  encrypted  or  protected  in  a  substantially similar manner.   The
    11  department of state shall, upon the filing of each beneficial  ownership
    12  disclosure,  assign each beneficial owner of a limited liability company
    13  an anonymized unique identifying number, which shall not be based on any
    14  personally identifying number including but  not  limited  to  a  social
    15  security  or  tax  identification  number assigned to or associated with
    16  such beneficial owner.
    17    (c) (1) Each reporting company formed on or before the effective  date
    18  of  this  section  shall file the information required under subdivision
    19  (a) of this section; and each exempt company formed  on  or  before  the
    20  effective date of this section shall file a statement signed by a member
    21  or  manager  indicating  the  provision  or  provisions  of  31 U.S.C. §
    22  5336(a)(11)(B), excluding such company from the definition of a  report-
    23  ing  company,  with the department of state no later than January first,
    24  two thousand twenty-five.
    25    (2)   A reporting company which has  failed  to  file  the  beneficial
    26  ownership disclosure as required by this  section for a period exceeding
    27  thirty  days shall be shown to be past due on the records of the depart-
    28  ment of state until an up-to-date  beneficial  ownership  disclosure  is
    29  filed with the department.
    30    (3) A reporting company which has failed to file the beneficial owner-
    31  ship  disclosure  as required by this section for a period exceeding two
    32  years shall be shown to be delinquent on the records of  the  department
    33  of state after a notice of delinquency has been mailed to the last known
    34  business  address of such reporting company, and such company has failed
    35  to file such information within  sixty  days  of  the  mailing  of  such
    36  notice.  Such  delinquency  shall  be  removed  from  the records of the
    37  department of state upon the filing of an up-to-date  beneficial  owner-
    38  ship disclosure, and the payment of a civil penalty of two hundred fifty
    39  dollars.
    40    §  6.  Paragraphs  7  and  8  of subdivision (a) of section 802 of the
    41  limited liability company law are amended and a new paragraph 9 is added
    42  to read as follows:
    43    (7) a statement that the  foreign  limited  liability  company  is  in
    44  existence in the jurisdiction of its formation at the time of the filing
    45  of such application; [and]
    46    (8) the name and address of the authorized officer in the jurisdiction
    47  of  its  formation where a copy of its articles of organization is filed
    48  or, if no public filing of its articles of organization is  required  by
    49  the  law  of the jurisdiction of formation, a statement that the foreign
    50  limited liability company shall provide, on request, a copy thereof with
    51  all amendments thereto (if such documents are in a foreign  language,  a
    52  translation  in  English  thereof  under oath of the translator shall be
    53  attached thereto), and the name and post office address  of  the  person
    54  responsible for providing such copies[.]; and
    55    (9)  in  the case of an exempt company, a statement signed by a member
    56  or manager indicating  the  provision  or  provisions  of  31  U.S.C.  §

        S. 995--B                           4
 
     1  5336(a)(11)(B),  excluding such company from the definition of a report-
     2  ing company to file an initial report, or in the  case  of  a  reporting
     3  company, the beneficial ownership disclosure information required pursu-
     4  ant to section eight hundred ten of this article.
     5    §  7.  Section  804 of the limited liability company law is amended by
     6  adding a new subdivision (c) to read as follows:
     7    (c) In the case of a foreign limited liability company that is also  a
     8  reporting  company,  such  reporting company shall amend its application
     9  for authority upon  any  change  in  the  beneficial  owner  information
    10  required pursuant to section eight hundred ten of this article.
    11    §  8.  The  limited  liability  company law is amended by adding a new
    12  section 810 to read as follows:
    13    § 810. Beneficial ownership disclosure.  (a) When filing the  applica-
    14  tion for authority pursuant to section eight hundred two of this article
    15  or  filing  any  amendments  to an application for authority pursuant to
    16  section eight hundred four of this article, a  reporting  company  shall
    17  file  with the department of state a beneficial ownership disclosure, or
    18  any updates to such information, as may be applicable, identifying  each
    19  beneficial  owner  by:    (1)  full  legal  name; (2) date of birth; (3)
    20  current business street address; and (4)  a  unique  identifying  number
    21  from  an  acceptable  identification  document  defined  in  31 U.S.C. §
    22  5336(a)(1). Provided, however, that where an initial report contains the
    23  information required herein,  such  foreign  limited  liability  company
    24  shall  submit a copy of the initial report  such  company  submitted  to
    25  the federal government pursuant to 31 U.S.C. § 5336 in order to  satisfy
    26  the requirements of this section.
    27    (b)  All  personal  or  identifying  information  of beneficial owners
    28  provided to the department of state under this section not  required  to
    29  be  included  in  the  business  entity database pursuant to section one
    30  hundred-b of the executive law, shall be deemed confidential except  for
    31  the  purposes  of  law  enforcement,  or  as  otherwise  required  to be
    32  disclosed pursuant to a court order. If confidential information associ-
    33  ated with a beneficial owner is held electronically, such records  shall
    34  be encrypted or protected in a substantially similar manner. The depart-
    35  ment  of  state  shall,  upon  the filing of each   beneficial ownership
    36  disclosure, assign each beneficial owner of a foreign limited  liability
    37  company  an  anonymized  unique  identifying  number, which shall not be
    38  based on any personally identifying number including but not limited  to
    39  a social security or tax identification number assigned to or associated
    40  with such beneficial owner.
    41    (c)  (1)  Each    reporting  company  formed pursuant to section eight
    42  hundred two of this chapter, on or before the  effective  date  of  this
    43  section  shall  file  the  information required under subdivision (a) of
    44  this section; and each exempt company shall file a statement signed by a
    45  member or manager indicating the provision or provisions of 31 U.S.C.  §
    46  5336(a)(11)(B) excluding such company from the definition of a reporting
    47  company,  with  the department of state no later than January first, two
    48  thousand twenty-five.
    49    (2)    A reporting company which has failed  to  file  its  beneficial
    50  ownership disclosure  as required by  this section, for a period exceed-
    51  ing  thirty  days,  shall  be shown to be past due on the records of the
    52  department of state until an up-to-date beneficial ownership  disclosure
    53  is filed with the department.
    54    (3) A reporting company which has failed to file its beneficial owner-
    55  ship  disclosure  as required by this section for a period exceeding two
    56  years shall be shown to be delinquent on the records of  the  department

        S. 995--B                           5
 
     1  of  state    after  a notice of delinquency  has been mailed to the last
     2  known business address of such  company and such company has  failed  to
     3  file  such  information within sixty days of the mailing of such notice.
     4  Such  delinquency shall be removed from the records of the department of
     5  state upon the filing of an up-to-date beneficial  ownership  disclosure
     6  required  by  this  section,  and  the payment of a civil penalty of two
     7  hundred fifty dollars.
     8    § 9. The executive law is amended by adding a  new  section  100-b  to
     9  read as follows:
    10    §  100-b.  Business  entity  database. 1. The secretary of state shall
    11  maintain a publicly available database on its website for each  business
    12  entity organized in New York state and each foreign business entity with
    13  authority    to    do    business in the state, that includes but is not
    14  limited to, the following information:
    15    (a) the name of the business entity;
    16    (b) the history of such name and changes to such name, where  applica-
    17  ble;
    18    (c) the current business street address and the county associated with
    19  such business street address;
    20    (d)  the duration or date of dissolution of the business entity, where
    21  applicable;
    22    (e) where the business entity is a limited liability company, the date
    23  of initial filing of the  articles  of    organization,   or  where  the
    24  business  entity is a foreign limited liability company, the application
    25  for authority;
    26    (f) the date of the most recent filing;
    27    (g)  the filing history associated with such entity; and
    28    (h) any other information pertaining to such business entity as may be
    29  determined by the secretary of state and in accordance  with  applicable
    30  state and federal laws, rules, and regulations.
    31    2.  (a)  In addition to the information required to be included in the
    32  database pursuant to subdivision one of this section, the  secretary  of
    33  state shall also include the full legal name or names of each beneficial
    34  owner, for every limited liability company and foreign limited liability
    35  company where such companies are also  reporting companies.
    36    (b)  The  secretary  of  state  shall  establish, through regulations,
    37  procedures to allow beneficial owners   of limited  liability  companies
    38  and foreign limited liability companies who are also reporting companies
    39  who cite significant privacy interests to apply for a waiver to withhold
    40  the  name  and/or business address associated of a beneficial owner from
    41  the  database  established in subdivision one of this section where such
    42  name and/or business address discloses personal or identifying  informa-
    43  tion  of  such  beneficial owner, no amendment to such information miti-
    44  gates such disclosure, and such disclosure serves  no  public  interest.
    45  Significant  privacy  interests  shall  include,  but not be limited to,
    46  where a beneficial owner is a natural person participating in an address
    47  confidentiality program,  or is a member of  a  limited liability compa-
    48  ny acting as a relator in a qui tam action filed pursuant to section one
    49  hundred ninety of the state finance law or 31 U.S.C.  section 3729.  The
    50  secretary  of  state  shall  issue a waiver to a beneficial owner upon a
    51  demonstration that a  significant  privacy  interest  exists  and  shall
    52  provide guidance on its website indicating what documentation is accept-
    53  able as proof for issuance of a waiver. If the secretary of state grants
    54  a  beneficial owner a waiver pursuant to this subdivision, the secretary
    55  of  state  shall  disclose  the  anonymized  unique  identifying  number
    56  assigned  by  the secretary of state to each beneficial owner  or owners

        S. 995--B                           6
 
     1  pursuant  to  section two hundred fifteen or section eight  hundred  ten
     2  of  the  limited    liability   company law, as may be applicable to the
     3  database established in subdivision one of this section.  The  secretary
     4  of state shall also provide information on its website regarding compli-
     5  ance with beneficial ownership disclosure requirements and how and where
     6  such information may be used and disclosed.
     7    §  10. This act shall take effect on the three hundred sixty-fifth day
     8  after it shall have become a law. Effective immediately,  the  addition,
     9  amendment  and/or  repeal  of  any  rule or regulation necessary for the
    10  implementation of this act on its effective date are  authorized  to  be
    11  made and completed on or before such effective date.
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