NY State Senate Bill 2019-S5384

Senate Bill S5384

2019-2020 Legislative Session

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

download bill text pdf

Archive: Last Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to corporations, authorities and commissions
Apr 29, 2019	referred to corporations, authorities and commissions

2019-S5384 (ACTIVE) - Details

See Assembly Version of this Bill:: A379
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §203, Lim Lil L; add §139-m, St Fin L
Versions Introduced in Other Legislative Sessions:: 2015-2016: A9670
2017-2018: A1917
2021-2022: S3665

2019-S5384 (ACTIVE) - Summary

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.

2019-S5384 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5384

SPONSOR: COMRIE
 
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 state finance 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 entering into a business contract with an LLC,
which then makes direct campaign contributions. By requiring the inclu-
sion 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 information that could, potentially, reveal a
conflict of interest.

 
LEGISLATIVE HISTORY:

2016: A9670-A; referred to Corporations, Authorities and Commissions.
2017-18: A1917; referred to Corporations, Authorities and Commissions.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
The thirtieth day after it shall have become law.

2019-S5384 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5384
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              April 29, 2019
                                ___________
 
 Introduced  by  Sen.  COMRIE -- read twice and ordered printed, and when
   printed to be committed 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:
 
   Section 1. Paragraphs 6 and 7 of subdivision (e) of section 203 of the
 limited liability company law, as added by chapter 470 of  the  laws  of
 1997, are amended to read as follows:
   (6)  if all or specified members are to be liable in their capacity as
 members for all or specified debts, obligations or  liabilities  of  the
 limited  liability company as authorized pursuant to section six hundred
 nine of this chapter, a statement that all or specified members  are  so
 liable  for  such debts, obligations or liabilities in their capacity as
 members of the limited  liability  company  as  authorized  pursuant  to
 section six hundred nine of this chapter; [and]
   (7)  THE  IDENTITY OF ALL DIRECT AND INDIRECT OWNERS OF THE MEMBERSHIP
 INTERESTS IN THE LIMITED LIABILITY COMPANY AND THE  PROPORTION  OF  EACH
 DIRECT  OR INDIRECT MEMBER'S OWNERSHIP INTEREST IN THE LIMITED LIABILITY
 COMPANY; AND
   (8) any other provisions, not inconsistent with law, that the  members
 elect  to  include in the articles or organization for the regulation of
 the internal affairs of the limited liability  company,  including,  but
 not limited to, (A) the business purpose for which the limited liability
 company  is  formed, (B) a statement of whether there are limitations on
 the authority of members or managers or a class or  classes  thereof  to
 bind  the  limited  liability  company  and  (C) any provisions that are
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD01817-01-9

 S. 5384                             2
 
 required or permitted to be included in the operating agreement  of  the
 limited  liability company pursuant to section four hundred seventeen of
 this chapter.
   § 2. The state finance law is amended by adding a new section 139-m to
 read as follows:
   §  139-M. CONTRACTS WITH LIMITED LIABILITY COMPANIES.  NOTWITHSTANDING
 ANY OTHER PROVISION OF LAW, ANY CONTRACT ENTERED INTO BY THE STATE  WITH
 A  LIMITED  LIABILITY  COMPANY, SHALL, IN ADDITION TO ANY OTHER REQUIRE-
 MENTS FOR SUCH CONTRACT, INCLUDE THE IDENTITY OF ALL DIRECT AND INDIRECT
 OWNERS OF THE MEMBERSHIP INTERESTS IN THE LIMITED LIABILITY COMPANY  AND
 THE PROPORTION OF EACH DIRECT OR INDIRECT MEMBER'S OWNERSHIP INTEREST IN
 THE LIMITED LIABILITY COMPANY.
   §  3.  This  act shall take effect on the thirtieth day after it shall
 have become a law and shall apply to all contracts entered into  by  the
 state on or after such effective date.

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