NY State Senate Bill S995B

Current Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

Introduced
In Committee
On Floor Calendar
- Passed Senate
- Passed Assembly
Delivered to Governor
Signed/Vetoed by Governor

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Actions

view actions (5)

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 23, 2023	print number 995b
May 23, 2023	amend (t) and recommit to corporations, authorities and commissions
Apr 28, 2023	print number 995a
Apr 28, 2023	amend (t) and recommit to corporations, authorities and commissions
Jan 09, 2023	referred to corporations, authorities and commissions

Bill Amendments

Original

B (Active)

Original

B (Active)

Co-Sponsors

S995 - Details

See Assembly Version of this Bill:: A3484
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L; add §100-b, Exec L
Versions Introduced in 2021-2022 Legislative Session:: S8439, A9415

S995 - Summary

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.

S995 - Sponsor Memo

 
BILL NUMBER: S995

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the limited liability company law, in relation to the
disclosure of beneficial owners of limited liability companies

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to modernize disclosure laws for limited liability compa-
nies by defining beneficial ownership and requiring the disclosure of
beneficial owners.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one is the short title.

Section two amends the LLC law to define beneficial ownership, exclude
certain individuals from qualifying as beneficial owners, and capture
indirect forms of beneficial ownership, including through trusts and
intermediaries.

Section three amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize an LLC in New York State.

Section four amends the LLC law to require an amendment to the documents
necessary to organize an LLC in New York State if there is a change to
the beneficial owners of the LLC.

Section five amends the LLC law to create a new section requiring the
disclosure of beneficial ownership and permits the LLC to file a copy of
the same form they file with the federal government.

Section six amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize a foreign LLC in New York State.

Section seven amends the LLC law, pertaining to foreign LLCS, to require
an amendment to the documents necessary to organize a foreign LLC in New
York State if there is a change to the beneficial owners of the foreign
LLC.

Section eight amends the LLC law, pertaining to foreign LLCS, to create
a new section requiring the disclosure of beneficial ownership and
permits the foreign LLC to file a copy of the same form they file with
the federal government.

Section nine is the effective date.

 
JUSTIFICATION:

Anonymous shell companies have been exploited as vehicles for money
laundering, tax evasion, organized crime, terrorist financing, and other
forms of corruption for decades. In the United States, the most common
form of a shell corporation is the limited liability company ("LLC"). To
form an LLC, a person needs less personal information than is required
to obtain a library card. The true owners of LLCs can be concealed even
further through trusts and nesting layers of corporate intermediaries,
facilitating money laundering, crime, and tax avoidance as assets become
washed through anonymous legal entities. Billions of dollars from the
illicit gains of international kleptocrats have been washed through LLCs
in the United States, becoming nearly impossible to trace without
tremendous effort. These phenomena have been thoroughly documented by
leaks and investigations such as the Panama Papers in 2016 and Pandora
Papers in 2021.

Anonymous LLCs have also been vehicles for narcotics and human traffick-
ers to launder their illicit profits and escape accountability. The
sociologist Adam Travis has documented an "LLC effect" in housing
markets, which is a statistically significant correlation between code
violations and the prevalence of LLC landlords caused by the combination
of anonymity and limited liability protections. This effect was demon-
strated by a 2019 Senate investigation into housing code violations in
the Hudson Valley.  Anonymous LLCs have also continued to facilitate
campaign finance violations despite recent legislation prohibiting this
practice.

Beneficial ownership transparency, which includes disclosure and public
reporting, is the internationally-recognized gold standard for combating
these forms of crime and corruption. This bill would make New York a
national leader in terms of addressing the public policy problems
created by anonymous shell corporations. This legislation would be a
significant deterrent to corruption, fraud, and organized crime. It
would ease the investigative burden on law enforcement authorities pros-
ecuting financial crimes and the regulatory burden imposed on businesses
required to report the beneficial owners of their customers pursuant to
federal law, such as title agencies and financial institutions. Tenants
would be able to know who their landlord is, researchers and policy-mak-
ers would be better able to understand business and investment patterns
otherwise made opaque by LLCs, and the government would be able to veri-
fy the beneficial owners of LLCs involved in procurement processes.

 
PRIOR LEGISLATIVE HISTORY:

S.8439B of 2021-2022 (Hoylman): Died in Rules

A.9415C of 2021-2022 (Gallagher): Advanced to Third Reading

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This bill is effective 365 days after becoming law, provided however
that the repeal, amendment, or enactment of any rule or regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive date is authorized to be made or completed before its effective
date.

S995 - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    995
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              January 9, 2023
                                ___________
 
 Introduced  by  Sens. HOYLMAN, BRISPORT, CLEARE, KRUEGER, MYRIE, RIVERA,
   SALAZAR -- read twice and ordered printed,  and  when  printed  to  be
   committed  to  the  Committee on Corporations, Authorities and Commis-
   sions
 
 AN ACT to amend the limited liability company law, in  relation  to  the
   disclosure of beneficial owners of limited liability companies
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "LLC transparency act".
   §  2.  Section  102 of the limited liability company law is amended by
 adding a new subdivision (ii) to read as follows:
   (II) (1) "BENEFICIAL OWNER" MEANS A NATURAL PERSON  WHO,  DIRECTLY  OR
 INDIRECTLY,  (A)  HOLDS  A  MEMBERSHIP  INTEREST  IN A LIMITED LIABILITY
 COMPANY; (B) EXERCISES SUBSTANTIAL  CONTROL  OVER  THE  DECISIONS  OF  A
 MEMBERSHIP  INTEREST  IN  A  LIMITED  LIABILITY COMPANY; OR (C) HAS BEEN
 ASSIGNED A MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY.  FOR  THE
 PURPOSES OF THIS SUBDIVISION AND FOR ANY REFERENCES TO BENEFICIAL OWNERS
 OF  ANY  LIMITED LIABILITY COMPANY, THE TERM "LIMITED LIABILITY COMPANY"
 SHALL INCLUDE, WHERE APPLICABLE, FOREIGN LIMITED LIABILITY COMPANIES AND
 AUTHORIZED FOREIGN LIMITED LIABILITY COMPANIES.
   (2) THE TERM "BENEFICIAL OWNER" SHALL NOT INCLUDE: (A) A MINOR  CHILD;
 (B)  A  PERSON ACTING AS A NOMINEE, INTERMEDIARY, CUSTODIAN, OR AGENT ON
 BEHALF OF ANOTHER PERSON; (C) A PERSON ACTING SOLELY AS AN EMPLOYEE OF A
 LIMITED LIABILITY COMPANY AND WHOSE CONTROL OVER  OR  ECONOMIC  BENEFITS
 FROM  THE  LIMITED  LIABILITY COMPANY DERIVES SOLELY FROM THE EMPLOYMENT
 STATUS OF THE PERSON; (D) A PERSON WHOSE  ONLY  INTEREST  IN  A  LIMITED
 LIABILITY  COMPANY  IS THROUGH A RIGHT OF INHERITANCE, UNLESS THE PERSON
 ALSO MEETS THE REQUIREMENTS OF PARAGRAPH ONE OF THIS SUBDIVISION; (E)  A
 CREDITOR  OF A LIMITED LIABILITY COMPANY, UNLESS THE CREDITOR ALSO MEETS
 THE REQUIREMENTS OF PARAGRAPH  ONE  OF  THIS  SUBDIVISION;  OR  (F)  ANY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00252-01-3

 S. 995                              2
 
 NATURAL  PERSON WHOSE MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY
 DERIVES SOLELY FROM HIS OR HER  EMPLOYMENT  BY  SUCH  LIMITED  LIABILITY
 COMPANY  AND SUCH LIMITED LIABILITY COMPANY'S ORGANIZATION AS AN EMPLOY-
 EE-OWNED  BUSINESS  OR  WORKER COOPERATIVE, AS EVIDENCED BY SUCH LIMITED
 LIABILITY COMPANY'S BY-LAWS OR ARTICLES OF ORGANIZATION.
   (3) IF A BENEFICIAL OWNER OF A LIMITED  LIABILITY  COMPANY  INDIRECTLY
 MEETS THE REQUIREMENTS OF SUBPARAGRAPH (A), (B), OR (C) OF PARAGRAPH ONE
 OF  THIS SUBDIVISION, AND SUCH COMPANY IS REQUIRED TO DISCLOSE ITS BENE-
 FICIAL OWNERS TO THE DEPARTMENT OF STATE OR DEPARTMENT OF  TAXATION  AND
 FINANCE,  SUCH  BENEFICIAL OWNER SHALL IDENTIFY EACH AND EVERY ENTITY OR
 PERSON LINKING SUCH BENEFICIAL OWNER TO THE LIMITED  LIABILITY  COMPANY,
 INCLUDING  BY  IDENTIFYING EVERY INTERMEDIARY BY NAME AND EXPLAINING THE
 NATURE OF THE LEGAL OR ECONOMIC RELATIONSHIP OF THE BENEFICIAL OWNER  TO
 EACH SUCH INTERMEDIARY AND HOW EACH SUCH INTERMEDIARY IS LINKED TO EVERY
 OTHER  INTERMEDIARY AND TO THE LIMITED LIABILITY COMPANY. THE BENEFICIAL
 OWNER MAY BE PERMITTED OR REQUIRED TO PROVIDE A  DIAGRAM  TO  MEET  THIS
 DISCLOSURE  REQUIREMENT.  IF  INDIRECT BENEFICIAL OWNERSHIP IS EXERCISED
 THROUGH A PUBLICLY TRADED ENTITY, A REIT, A UPREIT, OR  A  MUTUAL  FUND,
 THE REQUIREMENTS OF THIS PARAGRAPH SHALL ONLY APPLY TO BENEFICIAL OWNERS
 HOLDING OR CONTROLLING TWENTY-FIVE PERCENT OR MORE OF THE EQUITY IN SUCH
 LIMITED  LIABILITY  COMPANY.  THIS  SUBDIVISION  SHALL  APPLY UNTIL FULL
 DISCLOSURE OF BENEFICIAL OWNERSHIP BY NATURAL PERSONS IS ACHIEVED.
   (4) IF INDIRECT BENEFICIAL OWNERSHIP IS EXERCISED THROUGH A  TRUST  OR
 SIMILAR  ARRANGEMENT  WHICH  HOLDS  OR CONTROLS, DIRECTLY OR INDIRECTLY,
 TWENTY-FIVE PERCENT OR MORE OF  THE  EQUITY  IN  THE  LIMITED  LIABILITY
 COMPANY  OR EXERCISES SUBSTANTIAL CONTROL OVER SUCH COMPANY, THE LIMITED
 LIABILITY COMPANY SHALL IDENTIFY AS  A  BENEFICIAL  OWNER  EACH  NATURAL
 PERSON SERVING AS: (A) A TRUSTEE OF THE TRUST, A TRUST PROTECTOR, OR ANY
 OTHER  INDIVIDUAL  WITH AUTHORITY, DIRECTLY OR INDIRECTLY, TO DISPOSE OF
 TRUST INCOME, ASSETS, OR PRINCIPAL; (B) A  TRUST  BENEFICIARY  WITH  THE
 RIGHT, DIRECTLY OR INDIRECTLY, TO RECEIVE, DEMAND, OR WITHDRAW ANY TRUST
 INCOME,  ASSETS,  OR  PRINCIPAL;  AND  (C) A GRANTOR OR SETTLOR WITH THE
 RIGHT, DIRECTLY OR INDIRECTLY,  TO  REVOKE  THE  TRUST  OR  TO  RECEIVE,
 DEMAND, OR WITHDRAW TRUST INCOME, ASSETS OR PRINCIPAL.
   §  3.  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)  A  DOCUMENT  IDENTIFYING  THE  BENEFICIAL  OWNERS  OF THE LIMITED
 LIABILITY COMPANY IN ACCORDANCE WITH  SUBDIVISION  (A)  OF  SECTION  TWO
 HUNDRED FIFTEEN OF THIS ARTICLE; AND
   (8)  any other provisions, not inconsistent with law, that the members
 elect to include in the articles [or] OF 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
 required  or  permitted to be included in the operating agreement of the
 S. 995                              3
 
 limited liability company pursuant to section four hundred seventeen  of
 this chapter.
   §  4.  Paragraphs 8, 9 and 10 of subdivision (d) of section 211 of the
 limited liability company law, paragraph 10 as added by  section  18  of
 part  KK  of chapter 56 of the laws of 2021, are amended and a new para-
 graph 11 is added to read as follows:
   (8) the discovery of a materially false or inaccurate statement in the
 articles of organization; [and]
   (9) the decision to change any other  statement  in  the  articles  of
 organization[.];
   (10)  to  specify,  change  or  delete  the email address to which the
 secretary of state shall email a notice of the fact that process against
 the limited liability company has been electronically served upon him or
 her[.]; AND
   (11) A CHANGE IN THE  BENEFICIAL  OWNERS  OF  SUCH  LIMITED  LIABILITY
 COMPANY  OR  THE  INFORMATION  REQUIRED  TO BE PROVIDED RELATING TO EACH
 BENEFICIAL OWNER PURSUANT TO SECTION TWO HUNDRED THREE OF THIS ARTICLE.
   § 5. The limited liability company law is  amended  by  adding  a  new
 section 215 to read as follows:
   §  215.  BENEFICIAL  OWNERSHIP  DISCLOSURE.    (A) A LIMITED LIABILITY
 COMPANY, WHEN DISCLOSING ITS  BENEFICIAL  OWNERS,  SHALL  IDENTIFY  EACH
 BENEFICIAL  OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT  RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S  LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER  STATE
 OR,  IF  NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF A NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING  INFORMATION  FOR THE BENEFICIAL OWNER; (5) A FEDERAL  OR  STATE
 TAXPAYER  IDENTIFICATION  NUMBER  OR, IF NONE, A LEGAL ENTITY IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B) A LIMITED LIABILITY COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS
 TO THE DEPARTMENT OF STATE OR DEPARTMENT OF TAXATION  AND  FINANCE,  MAY
 SUBMIT  A  COPY  OF  THE  BENEFICIAL  OWNERSHIP INFORMATION SUCH COMPANY
 SUBMITTED TO THE FEDERAL GOVERNMENT PURSUANT TO 31 U.S.C.  SECTION  5336
 IN  ORDER  TO  SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED THAT SUCH
 FEDERAL REGISTRATION IS CURRENT AND CONTAINS ALL INFORMATION REQUIRED BY
 STATE LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 AND  YEAR  OF  BIRTH OF A BENEFICIAL OWNER SHALL NOT BE DEEMED AN UNWAR-
 RANTED INVASION OF PERSONAL PRIVACY  PURSUANT  TO  ARTICLE  SIX  OF  THE
 PUBLIC  OFFICERS  LAW.  ALL OTHER PERSONAL OR IDENTIFYING INFORMATION OF
 SUCH BENEFICIAL OWNER  SHALL  BE  DEEMED  CONFIDENTIAL  EXCEPT  FOR  THE
 PURPOSES OF LAW ENFORCEMENT. IF CONFIDENTIAL INFORMATION ASSOCIATED WITH
 A  BENEFICIAL  OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS  SHALL BE
 ENCRYPTED.
   § 6. Paragraphs 7 and 8 of subdivision  (a)  of  section  802  of  the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7)  a  statement  that  the  foreign  limited liability company is in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of its formation where a copy of its articles of organization  is  filed
 or,  if  no public filing of its articles of organization is required by
 the law of the jurisdiction of formation, a statement that  the  foreign
 limited liability company shall provide, on request, a copy thereof with
 S. 995                              4
 
 all  amendments  thereto (if such documents are in a foreign language, a
 translation in English thereof under oath of  the  translator  shall  be
 attached  thereto),  and  the name and post office address of the person
 responsible for providing such copies[.]; AND
   (9) A DOCUMENT IDENTIFYING THE BENEFICIAL OWNERS OF THE FOREIGN LIMIT-
 ED LIABILITY COMPANY IN ACCORDANCE WITH SUBDIVISION (A) OF SECTION EIGHT
 HUNDRED TEN OF THIS ARTICLE.
   §  7.  Section  804 of the limited liability company law is amended by
 adding a new subdivision (c) to read as follows:
   (C) EVERY FOREIGN LIMITED LIABILITY COMPANY THAT HAS RECEIVED A FILING
 RECEIPT  ENTITLED  "CERTIFICATE  OF  AUTHORITY  OF .... (NAME OF FOREIGN
 LIMITED LIABILITY COMPANY) UNDER  SECTION  EIGHT  HUNDRED  FIVE  OF  THE
 LIMITED LIABILITY COMPANY LAW," EVIDENCING AUTHORITY AS PROVIDED  HEREIN
 SHALL   AMEND  ITS APPLICATION FOR AUTHORITY UPON A CHANGE IN BENEFICIAL
 OWNERSHIP OR THE INFORMATION REQUIRED TO BE PROVIDED  RELATING  TO  EACH
 BENEFICIAL  OWNER  PURSUANT TO SECTION   EIGHT   HUNDRED   TWO  OF  THIS
 ARTICLE WITHIN NINETY DAYS OF SUCH CHANGE.
   § 8. The limited liability company law is  amended  by  adding  a  new
 section 810 to read as follows:
   § 810. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) A FOREIGN LIMITED LIABIL-
 ITY  COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS, SHALL IDENTIFY EACH
 BENEFICIAL OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT   RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S   LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER STATE
 OR, IF NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF  A  NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING   INFORMATION   FOR THE BENEFICIAL OWNER; (5) A FEDERAL OR STATE
 TAXPAYER IDENTIFICATION NUMBER OR, IF NONE, A  LEGAL  ENTITY  IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B)  A  FOREIGN LIMITED LIABILITY COMPANY, WHEN DISCLOSING ITS BENEFI-
 CIAL OWNERS TO THE DEPARTMENT OF STATE OR  DEPARTMENT  OF  TAXATION  AND
 FINANCE,  MAY SUBMIT A COPY OF THE BENEFICIAL OWNERSHIP INFORMATION SUCH
 COMPANY SUBMITTED TO  THE  FEDERAL  GOVERNMENT  PURSUANT  TO  31  U.S.C.
 SECTION 5336 IN ORDER TO SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED
 THAT  SUCH  FEDERAL REGISTRATION IS CURRENT AND CONTAINS ALL INFORMATION
 REQUIRED BY STATE LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 AND  YEAR  OF  BIRTH OF A BENEFICIAL OWNER SHALL NOT BE DEEMED AN UNWAR-
 RANTED INVASION OF PERSONAL PRIVACY  PURSUANT  TO  ARTICLE  SIX  OF  THE
 PUBLIC  OFFICERS  LAW.  ALL OTHER PERSONAL OR IDENTIFYING INFORMATION OF
 SUCH BENEFICIAL OWNER  SHALL  BE  DEEMED  CONFIDENTIAL  EXCEPT  FOR  THE
 PURPOSES OF LAW ENFORCEMENT. IF CONFIDENTIAL INFORMATION ASSOCIATED WITH
 A  BENEFICIAL  OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS  SHALL BE
 ENCRYPTED.
   § 9. This act shall take effect on the three hundred  sixty-fifth  day
 after  it  shall have become a law. Effective immediately, the addition,
 amendment and/or repeal of any rule  or  regulation  necessary  for  the
 implementation  of  this  act on its effective date are authorized to be
 made and completed on or before such effective date.

Co-Sponsors

view additional co-sponsors

S995A - Details

See Assembly Version of this Bill:: A3484
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L; add §100-b, Exec L
Versions Introduced in 2021-2022 Legislative Session:: S8439, A9415

S995A - Summary

S995A - Sponsor Memo

 
BILL NUMBER: S995A

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the limited liability company law, the tax law, the
administrative code of the city of New York, and the executive law, in
relation to the disclosure of beneficial owners of limited liability
companies

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to end the practice of anonymous ownership of limited
liability companies in New York by defining beneficial ownership,
requiring the disclosure of the identities of beneficial owners upon
company formation or registration, and publishing beneficial owners of
limited liability companies in New York's publicly searchable corpo-
ration and business entity database.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one is the short title.

Section two amends section 102 of the limited liability company (LLC)
law to define beneficial ownership, i.e. the individual people who actu-
ally profit from or substantially control a corporation or asset.  The
definition recently promulgated by the federal Treasury Department
through regulation is incorporated by reference, as well as definitions
of other relevant terms.

Section three amends section 203 of the LLC law to require that LLCs
include an initial report, including a list of beneficial owners, with
the documents submitted to the Department of State when organizing an
LLC in New York State. Exempt com panies must indicate which
exemption(s) they are claiming against their obligation to file such
initial report. The exemptions that may be claimed are identical to
those promulgated by the federal Treasury Department through regulation.

Section four amends section 211 of the LLC law to require that updates
and corrections to information required in an initial report are filed
with the Department of State.

Section five amends the LLC law to create a new section, 215, that
enumerates the information that must be disclosed by an LLC when identi-
fying one of its beneficial owners. The list of items is identical to
the information that must be disclosed to the Treasury Department pursu-
ant to federal law. Section 215 also permits an LLC to file an identical
copy of the report it filed with the Treasury Department with the New
York Department of State or Department of Taxation and Finance in order
to satisfy state reporting requirements. Section 215 permits the public
identification of beneficial owners through name, year of birth, busi-
ness address, and related limited liability companies, but deems all
other personally-identifying information included in such reports confi-
dential except for the purposes of law enforcement. Penalties for will-
ful or knowing non-compliance or fraud are also provided.

Sections six, seven, and eight make the same changes as sections three,
four, and five above, but as applied to foreign limited liability compa-

nies, by amending sections 802 and 804 of the LLC law and adding a new
section, 810.

Section nine amends the tax law to incorporate the new definition of
beneficial ownership as it applies to real estate transfer tax forms
filed with the Department of Taxation and Finance and to apply the
reporting requirement to all real property transfers instead of just
those for buildings with fewer than 1-4 units.

Section ten amends the New York City Administrative Code to incorporate
the new definition of beneficial ownership as it applies to real estate
transfer tax forms filed with the Department of Taxation and Finance and
to apply the reporting requirement to all real property transfers
instead of just those for buildings with fewer than 1-4 units.

Section eleven amends the tax law to create a new section, 171-x, that
requires the Department of Taxation and Finance to release to the
Department of State beneficial ownership information related to LLCs
gained through real estate transfer tax returns.

Section twelve requires that the Department of State assign every bene-
ficial owner of an LLC a unique identifying number and publish such
number in relation to any affiliated LLCs in the Department of State's
corporation and business entity database, which is publicly searchable.
The name, year of birth, and business address of any beneficial owner of
an LLC is also required to be published in such database in relation to
any affiliated LLCs. A waiver process for individuals with significant
privacy interests is created to prevent the disclosure of any personally
identifying information associated with those beneficial owners,
although their unique identifying number shall remain in the corporation
and business entity database.

Section thirteen provides fora deadline by which initial reports must be
filed with the Department of State by any reporting companies created on
or before the effective date of the act, utilizing the latest possible
date permitted by the Treasury Department pursuant to federal regu-
lation.

Section fourteen is the effective date.

 
JUSTIFICATION:

Limited liability is a legal privilege conferred upon an individual by
the state, and the receipt of such privilege should be conditioned on
the identification of the individual benefiting from it. Permitting
anonymous limited liability companies to do business in New York was a
public policy mistake that deserves correction.

Anonymous corporate ownership has proliferated since the 1990s and has
contributed to numerous problems. Anonymous shell companies are used to
bypass sanctions, avoid taxes, fund terrorist organizations and organ-
ized crime, and launder money. Anonymous LLCs leasing real property are
correlated with more numerous code violations, higher rents, and more
evictions compared to non-corporate owners. Drug and human traffickers
use anonymous shell companies like LLCs to launder the proceeds of their
criminal activities and evade detection. Deed theft, campaign finance
violations, and bid rigging can be facilitated by anonymous LLCs. Anony-
mous LLCs hamper routine code enforcement, burdening local governments.
Meanwhile, the anonymous ownership of a significant portion of real
estate in New York hampers policy-making and upends centuries of prece-
dent by obscuring the answer to the question: who owns what?

In response to exposes such as the Panama Papers and the Pandora Papers,
which highlighted the massive, global nature of illicit activity
fostered by anonymous shell companies like LLCs, the UK, European Union,
Australia, New Zealand, Canada, and over 100 countries worldwide are
creating registries of the beneficial owners of corporate and legal
entities, many of them public. In 2021, the federal government passed
the Corporate Transparency Act, which requires the Treasury Department
to collect beneficial ownership information from corporations in a
private, government database.  Unfortunately, the inaccessible nature of
the new federal database means that this information will serve no use
for civil society or local government in New York, denying New Yorkers
the many benefits that beneficial ownership transparency offers.

This bill builds on previous efforts to require the disclosure of LLC
members and managers involved in real estate transactions in New York.
The bill adopts the same standards promulgated by the Treasury Depart-
ment pursuant to the Corporate Transparency Act and requires that the
same information also be filed with New York's Department of State.
Companies subject to the federal government's reporting requirements may
submit a copy of their federal registration to New York's Department of
State in order to minimize the burden of such reporting. To protect
genuine privacy interests that some individuals may have, a waiver proc-
ess is created, with specific protections for whistleblowers using LLCs
to file false claims act lawsuits and individuals participating in an
address confidentiality program.

 
PRIOR LEGISLATIVE HISTORY:

A9415 / S8439 (2022) - died on third reading.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This bill is effective 365 days after becoming law, provided however
that the repeal, amendment, or enactment of any rule or regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive date is authorized to be made or completed before its effective
date.

S995A - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  995--A
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              January 9, 2023
                                ___________
 
 Introduced  by  Sens.  HOYLMAN-SIGAL,  BRISPORT, CLEARE, KRUEGER, MYRIE,
   RIVERA, SALAZAR -- read twice and ordered printed, and when printed to
   be committed to the Committee on Corporations, Authorities and Commis-
   sions -- committee discharged,  bill  amended,  ordered  reprinted  as
   amended and recommitted to said committee

 AN  ACT  to  amend  the  limited liability company law, the tax law, the
   administrative code of the city of New York, and the executive law, in
   relation to the disclosure of beneficial owners of  limited  liability
   companies
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "LLC transparency act".
   §  2.  Section  102 of the limited liability company law is amended by
 adding a new subdivision (ii) to read as follows:
   (II) (1) "BENEFICIAL OWNER" MEANS THE SAME AS SUCH TERM IS DEFINED  IN
 31 C.F.R. § 1010.380 (D).
   (2)  "INITIAL  REPORT"  MEANS  THE  SAME AS SUCH TERM IS DEFINED IN 31
 C.F.R. § 1010.380 (B).
   (3) "REPORTING COMPANY" MEANS A LIMITED LIABILITY  COMPANY  THAT  DOES
 NOT  MEET  A  CONDITION FOR EXEMPTION ENUMERATED IN 31 C.F.R. § 1010.380
 (C)(2).
   (4) "EXEMPT COMPANY" MEANS A LIMITED LIABILITY COMPANY  THAT  MEETS  A
 CONDITION FOR EXEMPTION ENUMERATED IN 31 C.F.R. § 1010.380 (C)(2).
   (5)  FOR    THE PURPOSES OF THIS SUBDIVISION AND FOR ANY REFERENCES TO
 BENEFICIAL OWNERS OF  ANY  LIMITED LIABILITY COMPANY, THE TERM  "LIMITED
 LIABILITY  COMPANY"  SHALL  INCLUDE,  WHERE  APPLICABLE, FOREIGN LIMITED
 LIABILITY COMPANIES AND AUTHORIZED FOREIGN LIMITED LIABILITY COMPANIES.
   § 3. 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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00252-07-3

 S. 995--A                           2
 
   (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)  IN  THE CASE OF AN EXEMPT COMPANY, A STATEMENT SIGNED BY A MEMBER
 OR MANAGER INDICATING WHICH EXEMPTION OR EXEMPTIONS THE  COMPANY  CLAIMS
 AGAINST  ITS  OBLIGATION  TO FILE AN INITIAL REPORT, OR IN THE CASE OF A
 REPORTING COMPANY, AN INITIAL REPORT; AND
   (8) any other provisions, not inconsistent with law, that the  members
 elect to include in the articles [or] OF 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
 required or permitted to be included in the operating agreement  of  the
 limited  liability company pursuant to section four hundred seventeen of
 this chapter.
   § 4. Paragraphs 8, 9, and 10 of subdivision (d) of section 211 of  the
 limited  liability  company  law, paragraph 10 as added by section 18 of
 part KK of chapter 56 of the laws of 2021, are amended and a  new  para-
 graph 11 is added to read as follows:
   (8) the discovery of a materially false or inaccurate statement in the
 articles of organization; [and]
   (9)  the  decision  to  change  any other statement in the articles of
 organization[.];
   (10) to specify, change or delete  the  email  address  to  which  the
 secretary of state shall email a notice of the fact that process against
 the limited liability company has been electronically served upon him or
 her[.]; AND
   (11)  IN  THE CASE OF A REPORTING COMPANY, A CHANGE IN THE INFORMATION
 REQUIRED TO BE INCLUDED IN AN INITIAL REPORT OR A CHANGE TO THE  BENEFI-
 CIAL  OWNERS  OF  SUCH  LIMITED  LIABILITY  COMPANY  OR  THE INFORMATION
 REQUIRED TO BE PROVIDED RELATING TO EACH BENEFICIAL  OWNER  PURSUANT  TO
 SECTION TWO HUNDRED THREE OF THIS ARTICLE.
   §  5.  The  limited  liability  company law is amended by adding a new
 section 215 to read as follows:
   § 215. BENEFICIAL OWNERSHIP  DISCLOSURE.    (A)  A  LIMITED  LIABILITY
 COMPANY,  WHEN  DISCLOSING  ITS  BENEFICIAL  OWNERS, SHALL IDENTIFY EACH
 BENEFICIAL OWNER BY: (1) FULL LEGAL NAME; (2) DATE OF BIRTH; (3) CURRENT
 RESIDENTIAL STREET ADDRESS; (4) A  UNIQUE  IDENTIFYING  NUMBER  AND  THE
 ISSUING  JURISDICTION FROM ONE OF THE FOLLOWING DOCUMENTS: (I) A NON-EX-
 PIRED PASSPORT ISSUED TO THE INDIVIDUAL BY THE UNITED STATES GOVERNMENT;
 OR, IF NONE, (II) A NON-EXPIRED IDENTIFICATION DOCUMENT  ISSUED  TO  THE
 INDIVIDUAL BY A STATE, LOCAL GOVERNMENT, OR INDIAN TRIBE FOR THE PURPOSE
 OF IDENTIFYING THE INDIVIDUAL; OR, IF NONE, (III) A NON-EXPIRED DRIVER'S
 LICENSE ISSUED TO THE INDIVIDUAL BY A STATE; OR, IF NONE, (IV) A NON-EX-
 PIRED PASSPORT ISSUED BY A FOREIGN GOVERNMENT TO THE INDIVIDUAL; AND (5)
 AN  IMAGE  OF  THE  DOCUMENT FROM WHICH THE UNIQUE IDENTIFYING NUMBER IN
 PARAGRAPH FOUR OF THIS SUBDIVISION WAS OBTAINED.
   (B) A LIMITED LIABILITY COMPANY, WHEN  FILING  AN  INITIAL  REPORT,  A
 PORTION  THEREOF,  OR  ANY  AMENDMENT  OR CORRECTION THERETO PURSUANT TO
 SECTION TWO HUNDRED THREE OR TWO HUNDRED ELEVEN OF THIS ARTICLE, OR WHEN
 S. 995--A                           3
 
 DISCLOSING ITS BENEFICIAL OWNERS TO THE DEPARTMENT OF STATE  OR  DEPART-
 MENT  OF  TAXATION  AND  FINANCE,  MAY  SUBMIT A COPY OF THE REPORT SUCH
 COMPANY SUBMITTED TO THE FEDERAL GOVERNMENT  PURSUANT  TO  31  C.F.R.  §
 1010.380  IN ORDER TO SATISFY SUCH REPORTING REQUIREMENTS, PROVIDED THAT
 SUCH FEDERAL REPORT IS CURRENT AND CONTAINS ALL INFORMATION REQUIRED  BY
 STATE LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 DATE  OF  BIRTH, AND ASSOCIATED LIMITED LIABILITY COMPANIES OF A BENEFI-
 CIAL OWNER SHALL NOT BE  DEEMED  AN  UNWARRANTED  INVASION  OF  PERSONAL
 PRIVACY   PURSUANT  TO  ARTICLE  SIX  OF THE PUBLIC  OFFICERS  LAW.  ALL
 OTHER PERSONAL OR  IDENTIFYING  INFORMATION  OF  SUCH  BENEFICIAL  OWNER
 SHALL    BE    DEEMED    CONFIDENTIAL   EXCEPT   FOR THE PURPOSES OF LAW
 ENFORCEMENT. IF CONFIDENTIAL INFORMATION ASSOCIATED WITH A    BENEFICIAL
 OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS SHALL BE ENCRYPTED.
   (D) ANY PERSON WHO: (1) KNOWINGLY PROVIDES FALSE OR FRAUDULENT BENEFI-
 CIAL  OWNERSHIP  INFORMATION; OR (2) WILLFULLY FAILS TO PROVIDE COMPLETE
 OR UPDATED INFORMATION SHALL BE GUILTY OF A MISDEMEANOR  AND  LIABLE  TO
 THE  STATE FOR A CIVIL PENALTY OF NOT MORE THAN TEN THOUSAND DOLLARS AND
 SHALL BE PROHIBITED FROM ORGANIZING, FORMING, REGISTERING,  OR  MANAGING
 ANY  LIMITED  LIABILITY  COMPANY OR PARTNERSHIP IN THE STATE OF NEW YORK
 FOR A PERIOD NOT LESS THAN ONE YEAR OR GREATER THAN  FIVE  YEARS.    THE
 DEPARTMENT OF STATE MAY WITHDRAW OR PROHIBIT THE AUTHORITY OF SUCH ENTI-
 TY TO DO BUSINESS WITHIN THE STATE FOR AT LEAST TWO YEARS.
   §  6.  Paragraphs  7  and  8  of subdivision (a) of section 802 of the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7) a statement that the  foreign  limited  liability  company  is  in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of  its  formation where a copy of its articles of organization is filed
 or, if no public filing of its articles of organization is  required  by
 the  law  of the jurisdiction of formation, a statement that the foreign
 limited liability company shall provide, on request, a copy thereof with
 all amendments thereto (if such documents are in a foreign  language,  a
 translation  in  English  thereof  under oath of the translator shall be
 attached thereto), and the name and post office address  of  the  person
 responsible for providing such copies[.]; AND
   (9)  IN  THE CASE OF AN EXEMPT COMPANY, A STATEMENT SIGNED BY A MEMBER
 OR MANAGER INDICATING WHICH EXEMPTION OR EXEMPTIONS THE  COMPANY  CLAIMS
 AGAINST  ITS  OBLIGATION  TO FILE AN INITIAL REPORT, OR IN THE CASE OF A
 REPORTING COMPANY, AN INITIAL REPORT INCLUDING A  DOCUMENT   IDENTIFYING
 THE  BENEFICIAL    OWNERS    OF THE FOREIGN LIMITED LIABILITY COMPANY IN
 ACCORDANCE WITH SUBDIVISION (A) OF SECTION EIGHT  HUNDRED  TEN  OF  THIS
 ARTICLE.
   §  7.  Section  804 of the limited liability company law is amended by
 adding a new subdivision (c) to read as follows:
   (C) EVERY REPORTING COMPANY THAT HAS RECEIVED A FILING RECEIPT   ENTI-
 TLED    "CERTIFICATE   OF   AUTHORITY   OF .... (NAME OF FOREIGN LIMITED
 LIABILITY COMPANY) UNDER  SECTION  EIGHT  HUNDRED  FIVE  OF  THE LIMITED
 LIABILITY COMPANY LAW," EVIDENCING AUTHORITY AS  PROVIDED  HEREIN  SHALL
 AMEND    ITS  APPLICATION FOR AUTHORITY UPON A CHANGE IN THE INFORMATION
 REQUIRED TO BE INCLUDED IN AN INITIAL REPORT OR A CHANGE TO THE  BENEFI-
 CIAL    OWNERS  OF  SUCH  LIMITED  LIABILITY  COMPANY OR THE INFORMATION
 REQUIRED TO BE PROVIDED RELATING TO EACH BENEFICIAL  OWNER  PURSUANT  TO
 S. 995--A                           4
 
 SECTION   EIGHT   HUNDRED   TWO   OF  THIS ARTICLE WITHIN NINETY DAYS OF
 SUCH CHANGE.
   §  8.  The  limited  liability  company law is amended by adding a new
 section 810 to read as follows:
   § 810. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) A FOREIGN LIMITED LIABIL-
 ITY COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS, SHALL IDENTIFY  EACH
 BENEFICIAL  OWNER  BY:    (1)  FULL  LEGAL  NAME; (2) DATE OF BIRTH; (3)
 CURRENT RESIDENTIAL STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER  AND
 THE  ISSUING  JURISDICTION  FROM  ONE  OF THE FOLLOWING DOCUMENTS: (I) A
 NON-EXPIRED PASSPORT ISSUED TO  THE  INDIVIDUAL  BY  THE  UNITED  STATES
 GOVERNMENT;  OR,  IF  NONE,  (II)  A NON-EXPIRED IDENTIFICATION DOCUMENT
 ISSUED TO THE INDIVIDUAL BY A STATE, LOCAL GOVERNMENT, OR  INDIAN  TRIBE
 FOR  THE  PURPOSE  OF  IDENTIFYING  THE INDIVIDUAL; OR, IF NONE, (III) A
 NON-EXPIRED DRIVER'S LICENSE ISSUED TO THE INDIVIDUAL BY A STATE; OR, IF
 NONE, (IV) A NON-EXPIRED PASSPORT ISSUED BY A FOREIGN GOVERNMENT TO  THE
 INDIVIDUAL; AND (5) AN IMAGE OF THE DOCUMENT FROM WHICH THE UNIQUE IDEN-
 TIFYING NUMBER IN PARAGRAPH FOUR OF THIS SUBDIVISION WAS OBTAINED.
   (B)  A  FOREIGN  LIMITED  LIABILITY  COMPANY,  WHEN  FILING AN INITIAL
 REPORT, A PORTION THEREOF, OR ANY AMENDMENT OR CORRECTION THERETO PURSU-
 ANT TO THIS SECTION OR SECTION EIGHT HUNDRED FOUR OF  THIS  ARTICLE,  OR
 WHEN  DISCLOSING  ITS  BENEFICIAL  OWNERS  TO THE DEPARTMENT OF STATE OR
 DEPARTMENT OF TAXATION AND FINANCE, MAY SUBMIT A COPY OF THE REPORT SUCH
 COMPANY SUBMITTED TO THE FEDERAL GOVERNMENT  PURSUANT  TO  31  C.F.R.  §
 1010.380  IN ORDER TO SATISFY REPORTING REQUIREMENTS, PROVIDED THAT SUCH
 FEDERAL REPORT IS CURRENT AND CONTAINS ALL INFORMATION REQUIRED BY STATE
 LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 DATE OF  BIRTH, AND ASSOCIATED LIMITED LIABILITY COMPANIES OF A  BENEFI-
 CIAL  OWNER  SHALL  NOT  BE  DEEMED  AN UNWARRANTED INVASION OF PERSONAL
 PRIVACY  PURSUANT  TO  ARTICLE  SIX  OF THE PUBLIC  OFFICERS  LAW.   ALL
 OTHER  PERSONAL  OR  IDENTIFYING  INFORMATION  OF  SUCH BENEFICIAL OWNER
 SHALL   BE   DEEMED   CONFIDENTIAL   EXCEPT   FOR THE  PURPOSES  OF  LAW
 ENFORCEMENT.  IF  CONFIDENTIAL INFORMATION ASSOCIATED WITH A  BENEFICIAL
 OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS SHALL BE ENCRYPTED.
   (D) ANY PERSON WHO: (1) KNOWINGLY PROVIDES FALSE OR FRAUDULENT BENEFI-
 CIAL OWNERSHIP INFORMATION; OR (2) WILLFULLY FAILS TO  PROVIDE  COMPLETE
 OR  UPDATED  INFORMATION  SHALL BE GUILTY OF A MISDEMEANOR AND LIABLE TO
 THE STATE FOR A CIVIL PENALTY OF NOT MORE THAN TEN THOUSAND DOLLARS  AND
 SHALL  BE  PROHIBITED FROM ORGANIZING, FORMING, REGISTERING, OR MANAGING
 ANY LIMITED LIABILITY COMPANY OR PARTNERSHIP IN THE STATE  OF  NEW  YORK
 FOR  A  PERIOD  NOT  LESS THAN ONE YEAR OR GREATER THAN FIVE YEARS.  THE
 DEPARTMENT OF STATE MAY WITHDRAW OR PROHIBIT THE AUTHORITY OF SUCH ENTI-
 TY TO TRANSACT BUSINESS WITHIN THE STATE OF NEW YORK FOR  AT  LEAST  TWO
 YEARS.
   § 9. Paragraph 2 of subdivision (a) of section 1409 of the tax law, as
 amended  by  section  3  of part O of chapter 59 of the laws of 2021, is
 amended to read as follows:
   (2) When the grantor or grantee of a deed for a building used as resi-
 dential real property [containing up to four family dwelling units] is a
 limited liability company, the joint return shall not  be  accepted  for
 filing  unless  it  is  accompanied  by  a document which identifies the
 [names and business addresses of all members, managers,  and  any  other
 authorized  persons,  if  any, of such limited liability company and the
 names and business addresses or, if none, the business addresses of  all
 shareholders, directors, officers, members, managers and partners of any
 limited  liability  company  or other business entity that are to be the
 S. 995--A                           5

 members, managers or authorized persons, if any, of such limited liabil-
 ity company. The identification of such names and addresses shall not be
 deemed an unwarranted invasion of personal privacy pursuant  to  article
 six  of  the public officers law. If any such member, manager or author-
 ized person of the limited liability company is itself a limited liabil-
 ity company or other business entity other than a publicly traded  enti-
 ty,  a  REIT, a UPREIT, or a mutual fund, the names and addresses of the
 shareholders, directors, officers, members, managers and partners of the
 limited liability  company  or  other  business  entity  shall  also  be
 disclosed until full disclosure of ultimate ownership by natural persons
 is  achieved]  BENEFICIAL  OWNERS  OF  SUCH LIMITED LIABILITY COMPANY IN
 ACCORDANCE WITH SECTION TWO HUNDRED FIFTEEN OR EIGHT HUNDRED TEN OF  THE
 LIMITED  LIABILITY  COMPANY  LAW,  AS  APPLICABLE.  For purposes of this
 subdivision, the terms  ["members",  "managers",  "authorized  person",]
 "BENEFICIAL OWNERS" AND "limited liability company" [and "other business
 entity"]  shall  have  the  same  meaning  as those terms are defined in
 section one hundred two of the limited liability company law.
   § 10. Subdivision h of section 11-2105 of the administrative  code  of
 the  city of New York, as amended by chapter 555 of the laws of 2022, is
 amended to read as follows:
   h. When the grantor or grantee of a deed for a building used as  resi-
 dential real property [containing up to four family dwelling units] is a
 limited  liability  company,  the joint return shall not be accepted for
 filing unless it is accompanied  by  a  document  which  identifies  the
 [names  and  business  addresses of all members, managers, and any other
 authorized persons, if any, of such limited liability  company  and  the
 names  and business addresses or, if none, the business addresses of all
 shareholders, directors, officers, members, managers and partners of any
 limited liability company or other business entity that are  to  be  the
 members, managers or authorized persons, if any, of such limited liabil-
 ity company. The identification of such names and addresses shall not be
 deemed  an  unwarranted invasion of personal privacy pursuant to article
 six of the public officers law. If any such member, manager  or  author-
 ized person of the limited liability company is itself a limited liabil-
 ity  company or other business entity other than a publicly traded enti-
 ty, a REIT, an UPREIT, or a mutual fund, the names and addresses of  the
 shareholders, directors, officers, members, managers and partners of the
 limited  liability  company  or  other  business  entity  shall  also be
 disclosed until full disclosure of ultimate ownership by natural persons
 is achieved] BENEFICIAL OWNERS OF  SUCH  LIMITED  LIABILITY  COMPANY  IN
 ACCORDANCE  WITH SECTION TWO HUNDRED FIFTEEN OR EIGHT HUNDRED TEN OF THE
 LIMITED LIABILITY COMPANY LAW, AS APPLICABLE.    For  purposes  of  this
 subdivision,  the  terms  ["members",  "managers", "authorized person",]
 "BENEFICIAL OWNERS" AND "limited liability company" [and "other business
 entity"] shall have the same meaning  as  those  terms  are  defined  in
 section one hundred two of the limited liability company law.
   §  11. The tax law is amended by adding a new section 171-x to read as
 follows:
   § 171-X. INFORMATION SHARING WITH THE DEPARTMENT  OF  STATE  REGARDING
 BENEFICIAL OWNERS OF LIMITED LIABILITY COMPANIES. NOTWITHSTANDING SUBDI-
 VISION  (A)  OF SECTION FOURTEEN HUNDRED EIGHTEEN OF THIS CHAPTER OR ANY
 OTHER LAW, THE COMMISSIONER SHALL RELEASE TO  THE  DEPARTMENT  OF  STATE
 INFORMATION  REGARDING  BENEFICIAL OWNERS OF LIMITED LIABILITY COMPANIES
 WHICH IS REPORTED TO THE DEPARTMENT EITHER  ON  A  FORM  ISSUED  BY  THE
 DEPARTMENT  OR  ANY  OTHER  METHOD  OF  REPORT  TO THE DEPARTMENT.   FOR
 PURPOSES OF THIS SECTION, THE TERMS  "BENEFICIAL  OWNERS"  AND  "LIMITED
 S. 995--A                           6
 
 LIABILITY  COMPANY"  SHALL  HAVE  THE  SAME  MEANING  AS THOSE TERMS ARE
 DEFINED IN SECTION ONE HUNDRED TWO OF THE LIMITED LIABILITY COMPANY LAW.
   §  12.  The  executive law is amended by adding a new section 100-b to
 read as follows:
   § 100-B. CORPORATION AND  BUSINESS  ENTITY  DATABASE;  INFORMATION  ON
 BENEFICIAL  OWNERS.  1. THE SECRETARY OF STATE SHALL ASSIGN EACH BENEFI-
 CIAL OWNER OF A LIMITED LIABILITY COMPANY AN ANONYMIZED UNIQUE IDENTIFY-
 ING NUMBER AND PUBLISH SUCH NUMBER IN RELATION TO ANY AFFILIATED  COMPA-
 NIES,  IN  ADDITION  TO SUCH BENEFICIAL OWNER'S NAME, DATE OF BIRTH, AND
 BUSINESS ADDRESS, IN THE CORPORATION AND BUSINESS ENTITY DATABASE OR ANY
 SUBSEQUENT DATABASE WHICH IS MAINTAINED BY THE DIVISION OF  CORPORATIONS
 WITHIN  THE  DEPARTMENT  OF  STATE.   DATA ASSOCIATED WITH EVERY LIMITED
 LIABILITY COMPANY REGISTERED TO TRANSACT  BUSINESS  IN  NEW  YORK  STATE
 SHALL  BE PUBLISHED ONLINE IN A DOWNLOADABLE SPREADSHEET FORMAT AT LEAST
 ONCE ANNUALLY, OR OTHERWISE IN ANY MANNER COMPATIBLE WITH  THE  REQUIRE-
 MENTS OF EXECUTIVE ORDER NINETY-FIVE, DATED MARCH ELEVENTH, TWO THOUSAND
 THIRTEEN. SUCH DATA SHALL ALSO INCLUDE THE NAME, DATE OF BIRTH, BUSINESS
 ADDRESS,  AND  ANONYMIZED  UNIQUE IDENTIFYING NUMBER OF EVERY BENEFICIAL
 OWNER OF EACH LIMITED LIABILITY COMPANY. IF A BENEFICIAL OWNER HAS  BEEN
 ISSUED  A  WAIVER  PURSUANT TO SUBDIVISION TWO OF THIS SECTION, ONLY THE
 ANONYMIZED UNIQUE IDENTIFYING NUMBER  ASSOCIATED  WITH  SUCH  BENEFICIAL
 OWNER  SHALL BE PUBLISHED IN RELATION TO EACH AFFILIATED LIMITED LIABIL-
 ITY COMPANY. FOR PURPOSES OF THIS SECTION, THE TERMS "BENEFICIAL  OWNER"
 AND  "LIMITED  LIABILITY  COMPANY"  SHALL HAVE THE SAME MEANING AS THOSE
 TERMS ARE DEFINED IN SECTION ONE HUNDRED TWO OF  THE  LIMITED  LIABILITY
 COMPANY LAW.
   2.  THE DEPARTMENT SHALL ESTABLISH, THROUGH REGULATIONS, PROCEDURES TO
 ALLOW BENEFICIAL OWNERS WITH SIGNIFICANT PRIVACY INTERESTS TO APPLY  FOR
 A WAIVER TO WITHHOLD ALL PERSONAL OR IDENTIFYING INFORMATION FROM PUBLIC
 DISCLOSURE.  THE ISSUANCE OF A WAIVER SHALL BE UPON GOOD CAUSE SHOWN AND
 IN THE PUBLIC INTEREST. IF  A  BENEFICIAL  OWNER  IS  A  NATURAL  PERSON
 PARTICIPATING  IN AN ADDRESS CONFIDENTIALITY PROGRAM OR IS A MEMBER OF A
 LIMITED LIABILITY COMPANY ACTING AS A RELATOR IN A QUI TAM ACTION  FILED
 PURSUANT  TO  SECTION  ONE HUNDRED NINETY OF THE STATE FINANCE LAW OR 31
 U.S.C. SECTION 3729, SUCH BENEFICIAL OWNER SHALL  BE  PRESUMED  TO  HAVE
 GOOD  CAUSE  AND  PRIVACY  IN THE PUBLIC INTEREST. THE LIMITED LIABILITY
 COMPANY MAY SUBMIT DOCUMENTATION INDICATING SUCH STATUS TO  THE  DEPART-
 MENT,  AND THE DEPARTMENT SHALL PROVIDE GUIDANCE ON ITS WEBSITE INDICAT-
 ING WHAT DOCUMENTATION IS ACCEPTABLE AS PROOF OF SUCH  STATUS  OR  OTHER
 GOOD  CAUSE  FOR ISSUANCE OF A WAIVER. THE DEPARTMENT SHALL ALSO PROVIDE
 NOTICE ON ITS WEBSITE THAT BENEFICIAL OWNERS NOT IN RECEIPT  OF  SUCH  A
 WAIVER  MAY BE PUBLICLY IDENTIFIED AND GUIDANCE ON ITS WEBSITE REGARDING
 COMPLIANCE WITH BENEFICIAL OWNERSHIP DISCLOSURE REQUIREMENTS.
   § 13. By January 1, 2025, each reporting company created on or  before
 the  effective  date  of  this act shall file an initial report with the
 department of state and each exempt company shall file  with the depart-
 ment of state a statement signed by a member or manager  indicating  the
 specific  exemption or exemptions such exempt company claims against its
 obligation to file an initial report.
   § 14. This act shall take effect on the three hundred sixty-fifth  day
 after  it  shall have become a law. Effective immediately, the addition,
 amendment and/or repeal of any rule  or  regulation  necessary  for  the
 implementation  of  this  act on its effective date are authorized to be
 made and completed on or before such effective date.

Co-Sponsors

view additional co-sponsors

S995B (ACTIVE) - Details

See Assembly Version of this Bill:: A3484
Current Committee:: Senate Corporations, Authorities And Commissions
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L; add §100-b, Exec L
Versions Introduced in 2021-2022 Legislative Session:: S8439, A9415

S995B (ACTIVE) - Summary

S995B (ACTIVE) - Sponsor Memo

 
BILL NUMBER: S995B

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the limited liability company law and the executive law,
in relation to the disclosure of beneficial owners of limited liability
companies

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to end the practice of anonymous ownership of limited
liability companies in New York by defining beneficial ownership,
requiring the disclosure of the identities of beneficial owners upon
company formation or registration, and publishing beneficial owners of
limited liability companies in New York's publicly searchable business
entity database.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one is the short title.

Section two amends section 102 of the limited liability company (LLC)
law to define beneficial owner, initial report, reporting company and
exempt company.

Section three amends section 203 of the LLC law to require that LLCs
include an initial report, including a list of beneficial owners, with
the documents submitted to the Department of State when organizing an
LLC in New York State. Exempt companies must indicate which exemption(s)
they are claiming against their obligation to file such initial report.
The exemptions that may be claimed are identical to those promulgated by
the federal Treasury Department through regulation.

Section four amends section 211 of the LLC law to require that updates
and corrections to information required in an initial report are filed
with the Department of State.

Section five amends the LLC law to create a new section, 215, that
enumerates the information that must be disclosed by an LLC when identi-
fying one of its beneficial owners. The list of items is identical to
the information that must be disclosed to the Treasury Department pursu-
ant to federal law. Section 215 also permits an LLC to file an identical
copy of the report it filed with the Treasury Department with the New
York Department of State in order to satisfy state reporting require-
ments.

Sections six, seven, and eight make the same changes as sections three,
four, and five above, but as applied to foreign limited liability compa-
nies, by amending sections 802 and 804 of the LLC law and adding a new
section, 810.

Section nine requires that the secretary of state maintain a publicly
available database on its website for each business entity organized in
New York. The data base must include, among other things, the name of
the business entity, the current business street address and county
associated with each business street address, and the full name(s) of
each beneficial owner. The Secretary of State is required to establish

rules and regulations to allow beneficial owners to apply for confiden-
tiality waivers.

Section ten is the effective date.

 
JUSTIFICATION:

Limited liability is a legal privilege conferred upon an individual by
the state, and the receipt of such privilege should be conditioned on
the identification of the individual benefiting from it. Permitting
anonymous limited liability companies to do business in New York was a
public policy mistake that deserves correction.

Anonymous corporate ownership has proliferated since the 1990s and has
contributed to numerous problems. Anonymous shell companies are used to
bypass sanctions, avoid taxes, fund terrorist organizations and organ-
ized crime, and launder money. Anonymous LLCs leasing real property are
correlated with more numerous code violations, higher rents, and more
evictions compared to non-corporate owners. Drug and human traffickers
use anonymous shell companies like LLCs to launder the proceeds of their
criminal activities and evade detection. Deed theft, campaign finance
violations, and bid rigging can be facilitated by anonymous LLCs. Anony-
mous LLCs hamper routine code enforcement, burdening local governments.
Meanwhile, the anonymous ownership of a significant portion of real
estate in New York hampers policy-making and upends centuries of prece-
dent by obscuring the answer to the question: who owns what?

In response to exposes such as the Panama Papers and the Pandora Papers,
which highlighted the massive, global nature of illicit activity
fostered by anonymous shell companies like LLCs, the UK, European Union,
Australia, New Zealand, Canada, and over 100 countries worldwide are
creating registries of the beneficial owners of corporate and legal
entities, many of them public. In 2021, the federal government passed
the Corporate Transparency Act, which requires the Treasury Department
to collect beneficial ownership information from corporations in a
private, government database.  Unfortunately, the inaccessible nature of
the new federal database means that this information will serve no use
for civil society or local government in New York, denying New Yorkers
the many benefits that beneficial ownership transparency offers.

This bill builds on previous efforts to require the disclosure of LLC
members and managers involved in real estate transactions in New York.
The bill adopts the same standards promulgated by the Treasury Depart-
ment pursuant to the Corporate Transparency Act and requires that the
same information also be filed with New York's Department of State.
Companies subject to the federal government's reporting requirements may
submit a copy of their federal registration to New York's Department of
State in order to minimize the burden of such reporting. To protect
genuine privacy interests that some individuals may have, a waiver proc-
ess is created, with specific protections for whistleblowers using LLCs
to file false claims act lawsuits and individuals participating in an
address confidentiality program.

 
PRIOR LEGISLATIVE HISTORY:

A9415 / 58439 (2022) - died on third reading.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.

 
EFFECTIVE DATE:
This bill is effective 365 days after becoming law, provided however
that the repeal, amendment, or enactment of any rule or regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive date is authorized to be made or completed before its effective
date.

S995B (ACTIVE) - Bill Text download pdf

 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  995--B
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              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:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "LLC transparency act".
   § 2. Section 102 of the limited liability company law  is  amended  by
 adding  four  new  subdivisions  (ii),  (jj),  (kk)  and (ll) to read as
 follows:
   (II) "BENEFICIAL OWNER" SHALL HAVE THE SAME MEANING AS DEFINED  IN  31
 U.S.C.  § 5336(A)(3), AS AMENDED, AND ANY REGULATIONS PROMULGATED THERE-
 UNDER.
   (JJ) "INITIAL REPORT" SHALL MEAN  THE  REPORT  REQUIRED  TO  BE  FILED
 PURSUANT TO 31 C.F.R. § 1010.380, AS AMENDED.
   (KK)  "REPORTING COMPANY" SHALL HAVE THE SAME MEANING AS DEFINED IN 31
 U.S.C.  § 5336(A)(11)(A), AS AMENDED, AND  ANY  REGULATIONS  PROMULGATED
 THEREUNDER,  BUT  SHALL  ONLY  INCLUDE  LIMITED  LIABILITY COMPANIES AND
 FOREIGN LIMITED LIABILITY COMPANIES.
   (LL) "EXEMPT COMPANY"  SHALL  MEAN  A  LIMITED  LIABILITY  COMPANY  OR
 FOREIGN  LIMITED  LIABILITY COMPANY NOT OTHERWISE DEFINED AS A REPORTING
 COMPANY THAT MEETS A CONDITION FOR EXEMPTION ENUMERATED IN 31  U.S.C.  §
 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

 
   §  3.  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)  IN  THE CASE OF AN EXEMPT COMPANY, A STATEMENT SIGNED BY A MEMBER
 OR MANAGER INDICATING  THE  PROVISION  OR  PROVISIONS  OF  31  U.S.C.  §
 5336(A)(11)(B),  EXCLUDING SUCH COMPANY FROM THE DEFINITION OF A REPORT-
 ING COMPANY TO FILE AN INITIAL REPORT, OR IN THE  CASE  OF  A  REPORTING
 COMPANY,  THE  BENEFICIAL  OWNERSHIP  DISCLOSURE INFORMATION AS REQUIRED
 PURSUANT TO SECTION TWO HUNDRED FIFTEEN OF THIS ARTICLE; AND
   (8) any other provisions, not inconsistent with law, that the  members
 elect to include in the articles [or] OF 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
 required or permitted to be included in the operating agreement  of  the
 limited  liability company pursuant to section four hundred seventeen of
 this chapter.
   § 4. Paragraphs 8, 9 and 10 of subdivision (d) of section 211  of  the
 limited  liability  company  law, paragraph 10 as added by section 18 of
 part KK of chapter 56 of the laws of 2021, are amended and a  new  para-
 graph 11 is added to read as follows:
   (8) the discovery of a materially false or inaccurate statement in the
 articles of organization; [and]
   (9)  the  decision  to  change  any other statement in the articles of
 organization[.];
   (10) to specify, change or delete  the  email  address  to  which  the
 [secretary]  DEPARTMENT  of  state shall email a notice of the fact that
 process against the limited liability company  has  been  electronically
 served upon him or her[.]; AND
   (11) IN THE CASE OF A REPORTING COMPANY, ANY CHANGE IN THE INFORMATION
 REQUIRED TO BE DISCLOSED PURSUANT TO SECTION TWO HUNDRED FIFTEEN OF THIS
 ARTICLE,  OR  WHERE  A  REPORTING  COMPANY  HAS NOT FILED THE DISCLOSURE
 REQUIRED BY SUCH SECTION, SUCH COMPANY SHALL FILE SUCH DISCLOSURE AT THE
 TIME OF FILING SUCH CERTIFICATE OF AMENDMENT.
   § 5. The limited liability company law is  amended  by  adding  a  new
 section 215 to read as follows:
   §  215. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) WHEN FILING THE ARTICLES
 OF ORGANIZATION PURSUANT TO SECTION TWO HUNDRED THREE OF THIS ARTICLE OR
 FILING AN AMENDMENT OF THE ARTICLES OF ORGANIZATION PURSUANT TO  SECTION
 TWO  HUNDRED  ELEVEN  OF  THIS ARTICLE, THE REPORTING COMPANY SHALL FILE
 WITH THE DEPARTMENT OF STATE A BENEFICIAL OWNERSHIP DISCLOSURE, AND  ANY
 UPDATES  TO  SUCH  INFORMATION,  AS  MAY BE APPLICABLE, IDENTIFYING EACH
 BENEFICIAL OWNER BY: (1) FULL LEGAL NAME; (2) DATE OF BIRTH; (3) CURRENT
 BUSINESS STREET ADDRESS; AND (4) A UNIQUE  IDENTIFYING  NUMBER  FROM  AN
 ACCEPTABLE  IDENTIFICATION  DOCUMENT DEFINED IN 31 U.S.C. § 5336 (A)(1).
 PROVIDED, HOWEVER, THAT WHERE AN INITIAL REPORT CONTAINS THE INFORMATION
 REQUIRED HEREIN, A REPORTING COMPANY MAY SUBMIT A COPY  OF  THE  INITIAL
 S. 995--B                           3
 
 REPORT,  SUBMITTED  TO  THE  FEDERAL  GOVERNMENT PURSUANT TO 31 U.S.C. §
 5336, TO SATISFY THE REQUIREMENTS OF THIS SECTION.
   (B)  ALL  PERSONAL  OR  IDENTIFYING  INFORMATION  OF BENEFICIAL OWNERS
 PROVIDED TO THE DEPARTMENT OF STATE UNDER THIS SECTION NOT  REQUIRED  TO
 BE  INCLUDED  IN  THE  BUSINESS  ENTITY DATABASE PURSUANT TO SECTION ONE
 HUNDRED-B OF THE EXECUTIVE LAW, SHALL BE DEEMED CONFIDENTIAL EXCEPT  FOR
 THE  PURPOSES  OF  LAW  ENFORCEMENT,  OR  AS  OTHERWISE  REQUIRED  TO BE
 DISCLOSED PURSUANT TO A COURT ORDER. IF CONFIDENTIAL INFORMATION ASSOCI-
 ATED WITH A BENEFICIAL OWNER IS HELD ELECTRONICALLY, SUCH RECORDS  SHALL
 BE  ENCRYPTED  OR  PROTECTED  IN  A  SUBSTANTIALLY SIMILAR MANNER.   THE
 DEPARTMENT OF STATE SHALL, UPON THE FILING OF EACH BENEFICIAL  OWNERSHIP
 DISCLOSURE,  ASSIGN EACH BENEFICIAL OWNER OF A LIMITED LIABILITY COMPANY
 AN ANONYMIZED UNIQUE IDENTIFYING NUMBER, WHICH SHALL NOT BE BASED ON ANY
 PERSONALLY IDENTIFYING NUMBER INCLUDING BUT  NOT  LIMITED  TO  A  SOCIAL
 SECURITY  OR  TAX  IDENTIFICATION  NUMBER ASSIGNED TO OR ASSOCIATED WITH
 SUCH BENEFICIAL OWNER.
   (C) (1) EACH REPORTING COMPANY FORMED ON OR BEFORE THE EFFECTIVE  DATE
 OF  THIS  SECTION  SHALL FILE THE INFORMATION REQUIRED UNDER SUBDIVISION
 (A) OF THIS SECTION; AND EACH EXEMPT COMPANY FORMED  ON  OR  BEFORE  THE
 EFFECTIVE DATE OF THIS SECTION SHALL FILE A STATEMENT SIGNED BY A MEMBER
 OR  MANAGER  INDICATING  THE  PROVISION  OR  PROVISIONS  OF  31 U.S.C. §
 5336(A)(11)(B), EXCLUDING SUCH COMPANY FROM THE DEFINITION OF A  REPORT-
 ING  COMPANY,  WITH THE DEPARTMENT OF STATE NO LATER THAN JANUARY FIRST,
 TWO THOUSAND TWENTY-FIVE.
   (2)   A REPORTING COMPANY WHICH HAS  FAILED  TO  FILE  THE  BENEFICIAL
 OWNERSHIP DISCLOSURE AS REQUIRED BY THIS  SECTION FOR A PERIOD EXCEEDING
 THIRTY  DAYS SHALL BE SHOWN TO BE PAST DUE ON THE RECORDS OF THE DEPART-
 MENT OF STATE UNTIL AN UP-TO-DATE  BENEFICIAL  OWNERSHIP  DISCLOSURE  IS
 FILED WITH THE DEPARTMENT.
   (3) A REPORTING COMPANY WHICH HAS FAILED TO FILE THE BENEFICIAL OWNER-
 SHIP  DISCLOSURE  AS REQUIRED BY THIS SECTION FOR A PERIOD EXCEEDING TWO
 YEARS SHALL BE SHOWN TO BE DELINQUENT ON THE RECORDS OF  THE  DEPARTMENT
 OF STATE AFTER A NOTICE OF DELINQUENCY HAS BEEN MAILED TO THE LAST KNOWN
 BUSINESS  ADDRESS OF SUCH REPORTING COMPANY, AND SUCH COMPANY HAS FAILED
 TO FILE SUCH INFORMATION WITHIN  SIXTY  DAYS  OF  THE  MAILING  OF  SUCH
 NOTICE.  SUCH  DELINQUENCY  SHALL  BE  REMOVED  FROM  THE RECORDS OF THE
 DEPARTMENT OF STATE UPON THE FILING OF AN UP-TO-DATE  BENEFICIAL  OWNER-
 SHIP DISCLOSURE, AND THE PAYMENT OF A CIVIL PENALTY OF TWO HUNDRED FIFTY
 DOLLARS.
   §  6.  Paragraphs  7  and  8  of subdivision (a) of section 802 of the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7) a statement that the  foreign  limited  liability  company  is  in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of  its  formation where a copy of its articles of organization is filed
 or, if no public filing of its articles of organization is  required  by
 the  law  of the jurisdiction of formation, a statement that the foreign
 limited liability company shall provide, on request, a copy thereof with
 all amendments thereto (if such documents are in a foreign  language,  a
 translation  in  English  thereof  under oath of the translator shall be
 attached thereto), and the name and post office address  of  the  person
 responsible for providing such copies[.]; AND
   (9)  IN  THE CASE OF AN EXEMPT COMPANY, A STATEMENT SIGNED BY A MEMBER
 OR MANAGER INDICATING  THE  PROVISION  OR  PROVISIONS  OF  31  U.S.C.  §
 S. 995--B                           4
 
 5336(A)(11)(B),  EXCLUDING SUCH COMPANY FROM THE DEFINITION OF A REPORT-
 ING COMPANY TO FILE AN INITIAL REPORT, OR IN THE  CASE  OF  A  REPORTING
 COMPANY, THE BENEFICIAL OWNERSHIP DISCLOSURE INFORMATION REQUIRED PURSU-
 ANT TO SECTION EIGHT HUNDRED TEN OF THIS ARTICLE.
   §  7.  Section  804 of the limited liability company law is amended by
 adding a new subdivision (c) to read as follows:
   (C) IN THE CASE OF A FOREIGN LIMITED LIABILITY COMPANY THAT IS ALSO  A
 REPORTING  COMPANY,  SUCH  REPORTING COMPANY SHALL AMEND ITS APPLICATION
 FOR AUTHORITY UPON  ANY  CHANGE  IN  THE  BENEFICIAL  OWNER  INFORMATION
 REQUIRED PURSUANT TO SECTION EIGHT HUNDRED TEN OF THIS ARTICLE.
   §  8.  The  limited  liability  company law is amended by adding a new
 section 810 to read as follows:
   § 810. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) WHEN FILING THE  APPLICA-
 TION FOR AUTHORITY PURSUANT TO SECTION EIGHT HUNDRED TWO OF THIS ARTICLE
 OR  FILING  ANY  AMENDMENTS  TO AN APPLICATION FOR AUTHORITY PURSUANT TO
 SECTION EIGHT HUNDRED FOUR OF THIS ARTICLE, A  REPORTING  COMPANY  SHALL
 FILE  WITH THE DEPARTMENT OF STATE A BENEFICIAL OWNERSHIP DISCLOSURE, OR
 ANY UPDATES TO SUCH INFORMATION, AS MAY BE APPLICABLE, IDENTIFYING  EACH
 BENEFICIAL  OWNER  BY:    (1)  FULL  LEGAL  NAME; (2) DATE OF BIRTH; (3)
 CURRENT BUSINESS STREET ADDRESS; AND (4)  A  UNIQUE  IDENTIFYING  NUMBER
 FROM  AN  ACCEPTABLE  IDENTIFICATION  DOCUMENT  DEFINED  IN  31 U.S.C. §
 5336(A)(1). PROVIDED, HOWEVER, THAT WHERE AN INITIAL REPORT CONTAINS THE
 INFORMATION REQUIRED HEREIN,  SUCH  FOREIGN  LIMITED  LIABILITY  COMPANY
 SHALL  SUBMIT A COPY OF THE INITIAL REPORT  SUCH  COMPANY  SUBMITTED  TO
 THE FEDERAL GOVERNMENT PURSUANT TO 31 U.S.C. § 5336 IN ORDER TO  SATISFY
 THE REQUIREMENTS OF THIS SECTION.
   (B)  ALL  PERSONAL  OR  IDENTIFYING  INFORMATION  OF BENEFICIAL OWNERS
 PROVIDED TO THE DEPARTMENT OF STATE UNDER THIS SECTION NOT  REQUIRED  TO
 BE  INCLUDED  IN  THE  BUSINESS  ENTITY DATABASE PURSUANT TO SECTION ONE
 HUNDRED-B OF THE EXECUTIVE LAW, SHALL BE DEEMED CONFIDENTIAL EXCEPT  FOR
 THE  PURPOSES  OF  LAW  ENFORCEMENT,  OR  AS  OTHERWISE  REQUIRED  TO BE
 DISCLOSED PURSUANT TO A COURT ORDER. IF CONFIDENTIAL INFORMATION ASSOCI-
 ATED WITH A BENEFICIAL OWNER IS HELD ELECTRONICALLY, SUCH RECORDS  SHALL
 BE ENCRYPTED OR PROTECTED IN A SUBSTANTIALLY SIMILAR MANNER. THE DEPART-
 MENT  OF  STATE  SHALL,  UPON  THE FILING OF EACH   BENEFICIAL OWNERSHIP
 DISCLOSURE, ASSIGN EACH BENEFICIAL OWNER OF A FOREIGN LIMITED  LIABILITY
 COMPANY  AN  ANONYMIZED  UNIQUE  IDENTIFYING  NUMBER, WHICH SHALL NOT BE
 BASED ON ANY PERSONALLY IDENTIFYING NUMBER INCLUDING BUT NOT LIMITED  TO
 A SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER ASSIGNED TO OR ASSOCIATED
 WITH SUCH BENEFICIAL OWNER.
   (C)  (1)  EACH    REPORTING  COMPANY  FORMED PURSUANT TO SECTION EIGHT
 HUNDRED TWO OF THIS CHAPTER, ON OR BEFORE THE  EFFECTIVE  DATE  OF  THIS
 SECTION  SHALL  FILE  THE  INFORMATION REQUIRED UNDER SUBDIVISION (A) OF
 THIS SECTION; AND EACH EXEMPT COMPANY SHALL FILE A STATEMENT SIGNED BY A
 MEMBER OR MANAGER INDICATING THE PROVISION OR PROVISIONS OF 31 U.S.C.  §
 5336(A)(11)(B) EXCLUDING SUCH COMPANY FROM THE DEFINITION OF A REPORTING
 COMPANY,  WITH  THE DEPARTMENT OF STATE NO LATER THAN JANUARY FIRST, TWO
 THOUSAND TWENTY-FIVE.
   (2)    A REPORTING COMPANY WHICH HAS FAILED  TO  FILE  ITS  BENEFICIAL
 OWNERSHIP DISCLOSURE  AS REQUIRED BY  THIS SECTION, FOR A PERIOD EXCEED-
 ING  THIRTY  DAYS,  SHALL  BE SHOWN TO BE PAST DUE ON THE RECORDS OF THE
 DEPARTMENT OF STATE UNTIL AN UP-TO-DATE BENEFICIAL OWNERSHIP  DISCLOSURE
 IS FILED WITH THE DEPARTMENT.
   (3) A REPORTING COMPANY WHICH HAS FAILED TO FILE ITS BENEFICIAL OWNER-
 SHIP  DISCLOSURE  AS REQUIRED BY THIS SECTION FOR A PERIOD EXCEEDING TWO
 YEARS SHALL BE SHOWN TO BE DELINQUENT ON THE RECORDS OF  THE  DEPARTMENT
 S. 995--B                           5
 
 OF  STATE    AFTER  A NOTICE OF DELINQUENCY  HAS BEEN MAILED TO THE LAST
 KNOWN BUSINESS ADDRESS OF SUCH  COMPANY AND SUCH COMPANY HAS  FAILED  TO
 FILE  SUCH  INFORMATION WITHIN SIXTY DAYS OF THE MAILING OF SUCH NOTICE.
 SUCH  DELINQUENCY SHALL BE REMOVED FROM THE RECORDS OF THE DEPARTMENT OF
 STATE UPON THE FILING OF AN UP-TO-DATE BENEFICIAL  OWNERSHIP  DISCLOSURE
 REQUIRED  BY  THIS  SECTION,  AND  THE PAYMENT OF A CIVIL PENALTY OF TWO
 HUNDRED FIFTY DOLLARS.
   § 9. The executive law is amended by adding a  new  section  100-b  to
 read as follows:
   §  100-B.  BUSINESS  ENTITY  DATABASE. 1. THE SECRETARY OF STATE SHALL
 MAINTAIN A PUBLICLY AVAILABLE DATABASE ON ITS WEBSITE FOR EACH  BUSINESS
 ENTITY ORGANIZED IN NEW YORK STATE AND EACH FOREIGN BUSINESS ENTITY WITH
 AUTHORITY    TO    DO    BUSINESS IN THE STATE, THAT INCLUDES BUT IS NOT
 LIMITED TO, THE FOLLOWING INFORMATION:
   (A) THE NAME OF THE BUSINESS ENTITY;
   (B) THE HISTORY OF SUCH NAME AND CHANGES TO SUCH NAME, WHERE  APPLICA-
 BLE;
   (C) THE CURRENT BUSINESS STREET ADDRESS AND THE COUNTY ASSOCIATED WITH
 SUCH BUSINESS STREET ADDRESS;
   (D)  THE DURATION OR DATE OF DISSOLUTION OF THE BUSINESS ENTITY, WHERE
 APPLICABLE;
   (E) WHERE THE BUSINESS ENTITY IS A LIMITED LIABILITY COMPANY, THE DATE
 OF INITIAL FILING OF THE  ARTICLES  OF    ORGANIZATION,   OR  WHERE  THE
 BUSINESS  ENTITY IS A FOREIGN LIMITED LIABILITY COMPANY, THE APPLICATION
 FOR AUTHORITY;
   (F) THE DATE OF THE MOST RECENT FILING;
   (G)  THE FILING HISTORY ASSOCIATED WITH SUCH ENTITY; AND
   (H) ANY OTHER INFORMATION PERTAINING TO SUCH BUSINESS ENTITY AS MAY BE
 DETERMINED BY THE SECRETARY OF STATE AND IN ACCORDANCE  WITH  APPLICABLE
 STATE AND FEDERAL LAWS, RULES, AND REGULATIONS.
   2.  (A)  IN ADDITION TO THE INFORMATION REQUIRED TO BE INCLUDED IN THE
 DATABASE PURSUANT TO SUBDIVISION ONE OF THIS SECTION, THE  SECRETARY  OF
 STATE SHALL ALSO INCLUDE THE FULL LEGAL NAME OR NAMES OF EACH BENEFICIAL
 OWNER, FOR EVERY LIMITED LIABILITY COMPANY AND FOREIGN LIMITED LIABILITY
 COMPANY WHERE SUCH COMPANIES ARE ALSO  REPORTING COMPANIES.
   (B)  THE  SECRETARY  OF  STATE  SHALL  ESTABLISH, THROUGH REGULATIONS,
 PROCEDURES TO ALLOW BENEFICIAL OWNERS   OF LIMITED  LIABILITY  COMPANIES
 AND FOREIGN LIMITED LIABILITY COMPANIES WHO ARE ALSO REPORTING COMPANIES
 WHO CITE SIGNIFICANT PRIVACY INTERESTS TO APPLY FOR A WAIVER TO WITHHOLD
 THE  NAME  AND/OR BUSINESS ADDRESS ASSOCIATED OF A BENEFICIAL OWNER FROM
 THE  DATABASE  ESTABLISHED IN SUBDIVISION ONE OF THIS SECTION WHERE SUCH
 NAME AND/OR BUSINESS ADDRESS DISCLOSES PERSONAL OR IDENTIFYING  INFORMA-
 TION  OF  SUCH  BENEFICIAL OWNER, NO AMENDMENT TO SUCH INFORMATION MITI-
 GATES SUCH DISCLOSURE, AND SUCH DISCLOSURE SERVES  NO  PUBLIC  INTEREST.
 SIGNIFICANT  PRIVACY  INTERESTS  SHALL  INCLUDE,  BUT NOT BE LIMITED TO,
 WHERE A BENEFICIAL OWNER IS A NATURAL PERSON PARTICIPATING IN AN ADDRESS
 CONFIDENTIALITY PROGRAM,  OR IS A MEMBER OF  A  LIMITED LIABILITY COMPA-
 NY ACTING AS A RELATOR IN A QUI TAM ACTION FILED PURSUANT TO SECTION ONE
 HUNDRED NINETY OF THE STATE FINANCE LAW OR 31 U.S.C.  SECTION 3729.  THE
 SECRETARY  OF  STATE  SHALL  ISSUE A WAIVER TO A BENEFICIAL OWNER UPON A
 DEMONSTRATION THAT A  SIGNIFICANT  PRIVACY  INTEREST  EXISTS  AND  SHALL
 PROVIDE GUIDANCE ON ITS WEBSITE INDICATING WHAT DOCUMENTATION IS ACCEPT-
 ABLE AS PROOF FOR ISSUANCE OF A WAIVER. IF THE SECRETARY OF STATE GRANTS
 A  BENEFICIAL OWNER A WAIVER PURSUANT TO THIS SUBDIVISION, THE SECRETARY
 OF  STATE  SHALL  DISCLOSE  THE  ANONYMIZED  UNIQUE  IDENTIFYING  NUMBER
 ASSIGNED  BY  THE SECRETARY OF STATE TO EACH BENEFICIAL OWNER  OR OWNERS
 S. 995--B                           6
 
 PURSUANT  TO  SECTION TWO HUNDRED FIFTEEN OR SECTION EIGHT  HUNDRED  TEN
 OF  THE  LIMITED    LIABILITY   COMPANY LAW, AS MAY BE APPLICABLE TO THE
 DATABASE ESTABLISHED IN SUBDIVISION ONE OF THIS SECTION.  THE  SECRETARY
 OF STATE SHALL ALSO PROVIDE INFORMATION ON ITS WEBSITE REGARDING COMPLI-
 ANCE WITH BENEFICIAL OWNERSHIP DISCLOSURE REQUIREMENTS AND HOW AND WHERE
 SUCH INFORMATION MAY BE USED AND DISCLOSED.
   §  10. This act shall take effect on the three hundred sixty-fifth day
 after it shall have become a law. Effective immediately,  the  addition,
 amendment  and/or  repeal  of  any  rule or regulation necessary for the
 implementation of this act on its effective date are  authorized  to  be
 made and completed on or before such effective date.

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The New York State Senate

senate Bill S995B

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S995B (ACTIVE) - Details

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S995B (ACTIVE) - Bill Text download pdf

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senate Bill S995B

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Sponsored By

Current Bill Status - In Senate Committee Corporations, Authorities And Commissions Committee

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Co-Sponsors

S995 - Details

S995 - Summary

S995 - Sponsor Memo

S995 - Bill Text download pdf

Co-Sponsors

S995A - Details

S995A - Summary

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Co-Sponsors

S995B (ACTIVE) - Details

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S995B (ACTIVE) - Bill Text download pdf

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