Senate Bill S9986

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9986
 
                             I N  S E N A T E
 
                              April 21, 2026
                                ___________
 
 Introduced  by Sen. SCARCELLA-SPANTON -- 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, in relation to a
   review of filing with the department of state; to amend  the  business
   corporations  law, in relation to filing fees; and to amend the execu-
   tive law, in relation to administrative procedure to  address  fraudu-
   lent entity filings
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. This act shall be known and may be cited as the "Fraudulent
 Entities Elimination Act" or the "FEEA Act".
   § 2. Legislative findings and intent. The  Legislature  declares  that
 the  creation  of  fraudulent business entities is a significant problem
 for many New Yorkers. Nefarious actors have created  business  entities,
 including  corporations and limited liability companies, using the name,
 address, contact information and other personal information of  unaffil-
 iated  New  Yorkers,  to  enable  them  to  engage  in a host of illegal
 conduct, including identity theft, deed theft, check kiting, wire fraud,
 money laundering, and smuggling.
   Currently, there is no mechanism for the department of  state  or  the
 office  of  the  New York state attorney general to efficiently dissolve
 fraudulently created business entities.  There  are  also  few  barriers
 stopping  bad  actors  from  promptly creating a new fraudulent business
 entity.
   The state must deter the creation of fraudulent business entities  and
 protect  consumers  from  those  who would use such entities for illegal
 purposes.
   § 3. Section 209 of the limited liability company law  is  amended  to
 read as follows:
   §  209.  Filing  with the department of state. 1. A signed articles of
 organization and any signed certificate of amendment  or  other  certif-
 icates  filed  pursuant  to  this  chapter  or of any judicial decree of
 amendment or cancellation shall be delivered to the department of state.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD13931-01-5
 S. 9986                             2
 
 If the instrument that is delivered  to  the  department  of  state  for
 filing  complies  as to form with the requirements of law and the filing
 fee required by any statute of this state in  connection  therewith  has
 been  paid,  the instrument shall be filed and indexed by the department
 of state. The department of state shall  not  review  such  articles  or
 certificates  for  legal  sufficiency;  its  review  shall be limited to
 determining that the form has been completed.
   2. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS  SECTION,
 THE  DEPARTMENT  OF  STATE  MAY REVIEW FILINGS BASED ON FRAUD, INCLUDING
 FILINGS THAT USE THE NAME,  ADDRESS,  CONTACT  INFORMATION  OR  PERSONAL
 INFORMATION OF A PERSON WITH NO AFFILIATION WITH THE COMPANY.
   §  4.  Section  104-a  of  the  business corporation law is amended by
 adding a new subdivision (t) to read as follows:
   (T) THE DEPARTMENT OF STATE SHALL CHARGE NO FEE FOR THE DISSOLUTION OR
 MODIFICATION OF A BUSINESS CORPORATION  CREATED  BY  FRAUD  INCLUDING  A
 CERTIFICATE,  INSTRUMENT  OR FILING THAT USES THE NAME, ADDRESS, CONTACT
 INFORMATION OR PERSONAL INFORMATION OF A PERSON WITH NO AFFILIATION WITH
 THE CORPORATION.
   § 5. The executive law is amended by adding a new section 111 to  read
 as follows:
   § 111. ADMINISTRATIVE PROCEDURE TO ADDRESS FRAUDULENT ENTITY FILINGS.
   1. AS USED IN THIS SECTION:
   (A) "BUSINESS ENTITY" MEANS ANY ENTITY FORMED PURSUANT TO THE BUSINESS
 CORPORATION  LAW,  LIMITED LIABILITY COMPANY LAW OR PARTNERSHIP LAW THAT
 IS REGISTERED WITH THE DEPARTMENT.
   (B) "ENTITY FORMATION PAPERS" MEANS CERTIFICATES OF  INCORPORATION  AS
 DESCRIBED IN SECTION FOUR HUNDRED TWO OF THE BUSINESS CORPORATION LAW OR
 ARTICLES  OF  ORGANIZATION  AS DESCRIBED IN SECTION TWO HUNDRED THREE OF
 THE LIMITED LIABILITY COMPANY LAW.
   2. THE DEPARTMENT SHALL CREATE AND MAKE AVAILABLE TO THE PUBLIC A FORM
 REGARDING  FRAUDULENTLY  CREATED  BUSINESS  ENTITIES.  SUCH  FORM  SHALL
 REQUIRE  THE SUBMITTER TO AFFIRM THAT THEY ARE A NATURAL PERSON AND THAT
 THEIR NAME, ADDRESS, EMAIL, PHONE NUMBER, CONTACT INFORMATION  OR  OTHER
 PERSONAL INFORMATION WAS LISTED IN ENTITY FORMATION PAPERS WITHOUT THEIR
 AUTHORIZATION.
   3. ONCE THE DEPARTMENT RECEIVES A PROPERLY EXECUTED FORM ALLEGING THAT
 AN  ENTITY  LISTED  A  NATURAL  PERSON'S  PERSONAL INFORMATION IN ENTITY
 FORMATION PAPERS WITHOUT  THE  PERSON'S  AUTHORIZATION,  THE  DEPARTMENT
 SHALL MAIL THE FORM TO THE ADDRESS ON FILE FOR THE ENTITY FOR SERVICE OF
 PROCESS.  INCLUDED  IN  THE  MAILING  SHALL  BE A FORM FOR THE ENTITY TO
 DISPUTE THAT  THE  ENTITY  FORMATION  PAPERS  LIST  A  NATURAL  PERSON'S
 PERSONAL INFORMATION WITHOUT THEIR AUTHORIZATION. SUCH DISPUTE FORM MUST
 BE AFFIRMED BY A NATURAL PERSON AUTHORIZED TO ACT ON BEHALF OF THE ENTI-
 TY.
   4.  ONCE  SIXTY DAYS HAVE ELAPSED AFTER THE DEPARTMENT MAILS THE FORMS
 TO THE ADDRESS ON FILE FOR SERVICE OF PROCESS  FOR  THE  ENTITY,  IF  NO
 DISPUTE  IS  SUBMITTED  BY  THE ENTITY TO THE DEPARTMENT, THE DEPARTMENT
 SHALL THEREAFTER PROMPTLY DISSOLVE THE ENTITY AND REMOVE ALL INFORMATION
 CONCERNING THE ENTITY FROM ITS PUBLIC DATABASE.
   5. IF THE ENTITY SUBMITS A  PROPERLY  AFFIRMED  DISPUTE  FORM  TO  THE
 DEPARTMENT,  THE  DEPARTMENT  SHALL  PROVIDE  A COPY OF SUCH FORM TO THE
 COMPLAINING PERSON, AND SUCH ENTITY SHALL NOT BE DISSOLVED  EXCEPT  UPON
 COURT ORDER.
   6.  ANY  NATURAL  PERSON WHO BELIEVES THAT THEIR NAME, ADDRESS, EMAIL,
 PHONE NUMBER, CONTACT INFORMATION  OR  OTHER  PERSONAL  INFORMATION  WAS
 LISTED  IN  ENTITY  FORMATION  PAPERS  WITHOUT  THEIR  AUTHORIZATION AND
 S. 9986                             3
 
 BELIEVES THAT THE BUSINESS ENTITY IS  USING  THEIR  INFORMATION  FOR  AN
 ILLEGAL OR FRAUDULENT PURPOSE MAY BRING A PROCEEDING AGAINST SUCH ENTITY
 FOR  DISSOLUTION OR MODIFICATION OF THE FRAUDULENTLY USED INFORMATION IN
 ANY COURT OF COMPETENT JURISDICTION.
   7. ANY BUSINESS ENTITY DISSOLVED BY THE DEPARTMENT BASED ON THE PROCE-
 DURE  SET  FORTH  IN  THIS  SECTION  MAY  BRING A PROCEEDING AGAINST THE
 DEPARTMENT TO HAVE THE ENTITY REINSTATED, AND SUCH REINSTATEMENT MAY  BE
 GRANTED  BY  COURT  ORDER  UPON A FINDING OF SATISFACTORY PROOF THAT THE
 DISSOLUTION WAS IN ERROR. ANY SUCH PROCEEDING MUST BE BROUGHT WITHIN ONE
 YEAR OF THE DISSOLUTION OF THE ENTITY.
   8. THE DEPARTMENT SHALL IMPLEMENT  NECESSARY  TECHNICAL  SOLUTIONS  TO
 PREVENT  INFILTRATION  OF  ITS  WEBSITE  BY  UNAUTHORIZED  OR FOREIGN IP
 ADDRESSES.
   § 6. This act shall take effect January 1, 2027.