Beneficial Owner Disclosure Under the New York LLC Transparency Act

See “Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies” press release here.

In response, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that revised the definition of “reporting company” to include only foreign entities (see 31 C.F.R. § 1010.380(c)(1), effective March 26). For those limited liability companies (LLCs) formed or authorized to do business in New York, however, the New York LLC Transparency Act (NY LLC Act) is still forthcoming and will require reporting similar in certain respects to what would have been required for such companies under the CTA.

On March 1, 2024, New York Governor Kathy Hochul signed into law the New York Senate Bill 8059, thereby amending the NY LLC Act originally passed on December 23, 2023 (New York Senate Bill 8059, signed by Governor Hochul subject to chapter amendment).[1] The NY LLC Act requires LLCs formed or authorized to do business in New York, to report their beneficial owners and company applicants to the New York Department of State. The following is a brief summary of some of the key provisions of the NY LLC Act, and the significant effect that has been produced as a result of the changes in certain federal CTA definitions to which the NY LLC Act is anchored.

Definitions

Many key terms under the NY LLC Act are defined by reference to the definitions under the CTA, such as “beneficial owner” (31 U.S.C. § 5336(a)(3)), “reporting company” (31 U.S.C. § 5336(a)(11)), “exempt company” (31 U.S.C. § 5336(a)(11)(B)), and “applicant” (31 U.S.C. § 5336(a)(2)). However, with respect to the definition of reporting company, under the NY LLC Act, a reporting company means only LLCs formed or authorized to do business in New York.

As noted above, FinCEN issued an interim final rule revising the definition of “reporting company” to include only entities that were formed under the laws of a foreign country. If the NY LLC Act is not also amended to undo the effect of the revisions issued by FinCEN, the NY LLC Act would appear to only apply to foreign (i.e., non-US) formed LLCs that are authorized to do business in New York and would not apply to LLCs formed in New York or in any other US state. Accordingly, the NY LLC Act will likely also need revisions, at least to its definition provisions.

Initial Beneficial Ownership Disclosure

As noted above, each reporting company is required to file a beneficial ownership disclosure with the New York Department of State. The disclosure must identify each beneficial owner of the reporting company and each applicant with respect to the reporting company. The information required to be disclosed follows: (a) full legal name, (b) date of birth, (c) current home or business street address, and (d) a unique identifying number from an acceptable identification document such as (i) an unexpired passport, (ii) an unexpired state driver’s license, or (iii) an unexpired identification card or document issued by a state or local government agency.

All beneficial ownership disclosures shall be submitted electronically as prescribed by the New York Department of State. As of the date of this article, there is no program on the New York Department of State’s website for the submission of the beneficial ownership disclosures. The NY LLC Act explicitly allows for such disclosures to be signed electronically.

Exempt Companies

An LLC formed or authorized to do business in New York will be exempt from having to file the beneficial ownership disclosure if it meets one of the 23 exemptions (or 24 exemptions, considering the interim final rule under the CTA) enumerated under the CTA (31 U.S.C. § 5336(a)(11)(B)), such as, securities reporting issuers, banks, credit unions, securities brokers or dealers, venture capital fund advisers, accounting firms, tax-exempt entities, and large operating companies. Each exempt company is required to electronically file an attestation indicating the specific exemption claimed and the facts on which the exemption is based. In addition, the attesting company is required to file an annual statement with respect to its exempt status, as will be further described below.

Date of Initial Reporting with the New York Department of State

Companies Formed Prior to January 1, 2026

Each reporting company formed or authorized to do business in New York before January 1, 2026 (the effective date) of the NY LLC Act must file its beneficial ownership disclosure with the New York Department of State no later than January 1, 2027. Each exempt company formed or authorized to do business before the effective date of the NY LLC Act must file its attestation of exemption with the New York Department of State no later than January 1, 2027.

Companies Formed on or After January 1, 2026

Each reporting company formed or authorized to do business in New York after the effective date must file the beneficial ownership disclosure no later than 30 days after the initial filing of articles of organization or application for authority to do business in New York. Similarly, each exempt company formed or authorized to do business in New York after the effective date must file the attestation of exemption no later than 30 days after the initial filing of articles of organization or application for authority to do business in New York.

Annual Reporting

Next, after the reporting company has filed its initial beneficial ownership disclosure or attestation of exemption, as the case may be, it is required to electronically file a statement annually confirming or updating the following; (1) their beneficial ownership disclosure information; (2) the street address of its principal executive office; (3) status as an exempt company, if applicable, and (4) such other information as may be designated by the New York Department of State.

Failure to File

If a reporting company fails to file the beneficial ownership disclosure, attestation of exemption or annual statement, as the case may be, for a period exceeding 30 days, the reporting company will be shown as past due on the records of the Department of State. If the reporting company fails to file the requested information for a period of two years, it will be shown as delinquent on the records of the Department of State. Further, the NY LLC Act authorizes the attorney general to assess a fine of up to $500 for each day the company is past due and/or delinquent. In addition, the New York Attorney General can bring an action to suspend, cancel, or dissolve any delinquent company.

With the revision of the definition of reporting company under the CTA to eliminate domestic US reporting companies from its scope, the fate of the NY LLC Act should be closely monitored. As noted above, the NY LLC Act specifically incorporates by reference certain definitions under the CTA. In light of the revisions made under the interim final rule issued by FinCEN, the New York Legislature may potentially be inclined to review these definitions and make changes to the NY LLC Act to counteract the effect of FinCEN’s interim final rule as it pertains to domestic (i.e., non-foreign) LLCs.