An Introduction to the New York State LLC Transparency Act
On December 22, 2023, New York Governor Kathy Hochul signed the LLC Transparency Act into law. This legislation, known as S.995B/A.3484, essentially created a database that law enforcement agencies at all levels of government can access to regulate LLC misconduct.
The law makes it such that starting on January 1, 2026, non-exempt LLCs started or registered in New York State must annually report individual beneficial ownership information to the Department of State. The due dates for filings are as follows:
LLCs formed or approved for business in New York on or after January 1, 2026, will have 30 days from their registration to follow the guidelines.
LLCs formed or approved before that date will have until January 1, 2027, to report.
Non-exempt LLCs (the federal government gives exemption status through the Corporate Transparency Act) must report the personal information of their beneficial owners and applicants. Beneficial owners own at least 25% of the company and/or exercise substantial control over the company. Applicants file the document with the secretary of state that registers the entity to do business in the United States. They are also responsible for overseeing the filing of the formation document.
For one to obtain substantial control, they must (1) serve as a senior official in the company (i.e., COO, CEO), (2) have the power to appoint or remove senior officers/board members, (3) exert great influence over the company’s decision-making, or (4) hold any other substantial control over the company.
The following information must be reported:
Full legal name
Date of birth
Current home or business street address
Identification numbers from government-issued ID (i.e., passport or driver’s license).
There are penalties for non-compliance with this new law. Such penalties include automatic suspension of company activities, a possible $500 daily fee, and dissolvement of the company in New York State if non-compliant for two or more years.
One key amendment made to the law is that as of March 1, 2024, beneficial owner personal information will be kept confidential - making citizens’ information secure and only available to agencies either with written consent, by court order, or for other valid law enforcement activities. As is with government documents, knowingly providing false information or attempting to do so will result in penalties.
If you own or operate a small business and seek guidance on how to navigate this update to state law, our team of experienced attorneys at the Law Office of Marc Scolnick, P.C. is ready to help. Call us today at (718) 554-6445 to set up a FREE consultation.
Sources:
https://www.nysenate.gov/legislation/bills/2023/S995/amendment/B
https://www.governor.ny.gov/news/governor-hochul-signs-llc-transparency-act#:~:text=Legislation%20S.995B%2FA.3484%20creates%20an%20LLC%20beneficial%20ownership%20database,now%2C%20has%20occurred%20behind%20a%20curtain%20of%20concealment.
This blog is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this post in any way seems to contradict the advice of counsel, counsel’s opinion should control over anything written herein. No attorney-client relationship is implied by this blog.