Bill Text: NY A09415 | 2021-2022 | General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relates to the disclosure of beneficial owners of limited liability companies and certain information about such beneficial owners.

Spectrum: Partisan Bill (Democrat 15-0)

Status: (Introduced - Dead) 2022-05-25 - amended on third reading 9415c [A09415 Detail]

Download: New_York-2021-A09415-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          9415

                   IN ASSEMBLY

                                      March 7, 2022
                                       ___________

        Introduced  by  M.  of  A.  GALLAGHER  --  read once and referred to the
          Committee on Corporations, Authorities and Commissions

        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 and certain other business entities

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section 1. Section 102 of the limited liability company law is amended
     2  by adding a new subdivision (ii) to read as follows:
     3    (ii)  (1)  "Beneficial  owner" means a natural person who, directly or
     4  indirectly, (A) holds a  membership  interest  in  a  limited  liability
     5  company  or  a foreign limited liability company; (B) exercises substan-
     6  tial control over the decisions of a membership interest  in  a  limited
     7  liability  company  or  a  foreign limited liability company; or (C) has
     8  been assigned a membership interest in a limited liability company or  a
     9  foreign limited liability company.
    10    (2)  The term "beneficial owner" shall not include: (A) a minor child;
    11  (B) a person acting as a nominee, intermediary, custodian, or  agent  on
    12  behalf of another person; (C) a person acting solely as an employee of a
    13  limited  liability  company  and whose control over or economic benefits
    14  from the limited liability company derives solely  from  the  employment
    15  status  of  the  person;  (D)  a person whose only interest in a limited
    16  liability company is through a right of inheritance, unless  the  person
    17  also  meets the requirements of paragraph one of this subdivision; (E) a
    18  creditor of a limited liability company, unless the creditor also  meets
    19  the  requirements  of  paragraph  one  of  this  subdivision; or (F) any
    20  natural person whose membership interest in a limited liability  company
    21  derives  solely  from  his  or  her employment by such limited liability
    22  company and such limited liability company's organization as an  employ-
    23  ee-owned  business  or  worker cooperative, as evidenced by such limited
    24  liability company's by-laws or articles of organization.
    25    (3) If an entity other than a natural person meets the requirements of
    26  a beneficial owner as defined in paragraph one of this subdivision,  the

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13266-05-2
        A. 9415                             2

     1  beneficial  owners  of such limited liability company or foreign limited
     2  liability company shall include the names and business addresses of  all
     3  members,  managers, shareholders, directors, officers, partners, and any
     4  other  authorized persons, if any, of such entity. The identification of
     5  such names and addresses shall not be deemed an unwarranted invasion  of
     6  personal  privacy pursuant to article six of the public officers law. If
     7  any such member, manager  or  authorized  person  is  itself  a  limited
     8  liability  company  or other business entity, the names and addresses of
     9  the shareholders, directors, officers, members, managers and partners of
    10  the limited liability company or other business  entity  shall  also  be
    11  disclosed until full disclosure of ultimate ownership by natural persons
    12  is  achieved.  If such entity is publicly traded, a REIT, a UPREIT, or a
    13  mutual fund, the requirements of this  paragraph  shall  only  apply  to
    14  shareholders possessing a controlling interest in such entity.
    15    §  2.  Paragraphs  6  and  7  of subdivision (e) of section 203 of the
    16  limited liability company law, as added by chapter 470 of  the  laws  of
    17  1997, are amended to read as follows:
    18    (6)  if all or specified members are to be liable in their capacity as
    19  members for all or specified debts, obligations or  liabilities  of  the
    20  limited  liability company as authorized pursuant to section six hundred
    21  nine of this chapter, a statement that all or specified members  are  so
    22  liable  for  such debts, obligations or liabilities in their capacity as
    23  members of the limited  liability  company  as  authorized  pursuant  to
    24  section six hundred nine of this chapter; [and]
    25    (7)  a  list of the beneficial owners of the limited liability company
    26  that identifies each beneficial owner by (A) name; (B) current  residen-
    27  tial  or  business  street  address; and (C) a unique identifying number
    28  from a non-expired passport issued by the United States or a non-expired
    29  driver's license or identification card issued by this or another state;
    30  and
    31    (8) any other provisions, not inconsistent with law, that the  members
    32  elect to include in the articles [or] of organization for the regulation
    33  of the internal affairs of the limited liability company, including, but
    34  not limited to, (A) the business purpose for which the limited liability
    35  company  is  formed, (B) a statement of whether there are limitations on
    36  the authority of members or managers or a class or  classes  thereof  to
    37  bind  the  limited  liability  company  and  (C) any provisions that are
    38  required or permitted to be included in the operating agreement  of  the
    39  limited  liability company pursuant to section four hundred seventeen of
    40  this chapter.
    41    § 3. Section 209 of the limited liability company law  is  amended  to
    42  read as follows:
    43    §  209.  Filing  with  the  department  of state. A signed articles of
    44  organization and any signed certificate of amendment  or  other  certif-
    45  icates  filed  pursuant  to  this  chapter  or of any judicial decree of
    46  amendment or cancellation shall be delivered to the department of state.
    47  If the instrument that is delivered  to  the  department  of  state  for
    48  filing  complies  as to form with the requirements of law and the filing
    49  fee required by any statute of this state in  connection  therewith  has
    50  been  paid,  the instrument shall be filed and indexed by the department
    51  of state. The department of state shall  not  review  such  articles  or
    52  certificates for legal sufficiency, except that it may review such arti-
    53  cles  or  certificates for legal sufficiency with regard to requirements
    54  pertaining to beneficial owners pursuant to sections two  hundred  three
    55  and  two  hundred  eleven of this article; its review shall be otherwise
    56  limited to determining that the form has been completed.
        A. 9415                             3

     1    § 4. The limited liability company law is  amended  by  adding  a  new
     2  section 215 to read as follows:
     3    §  215.  Beneficial  ownership  disclosure.  (a)  Beneficial ownership
     4  information relating to each limited liability company formed under  the
     5  laws  of  this  state  is  required to be maintained by the secretary of
     6  state until the end of the five year period beginning on the  date  that
     7  the limited liability company terminates pursuant to this chapter.
     8    (b) Any person who: (1) knowingly provides false or fraudulent benefi-
     9  cial  ownership  information; or (2) willfully fails to provide complete
    10  or updated information shall be guilty of a misdemeanor  and  liable  to
    11  the  state for a civil penalty of not more than ten thousand dollars and
    12  shall be prohibited from organizing, forming, registering,  or  managing
    13  any  limited  liability  company or partnership in the state of New York
    14  for a period not less than one year or greater than five years.
    15    § 5. Section 1418 of the tax law is amended by adding a  new  subdivi-
    16  sion (j) to read as follows:
    17    (j) Notwithstanding the provisions of subdivision (a) of this section,
    18  the  commissioner  or any officer or employee of the department of taxa-
    19  tion and finance may furnish to  the  department  of  state  information
    20  relating  to  beneficial  ownership  that  is  obtained  or derived from
    21  returns filed pursuant to this article.
    22    § 6. Paragraphs 7 and 8 of subdivision  (a)  of  section  802  of  the
    23  limited liability company law are amended and a new paragraph 9 is added
    24  to read as follows:
    25    (7)  a  statement  that  the  foreign  limited liability company is in
    26  existence in the jurisdiction of its formation at the time of the filing
    27  of such application; [and]
    28    (8) the name and address of the authorized officer in the jurisdiction
    29  of its formation where a copy of its articles of organization  is  filed
    30  or,  if  no public filing of its articles of organization is required by
    31  the law of the jurisdiction of formation, a statement that  the  foreign
    32  limited liability company shall provide, on request, a copy thereof with
    33  all  amendments  thereto (if such documents are in a foreign language, a
    34  translation in English thereof under oath of  the  translator  shall  be
    35  attached  thereto),  and  the name and post office address of the person
    36  responsible for providing such copies[.]; and
    37    (9) a list of the beneficial owners of the foreign  limited  liability
    38  company that identifies each beneficial owner by (A) name;  (B)  current
    39  residential  or  business  street  address; and (C) a unique identifying
    40  number from a non-expired passport issued by  the  United  States  or  a
    41  non-expired  driver's  license  or identification card issued by this or
    42  another state.
    43    §  7.  The  limited  liability  company law is amended by adding a new
    44  section 810 to read as follows:
    45    § 810. Beneficial ownership  disclosure.    (a)  Beneficial  ownership
    46  information  relating to each foreign  limited liability  company formed
    47  under the laws of this state is required to be maintained by the  secre-
    48  tary  of  state until the  end  of  the  five  year period  beginning on
    49  the date that the foreign limited liability company terminates  pursuant
    50  to this chapter.
    51    (b) Any person who: (1) knowingly provides false or fraudulent benefi-
    52  cial ownership information or (2) willfully fails to provide complete or
    53  updated  information  shall be guilty of a misdemeanor and liable to the
    54  state for a civil penalty of not more  than  ten  thousand  dollars  and
    55  shall  be  prohibited from organizing, forming, registering, or managing
        A. 9415                             4

     1  any limited liability company or partnership in the state  of  New  York
     2  for a period not less than one year or greater than five years.
     3    § 8. Paragraph 2 of subdivision (a) of section 1409 of the tax law, as
     4  amended  by  section  3  of part O of chapter 59 of the laws of 2021, is
     5  amended to read as follows:
     6    (2) When the grantor or grantee of a deed for a building used as resi-
     7  dential real property [containing up to four family dwelling units] is a
     8  limited liability company, the joint return shall not  be  accepted  for
     9  filing  unless  it  is  accompanied  by  a document which identifies the
    10  [names and business addresses of all members, managers,  and  any  other
    11  authorized  persons,  if  any, of such limited liability company and the
    12  names and business addresses or, if none, the business addresses of  all
    13  shareholders, directors, officers, members, managers and partners of any
    14  limited  liability  company  or other business entity that are to be the
    15  members, managers or authorized persons, if any, of such limited liabil-
    16  ity company. The identification of such names and addresses shall not be
    17  deemed an unwarranted invasion of personal privacy pursuant  to  article
    18  six  of  the public officers law. If any such member, manager or author-
    19  ized person of the limited liability company is itself a limited liabil-
    20  ity company or other business entity other than a publicly traded  enti-
    21  ty,  a  REIT, a UPREIT, or a mutual fund, the names and addresses of the
    22  shareholders, directors, officers, members, managers and partners of the
    23  limited liability  company  or  other  business  entity  shall  also  be
    24  disclosed until full disclosure of ultimate ownership by natural persons
    25  is  achieved]  beneficial  owners of such limited liability company. For
    26  purposes of this subdivision, the terms ["members", "managers", "author-
    27  ized person",] "beneficial owners" and "limited liability company"  [and
    28  "other  business entity"] shall have the same meaning as those terms are
    29  defined in section one hundred two of the limited liability company law.
    30    § 9. Subdivision h of section 11-2105 of the  administrative  code  of
    31  the  city  of  New York, as added by chapter 297 of the laws of 2019, is
    32  amended to read as follows:
    33    h. When the grantor or grantee of a deed for residential real property
    34  [containing one- to four-family dwelling units] is a  limited  liability
    35  company,  the joint return shall not be accepted for filing unless it is
    36  accompanied by a document  which  identifies  the  [names  and  business
    37  addresses of all members, managers, and any other authorized persons, if
    38  any,  of  such  limited  liability  company  and  the names and business
    39  addresses or, if none,  the  business  addresses  of  all  shareholders,
    40  directors,  officers,  members,  managers  and  partners  of any limited
    41  liability company or other business entity that are to be  the  members,
    42  managers or authorized persons, if any, of such limited liability compa-
    43  ny.  The  identification of such names and addresses shall not be deemed
    44  an unwarranted invasion of personal privacy pursuant to article  six  of
    45  the  public  officers  law.  If  any  such member, manager or authorized
    46  person of the limited liability company is itself  a  limited  liability
    47  company  or other business entity, the names and addresses of the share-
    48  holders, directors, officers, members,  managers  and  partners  of  the
    49  limited  liability  company  or  other  business  entity  shall  also be
    50  disclosed until full disclosure of ultimate ownership by natural persons
    51  is achieved] beneficial owners of such limited liability company.    For
    52  purposes of this subdivision, the terms ["members", "managers", "author-
    53  ized  person",] "beneficial owners" and "limited liability company" [and
    54  "other business entity"] shall have the same meaning as those terms  are
    55  defined in section one hundred two of the limited liability company law.
        A. 9415                             5

     1    §  10. The tax law is amended by adding a new section 171-x to read as
     2  follows:
     3    §  171-x.  Information  sharing with the department of state regarding
     4  beneficial owners of limited liability  companies.  Notwithstanding  any
     5  other  law,  the  commissioner  shall release to the department of state
     6  information regarding beneficial owners of limited  liability  companies
     7  which  is  reported  to  the  department  either on a form issued by the
     8  department or any other  method  of  report  to  the  department.    For
     9  purposes  of  this  section,  the terms "beneficial owners" and "limited
    10  liability company" shall have  the  same  meaning  as  those  terms  are
    11  defined in section one hundred two of the limited liability company law.
    12    §  11.  The  executive law is amended by adding a new section 100-b to
    13  read as follows:
    14    § 100-b. Corporation and  business  entity  database;  information  on
    15  beneficial  owners.  1. The secretary of state shall assign each benefi-
    16  cial owner of a limited liability company a  unique  identifying  number
    17  and  publish such number in relation to any affiliated limited liability
    18  companies in the corporation and business entity database or any  subse-
    19  quent database which is maintained by the division of corporations with-
    20  in  the  department of state.  The identification of the names and busi-
    21  ness addresses of beneficial owners associated with a unique identifying
    22  number in the corporation and business  entity  database  shall  not  be
    23  deemed  an  unwarranted invasion of personal privacy pursuant to article
    24  six of the public officers law; provided, however, that  the  department
    25  shall also establish, through regulations, procedures to  allow  benefi-
    26  cial  owners with  significant privacy  interests to apply  for a waiver
    27  to  withhold their names and business addresses from disclosure pursuant
    28  to the freedom of information law. For purposes  of  this  section,  the
    29  terms "beneficial owners" and "limited liability company" shall have the
    30  same  meaning  as  those terms are defined in section one hundred two of
    31  the limited liability company law.
    32    2. The secretary of state, in cooperation with the commissioner of the
    33  department of taxation and finance, may verify the beneficial  ownership
    34  information included in returns pursuant to subdivision two-b of section
    35  two hundred eleven of the tax law using beneficial ownership information
    36  submitted to the department of state pursuant to section two hundred two
    37  or  eight  hundred  two of the limited liability company law in order to
    38  identify fraud or suspicious activities and  may,  at  his  or  her  own
    39  discretion, refer such fraud to appropriate authorities.
    40    §  12.  Section 211 of the tax law is amended by adding a new subdivi-
    41  sion 2-b to read as follows:
    42    2-b. (a) The commissioner shall prescribe regulations and instructions
    43  requiring returns of information to be made  and  filed  in  conjunction
    44  with the reports required to be filed pursuant to this article, relating
    45  to  beneficial  owners  of limited liability companies.  For purposes of
    46  this section, the  terms  "beneficial  owners"  and  "limited  liability
    47  company"  shall  have  the  same  meaning  as those terms are defined in
    48  section one hundred two of the limited liability company law.
    49    (b) No report shall be accepted by the department if  the  information
    50  required  to be included in the return pursuant to paragraph (a) of this
    51  subdivision is not included in such report.
    52    (c) The commissioner, in cooperation with the secretary of state,  may
    53  verify the beneficial ownership information included in returns pursuant
    54  to  this subdivision using beneficial ownership information submitted to
    55  the department of state pursuant to section two  hundred  two  or  eight
    56  hundred  two  of  the limited liability company law in order to identify
        A. 9415                             6

     1  fraud or suspicious activities and may at  his  or  her  own  discretion
     2  refer such fraud to appropriate authorities. The information included in
     3  returns  pertaining  to  the  names and business addresses of beneficial
     4  owners shall be transmitted to the secretary of state to keep beneficial
     5  ownership information up to date, including with respect to the business
     6  entity database or any subsequent database maintained by the division of
     7  corporations  within  the  department  of  state pursuant to section one
     8  hundred-b of the executive law.
     9    (d) The information required to be included with returns  pursuant  to
    10  this subdivision shall be filed and shall be in such form as the commis-
    11  sioner may prescribe.
    12    §  13. This act shall take effect on the three hundred sixty-fifth day
    13  after it shall have become a law. Effective immediately,  the  addition,
    14  amendment  and/or  repeal  of  any  rule or regulation necessary for the
    15  implementation of this act on its effective date are  authorized  to  be
    16  made and completed on or before such effective date.