Bill Text: NY S08059 | 2023-2024 | General Assembly | Introduced

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

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2024-03-01 - SIGNED CHAP.102 [S08059 Detail]

Download: New_York-2023-S08059-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          8059

                    IN SENATE

                                     January 5, 2024
                                       ___________

        Introduced  by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
          when printed to be committed to the Committee on Rules

        AN ACT to amend the limited liability company law, in  relation  to  the
          disclosure  of  beneficial  owners  of limited liability companies; to
          amend a chapter of the laws of 2023  amending  the  limited  liability
          company  law and the executive law relating to the disclosure of bene-
          ficial owners of limited liability companies, as proposed in  legisla-
          tive  bills numbers S.  995-B and A. 3484-A, in relation to the effec-
          tiveness thereof; and to repeal provisions of  the  limited  liability
          company law and the executive law, in relation thereto

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

     1    Section 1. The limited liability company  law  is  amended  by  adding
     2  three new sections 1106, 1107 and 1108 to read as follows:
     3    §  1106.  Definitions.  For  the purposes of this section and sections
     4  eleven hundred seven and eleven hundred eight of this article:
     5    (a) "Beneficial owner" shall have the same meaning as  defined  in  31
     6  U.S.C.  § 5336(a)(3), as amended, and any regulations promulgated there-
     7  under.
     8    (b) "Reporting company" shall have the same meaning as defined  in  31
     9  U.S.C. § 5336(a)(11), as amended, and any regulations promulgated there-
    10  under,  but  shall  only  include  limited liability companies formed or
    11  authorized to do business in New York state.
    12    (c) "Exempt company" shall mean a limited liability company or foreign
    13  limited liability company not otherwise defined as a  reporting  company
    14  that  meets  a  condition  for  exemption  enumerated  in  31  U.S.C.  §
    15  5336(a)(11)(B).
    16    (d) "Applicant" shall have the same meaning as defined in 31 U.S.C.  §
    17  5336(a)(2),  as amended, and any regulations promulgated thereunder, but
    18  shall only include those relating to limited liability companies.
    19    § 1107. Beneficial ownership disclosure. (a) All  reporting  companies
    20  shall  file  with the department of state a beneficial ownership disclo-
    21  sure in such form and manner as directed by  the  department  of  state,
    22  identifying  each  beneficial  owner  of  the reporting company and each

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00252-10-4
        S. 8059                             2

     1  applicant with respect to that reporting company,  by:  (1)  full  legal
     2  name;  (2)  date  of birth; (3) current home or business street address;
     3  and (4) a unique identifying number from:  (i)  an  unexpired  passport;
     4  (ii)  an  unexpired  state driver's license; or (iii) an unexpired iden-
     5  tification card or document issued by a state or local government agency
     6  or tribal authority for the purpose of identification of  that  individ-
     7  ual.
     8    (b)  All  exempt companies shall electronically file, under penalty of
     9  perjury, an attestation of exemption in  such  form  designated  by  the
    10  department   of  state,  which  statement  shall  include  the  specific
    11  exemption claimed and the facts on which such exemption  is  based.  Any
    12  company  filing  an  exemption  pursuant  to  this  subdivision shall be
    13  subject to the annual statement requirement as stated in subdivision (g)
    14  of this section in the form prescribed by the department,  which  state-
    15  ment shall be attested to under penalty of perjury.
    16    (c)  All  beneficial ownership disclosures, attestations of exemption,
    17  and filing fees shall be submitted electronically as prescribed  by  the
    18  department  of state. The beneficial ownership disclosure or attestation
    19  of  exemption  shall  be  signed  electronically  consistent  with   the
    20  provisions of article three of the state technology law.
    21    (d)  Within  thirty days of an initial filing of articles of organiza-
    22  tion or an application for authority pursuant to this chapter, a report-
    23  ing company shall file with the department of state a beneficial  owner-
    24  ship  disclosure  that  complies  with  subdivision (a) of this section.
    25  Within thirty days of an initial filing of articles of  organization  or
    26  an application for authority pursuant to this chapter, an exempt company
    27  shall file with the department of state an attestation of exemption that
    28  complies with subdivision (b) of this section.
    29    (e)  Within one year of the effective date of this section, all previ-
    30  ously formed or authorized  reporting  companies  shall  file  with  the
    31  department of state a beneficial ownership disclosure that complies with
    32  subdivision  (a)  of this section. Within one year of the effective date
    33  of this section, all previously formed or  authorized  exempt  companies
    34  shall file with the department of state an attestation of exemption that
    35  complies with subdivision (b) of this section.
    36    (f)  All  information  relating  to  beneficial owners who are natural
    37  persons collected by the department of state  in  accordance  with  this
    38  section  shall  be  maintained  in a secure database and shall be deemed
    39  confidential except: (1) pursuant to the written request of or by volun-
    40  tary written consent of the beneficial owner; (2) by court order; (3) to
    41  officers or employees of another  federal,  state  or  local  government
    42  agency where disclosure is necessary for the agency to perform its offi-
    43  cial  duties  as  required  by statute or necessary to operate a program
    44  specifically authorized by law; or  (4)  for  a  valid  law  enforcement
    45  purpose  including  as  relevant to any law enforcement investigation by
    46  the office of the attorney general. Any beneficial ownership information
    47  disclosed by department of state shall not be further disclosed  by  any
    48  recipient  except  as authorized in law or as otherwise necessary to the
    49  performance of statutory duties.
    50    (g) Once the initial beneficial ownership disclosure has  been  filed,
    51  all reporting companies shall electronically file with the department of
    52  state  an  annual statement confirming or updating: (1) their beneficial
    53  ownership disclosure information; (2) the street address of its  princi-
    54  pal  executive  office; (3) status as exempt company, if applicable; and
    55  (4) such other information as may be designated  by  the  department  of
    56  state.
        S. 8059                             3

     1    (h)  The  department  of  state shall establish provisions for sharing
     2  information with agencies permitted to access  information  relating  to
     3  beneficial owners in accordance with subdivision (f) of this section.
     4    §  1108.  Violations  and Penalties. (a) (1) A reporting company which
     5  has failed to file its beneficial ownership disclosure,  attestation  of
     6  exemption,  or annual statement as required by this article for a period
     7  exceeding thirty days shall be shown to be past due on  the  records  of
     8  the department of state.
     9    (2)  The  attorney  general  may  assess  a fine of up to five hundred
    10  dollars for each day the company has been past due.
    11    (3) In addition to any action brought seeking relief  under  paragraph
    12  two  of this subdivision, such past due status shall be removed from the
    13  records of the department of state upon the filing of the current state-
    14  ment required by section 1107 of this article, the payment of a fine  of
    15  two  hundred  fifty  dollars, and verification from the attorney general
    16  that any penalties imposed pursuant to paragraph two of this subdivision
    17  have been paid.
    18    (b) (1) A reporting company which has failed to  file  its  beneficial
    19  ownership  disclosure,  attestation of exemption, or annual statement as
    20  required by this section for a period exceeding two years shall be shown
    21  to be delinquent on the records of the department of state.
    22    (2) The attorney general may assess a  fine  of  up  to  five  hundred
    23  dollars for each day the company has been delinquent.
    24    (3)  In  addition to any action brought seeking relief under paragraph
    25  two of this subdivision, such delinquency  shall  be  removed  from  the
    26  records of the department of state upon the filing of the current state-
    27  ment  required by section 1107 of this article, the payment of a fine of
    28  two hundred fifty dollars, and verification from  the  attorney  general
    29  that any penalties imposed pursuant to paragraph two of this subdivision
    30  have been paid.
    31    (c)  It  shall  be  unlawful  for  any person to knowingly provide, or
    32  attempt to provide, false or fraudulent  beneficial  ownership  informa-
    33  tion,  including  a  false or fraudulent identifying photograph or docu-
    34  ment, to the department of state in  accordance  with  this  article.  A
    35  person  shall  not  be  in  violation of this subdivision if such person
    36  voluntarily and promptly, and in no case later than  ninety  days  after
    37  the  date  after  the  submission  of  beneficial ownership information,
    38  provides the corrected information in the form and manner prescribed  by
    39  the  department of state, unless the false or fraudulent information was
    40  willfully submitted for the purpose of evading the requirements of  this
    41  article.
    42    (d) In addition to any existing authority, the New York state attorney
    43  general may investigate any violation of subdivision (c) of this section
    44  and  any  limited  liability  company  that fails to file its beneficial
    45  ownership disclosure, annual statements, or attestation of exemption  as
    46  required by section eleven hundred seven of this article. The department
    47  of  state  may  refer, for an investigation, to the attorney general any
    48  limited liability company for any violation of the  provisions  of  this
    49  article.  The  New  York state attorney general may seek a fine of up to
    50  five hundred dollars for each day the  company  has  been  past  due  in
    51  filing its beneficial ownership disclosure or attestation of exemption.
    52    (e)  (1) The New York state attorney general may bring an action under
    53  this section to dissolve or cancel any  entity  that  is  delinquent  in
    54  filing  it's beneficial ownership disclosure or attestation of exemption
    55  or has violated provisions of subdivision (c) of this section. If in the
    56  court's discretion it shall appear that the  limited  liability  company
        S. 8059                             4

     1  should  be  dissolved  and  cancelled  or  the foreign limited liability
     2  company's authority to do business in this state should be annulled,  it
     3  shall  make  a  judgment or final order dissolving the limited liability
     4  company  or  annulling  the  authority  of the foreign limited liability
     5  company.
     6    (2) If the judgment or final order shall provide for a dissolution and
     7  cancellation of the  limited  liability  company  or  the  annulment  of
     8  authority  of  the  foreign limited liability company, the court may, in
     9  its discretion, provide therein for the distribution of the property  of
    10  the  limited  liability  company  to those entitled thereto according to
    11  their respective rights.
    12    (3) The clerk of the court or such  other  person  as  the  court  may
    13  direct shall transmit certified copies of the judgment or final order of
    14  dissolution to the department of state.
    15    (4)  Upon  filing  by  the  department of state, the limited liability
    16  company shall be dissolved and its articles of organization cancelled or
    17  the  authority  of  the  foreign  limited  liability  company  shall  be
    18  annulled.
    19    (f) Any penalties provided for in this section shall be in addition to
    20  and  may be imposed concurrently with any other remedy or penalty other-
    21  wise provided for in law.
    22    (g) Any reporting or exempt company that fails to file its  beneficial
    23  ownership  disclosure  or  attestation  of  exemption in accordance with
    24  section 1107 of this article shall be deemed suspended.   Any  reporting
    25  or exempt company that fails to file its beneficial ownership disclosure
    26  or  attestation  of  exemption  in  accordance with section 1107 of this
    27  article shall be given notice by the department of state of such suspen-
    28  sion, at least thirty days prior to any change of status.   A  reporting
    29  company  or exempt company that is suspended by operation of this subdi-
    30  vision shall not conduct business in New York state until its beneficial
    31  ownership disclosure or attestation of  exemption  has  been  filed,  at
    32  which  point  the  suspension shall be deemed annulled and all corporate
    33  powers, rights, privileges, immunities, duties and liabilities shall  be
    34  restored  retroactively. The suspension of a reporting or exempt company
    35  shall not limit or impair the validity of any contract or  act  of  such
    36  reporting  or  exempt company, or any right or remedy of any other party
    37  under or by virtue of any contract, act or omission of such reporting or
    38  exempt company, or the right of any other party to maintain  any  action
    39  or special proceeding on any such contract, act or omission, or right of
    40  such  reporting  or  exempt  company  to  defend  any  action or special
    41  proceeding in this state, or result in any member, manager or  agent  of
    42  such  reporting  or  exempt  company becoming liable for the contractual
    43  obligations or other liabilities of the limited liability company.
    44    (h) The secretary of state may  promulgate  regulations  necessary  to
    45  effectuate the provisions of this article.
    46    §  2.  Subdivisions  (ii),  (jj),  (kk) and (ll) of section 102 of the
    47  limited liability company law, as added by a chapter of the laws of 2023
    48  amending the limited liability company law and the executive law  relat-
    49  ing  to  the disclosure of beneficial owners of limited liability compa-
    50  nies, as proposed in legislative bills numbers S. 995-B and  A.  3484-A,
    51  are REPEALED.
    52    §  3.  Paragraphs 6, 7, and 8 of subdivision (e) of section 203 of the
    53  limited liability company law, as amended by a chapter of  the  laws  of
    54  2023  amending  the  limited liability company law and the executive law
    55  relating to the disclosure of beneficial  owners  of  limited  liability
        S. 8059                             5

     1  companies,  as  proposed  in  legislative  bills numbers S. 995-B and A.
     2  3484-A, are amended to read as follows:
     3    (6)  if all or specified members are to be liable in their capacity as
     4  members for all or specified debts, obligations or  liabilities  of  the
     5  limited  liability company as authorized pursuant to section six hundred
     6  nine of this chapter, a statement that all or specified members  are  so
     7  liable  for  such debts, obligations or liabilities in their capacity as
     8  members of the limited  liability  company  as  authorized  pursuant  to
     9  section six hundred nine of this chapter; and
    10    (7)  [in the case of an exempt company, a statement signed by a member
    11  or manager indicating  the  provision  or  provisions  of  31  U.S.C.  §
    12  5336(a)(11)(B),  excluding such company from the definition of a report-
    13  ing company to file an initial report, or in the  case  of  a  reporting
    14  company,  the  beneficial  ownership  disclosure information as required
    15  pursuant to section two hundred fifteen of this article; and
    16    (8)] any other provisions, not inconsistent with law, that the members
    17  elect to include in the articles of organization for the  regulation  of
    18  the  internal  affairs  of the limited liability company, including, but
    19  not limited to, (A) the business purpose for which the limited liability
    20  company is formed, (B) a statement of whether there are  limitations  on
    21  the  authority  of  members or managers or a class or classes thereof to
    22  bind the limited liability company  and  (C)  any  provisions  that  are
    23  required  or  permitted to be included in the operating agreement of the
    24  limited liability company pursuant to section four hundred seventeen  of
    25  this chapter.
    26    §  4.  Paragraphs 8, 9, 10 and 11 of subdivision (d) of section 211 of
    27  the limited liability company law, as amended by a chapter of  the  laws
    28  of 2023 amending the limited liability company law and the executive law
    29  relating  to  the  disclosure  of beneficial owners of limited liability
    30  companies, as proposed in legislative bills  numbers  S.  995-B  and  A.
    31  3484-A, are amended to read as follows:
    32    (8) the discovery of a materially false or inaccurate statement in the
    33  articles of organization;
    34    (9)  the  decision  to  change  any other statement in the articles of
    35  organization; and
    36    (10) to specify, change or delete  the  email  address  to  which  the
    37  [department]  secretary  of  state shall email a notice of the fact that
    38  process against the limited liability company  has  been  electronically
    39  served upon him or her[; and
    40    (11) in the case of a reporting company, any change in the information
    41  required to be disclosed pursuant to section two hundred fifteen of this
    42  article,  or  where  a  reporting  company  has not filed the disclosure
    43  required by such section, such company shall file such disclosure at the
    44  time of filing such certificate of amendment].
    45    § 5. Section 215 of the limited liability company law, as added  by  a
    46  chapter  of  the laws of 2023 amending the limited liability company law
    47  and the executive law relating to the disclosure of beneficial owners of
    48  limited liability companies, as proposed in legislative bills numbers S.
    49  995-B and A. 3484-A, is REPEALED.
    50    § 6. Paragraphs 7, 8 and 9 of subdivision (a) of section  802  of  the
    51  limited  liability  company  law, as amended by a chapter of the laws of
    52  2023 amending the limited liability company law and  the  executive  law
    53  relating  to  the  disclosure  of beneficial owners of limited liability
    54  companies, as proposed in legislative bills  numbers  S.  995-B  and  A.
    55  3484-A, are amended to read as follows:
        S. 8059                             6

     1    (7)  a  statement  that  the  foreign  limited liability company is in
     2  existence in the jurisdiction of its formation at the time of the filing
     3  of such application; and
     4    (8) the name and address of the authorized officer in the jurisdiction
     5  of  its  formation where a copy of its articles of organization is filed
     6  or, if no public filing of its articles of organization is  required  by
     7  the  law  of the jurisdiction of formation, a statement that the foreign
     8  limited liability company shall provide, on request, a copy thereof with
     9  all amendments thereto (if such documents are in a foreign  language,  a
    10  translation  in  English  thereof  under oath of the translator shall be
    11  attached thereto), and the name and post office address  of  the  person
    12  responsible for providing such copies[; and
    13    (9)  in  the case of an exempt company, a statement signed by a member
    14  or manager indicating  the  provision  or  provisions  of  31  U.S.C.  §
    15  5336(a)(11)(B),  excluding such company from the definition of a report-
    16  ing company to file an initial report, or in the  case  of  a  reporting
    17  company, the beneficial ownership disclosure information required pursu-
    18  ant to section eight hundred ten of this article].
    19    §  7.  Subdivision (c) of section 804 of the limited liability company
    20  law, as added by a chapter of the laws  of  2023  amending  the  limited
    21  liability  company  law and the executive law relating to the disclosure
    22  of beneficial owners of limited  liability  companies,  as  proposed  in
    23  legislative bills numbers S. 995-B and A. 3484-A, is REPEALED.
    24    §  8.  Section 810 of the limited liability company law, as added by a
    25  chapter of the laws of 2023 amending the limited liability  company  law
    26  and the executive law relating to the disclosure of beneficial owners of
    27  limited liability companies, as proposed in legislative bills numbers S.
    28  995-B and A. 3484-A, is REPEALED.
    29     § 9. Section 100-b of the executive law, as added by a chapter of the
    30  laws  of  2023 amending the limited liability company law and the execu-
    31  tive law relating to the disclosure  of  beneficial  owners  of  limited
    32  liability  companies,  as proposed in legislative bills numbers S. 995-B
    33  and A. 3484-A, is REPEALED.
    34    § 10. Section 10 of a chapter of the laws of 2023 amending the limited
    35  liability company law and the executive law relating to  the  disclosure
    36  of  beneficial  owners  of  limited  liability companies, as proposed in
    37  legislative bills numbers S. 995-B and A. 3484-A, is amended to read  as
    38  follows:
    39    § 10. This act shall take effect [on the three hundred sixty-fifth day
    40  after  it shall have become a law] January 1, 2026. Effective immediate-
    41  ly, the addition, amendment and/or repeal  of  any  rule  or  regulation
    42  necessary  for  the implementation of this act on its effective date are
    43  authorized to be made and completed on or before such effective date.
    44    § 11. This act  shall  take  effect  immediately;  provided,  however,
    45  sections  one,  two,  three,  four, five, six, seven, eight, and nine of
    46  this act shall take effect on the same date and in the same manner as  a
    47  chapter  of  the laws of 2023 amending the limited liability company law
    48  and the executive law relating to the disclosure of beneficial owners of
    49  limited liability companies, as proposed in legislative bills numbers S.
    50  995-B and A. 3484-A, takes effect.