NY State Senate Bill 2021-S8439A

Senate Bill S8439A

2021-2022 Legislative Session

Relates to the disclosure of beneficial owners of limited liability companies and certain other business entities

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Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 03, 2022	committed to rules
May 25, 2022	amended on third reading 8439b
May 16, 2022	advanced to third reading
May 11, 2022	2nd report cal.
May 10, 2022	1st report cal.1192
Apr 29, 2022	print number 8439a
Apr 29, 2022	amend (t) and recommit to corporations, authorities and commissions
Mar 01, 2022	referred to corporations, authorities and commissions

Votes

- May 10, 2022 - Corporations, Authorities And Commissions Committee Vote
  S8439A
  
  6
  
  Aye
  
  1
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Corporations, Authorities And Commissions Committee Vote: May 10, 2022
      
      aye (6)
      
      Comrie
      
      Gaughran
      
      Mattera
      
      Mayer
      
      Ramos
      
      Skoufis
      
      nay (1)
      
      Martucci

Bill Amendments

Original

B (Active)

co-Sponsors

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2021-S8439 - Details

Current Committee:: Senate Rules
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L
Versions Introduced in 2023-2024 Legislative Session:: S995

2021-S8439 - Summary

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

2021-S8439 - Sponsor Memo

                                 
BILL NUMBER: S8439

SPONSOR: HOYLMAN
 
TITLE OF BILL:

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

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to provide full transparency for the beneficial owners of
limited liability companies in New York by defining beneficial owner-
ship, requiring annual disclosure on tax returns, and publishing benefi-
cial owners of limited liability companies in New York's publicly
searchable corporation and business entity database.

 
SUMMARY OF SPECIFIC PROVISIONS:

  Section  one  amends the limited liability company (LLC) law to define
beneficial ownership, i.e. the individual  people  who  actually  profit

from  or  control  a  corporation  or  asset. Provisions are included to
ensure that certain parties, such as creditors, minors, or employees  of
worker  cooperatives (among others) are not included for the purposes of
the law. Since corporate  entities  can  also  be  members  of  an  LLC,
provisions are included for disclosing the beneficial owners or officers
of other corporate entities that may comprise an LLC's membership.

  Section  two  amends  the LLC law to require that a list of beneficial
owners of an LLC be included with the documents necessary to organize an
LLC in New York State. The information provided  must  include  a  name,
current  business  address,  and a number from a non-expired passport or
driver's license.

  Section three permits the Department  of  State  to  check  for  legal
sufficiency  the list of beneficial owners included with an LLC's organ-
ization documents.

  Section four amends the LLC law to  create  a  new  section,  215,  to
require  the Department of State to preserve beneficial ownership infor-
mation for any LLC for a period of five years after an LLC has ceased to
exist and also provides penalties for the willful  filing  of  false  or
fraudulent beneficial ownership information.

  Section  five  amends the tax law to permit the Department of Taxation
and Finance to  share  beneficial  ownership  information  disclosed  on
returns by LLC filers with the Department of State.

  Section  six  amends  the LLC law to require that a list of beneficial
owners of an LLC be included with the documents necessary to register an
out-of-state LLC to do business  in  New  York  State.  The  information
provided  must  include  a  name, current business address, and a number
from a non-expired passport or driver's license.

  Section seven amends the LLC law to create  a  new  section,  810,  to
require  the Department of State to preserve beneficial ownership infor-
mation for any out-of-state LLC registered to do business  in  New  York
for  a  period of five years after an LLC has ceased to be registered in
New York and also provides penalties for the willful filing of false  or
fraudulent beneficial ownership information.

  Section  eight amends the tax law to require the disclosure of benefi-
cial owners of LLCs acquiring residential real property on deed transfer
forms filed with the Department of Taxation and Finance.  Previously the
law required the disclosure of members and  managers  of  LLCs  on  such
forms  but  only  applying to residential real property with one to four
units.

  Section nine amends the New York City Administrative Code  to  require
the  same  disclosure of beneficial ownership information on residential
real property deed transfer forms in New York City.

  Section ten amends the tax law to require the Department  of  Taxation
and  Finance  to release to the Department of State beneficial ownership
information gained through tax returns or any other means.

  Section eleven requires that the  Department  of  State  assign  every
beneficial  owner of an LLC a unique identifying number and publish such
number in relation to any affiliated LLCs in the Department  of  State's
corporation  and business entity database, which is publicly searchable.
The names and business of any beneficial owner shall be  accessible  via
FOIL, although they shall not be published in the corporation and entity
database  for  privacy  reasons.  A  waiver process for individuals with
significant privacy interests is created to prevent  the  disclosure  of
those  individuals'  names  and  businesses addresses via FOIL, although
their unique identifying number may remain in the corporation and  busi-
ness  entity  database.  The  Department  of State is also authorized to
verify beneficial ownership information in the database with information
submitted by the Department of Taxation and Finance and may,  if  incon-
sistencies  in  beneficial  ownership  information indicate fraud, refer
such suspected fraud to the relevant authorities.

  Section twelve amends the tax law to require that LLCs include benefi-
cial ownership information in their annual tax returns and that an annu-
al tax return shall not be accepted without the inclusion of such infor-
mation. The Department of Taxation and Finance is further authorized  to
verify beneficial ownership information included in LLC tax returns with
beneficial  ownership  information submitted to the Department of State,
and if inconsistencies are revealed that  indicate  potential  fraud  or
suspicious  activity,  to refer such suspicions to the relevant authori-
ties.

  Section thirteen is the effective date.

 
JUSTIFICATION:

Anonymous corporate ownership has proliferated since the 1990s  and  has
created  numerous public policy problems locally, nationally, and inter-
nationally. In 2015, the New York Times published a series  of  investi-
gative reports called "Towers of Secrecy" that revealed that many condo-
miniums in a Manhattan skyscraper were owned by high-profile individuals
under investigation or sanctions for crimes such as money-laundering and
embezzlement.  LLC  laws have enabled these individuals, whose purchases
may have otherwise  been  scrutinized  by  international  legal  or  tax
authorities,  to purchase assets in New York through anonymous and prac-
tically untraceable shell corporations. In 2019, a  local  newspaper  in
Cleveland broke the news that the largest commercial real estate holders
in  Cleveland were two Ukrainian oligarchs who purchased extensive prop-
erties throughout  the  downtown  business  district  with  hundreds  of
millions  of  dollars  laundered  through shell corporations. And a 2019
report commissioned by the New York Senate Committee  on  Investigations
and  Government  Operations found that opaque LLC ownership had hampered
code inspectors and code enforcement in upstate communities for years. A
Pew Stateline story in 2019 reported that this problem  was  nationwide,
prompting both Arizona and Washington to enact legislation that required
LLC  ownership  information  to  be registered in a state database. More
recently, tenants have been unable to receive  funds  disbursed  through
the  Emergency Rental Assistance Program because anonymous LLC landlords
have not completed their half of the application and have been unreacha-
ble by tenants or state authorities. Pointing to a sociological explana-
tion for neglect in deteriorating housing markets, a paper in the Ameri-
can Sociological Review in 2019 described an  "LLC  effect"  responsible
for  negligent  property  ownership  behavior.  Analyzing  thousands  of
records from Milwaukee's rental market and controlling for all  possible
confounding  variables,  the  author  found  that  LLC's  anonymity  and
protections against liability  facilitate  negligent  behavior,  because
property  owners  do not need to be publicly identified as slumlords and
liability protections reduce risks for landlords  who  forego  necessary
maintenance  or  violate  building  standards.  These  forces combine to
create hazards for municipal governments  seeking  to  enforce  building
codes and tenants forced to live in substandard conditions.

Leaks  such  as  the  Panama  Papers  and  the  Pandora Papers have also
revealed the extent  of  which  money  is  laundered  globally  for  the
purposes  of  tax avoidance through anonymous shell corporations such as
LLCs. In 2013, the G8 nations adopted a statement of principles relating
to  the  disclosure  of  beneficial  ownership  information,  which  was
expanded and adopted by the G20 in 2014 after the release of guidance by
the international Financial Action Task Force. In 2016, the United King-
dom  committed  to creating three public registries of beneficial owner-
ship information for real property, corporations, and trusts. In Europe,
the European Union directed member states to create publicly  searchable
registries of beneficial ownership information for corporate entities by
January  2020  and  another for trusts and similar legal arrangements by
March 2020. These registries were required to be connected to a  central
platform  by  March 10, 2021. In the United States, the National Defense
Authorization Act for 2021 authorized the Treasury Department  to  begin
collecting beneficial ownership information in a database called FinCEN,
so requiring these disclosures in New York should not be burdensome.

This  bill  builds  on previous efforts to require the disclosure of LLC
members and managers involved in real estate transactions in  New  York.
The  bill  extends  disclosure requirements to all LLCs registered to do
business in New York. By placing beneficial ownership information  in  a
public  database, government and public policy researchers can study who
actually owns what in New York, a task that has become  impossible  with
the  proliferation of anonymous LLCs in the real estate market beginning
in the 1990s. The database would also help eliminate the possibility  of
money-laundering  or tax avoidance through anonymous shell corporations,
and residential and commercial tenants will also  benefit  from  knowing
who their landlord actually is.

The  LLC  was  only  invented  in 1977 by the Wyoming state legislature,
blessed by the IRS in 1988, and adopted as a form of corporate organiza-
tion in New York in 1994. The anonymity of ownership of LLCs  and  other
shell corporations has helped create numerous public policy problems and
this bill will help fix them.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This  bill  is  effective  365 days after becoming law, provided however
that the repeal, amendment, or  enactment  of  any  rule  or  regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive  date  is  authorized  to be made or completed before its effective
date.

2021-S8439 - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8439
 
                             I N  S E N A T E
 
                               March 1, 2022
                                ___________
 
 Introduced  by  Sen. HOYLMAN -- 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, 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:
 
   Section 1. Section 102 of the limited liability company law is amended
 by adding a new subdivision (ii) to read as follows:
   (II) (1) "BENEFICIAL OWNER" MEANS A NATURAL PERSON  WHO,  DIRECTLY  OR
 INDIRECTLY,  (A)  HOLDS  A  MEMBERSHIP  INTEREST  IN A LIMITED LIABILITY
 COMPANY OR A FOREIGN LIMITED LIABILITY COMPANY; (B)  EXERCISES  SUBSTAN-
 TIAL  CONTROL  OVER  THE DECISIONS OF A MEMBERSHIP INTEREST IN A LIMITED
 LIABILITY COMPANY OR A FOREIGN LIMITED LIABILITY  COMPANY;  OR  (C)  HAS
 BEEN  ASSIGNED A MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY OR A
 FOREIGN LIMITED LIABILITY COMPANY.
   (2) THE TERM "BENEFICIAL OWNER" SHALL NOT INCLUDE: (A) A MINOR  CHILD;
 (B)  A  PERSON ACTING AS A NOMINEE, INTERMEDIARY, CUSTODIAN, OR AGENT ON
 BEHALF OF ANOTHER PERSON; (C) A PERSON ACTING SOLELY AS AN EMPLOYEE OF A
 LIMITED LIABILITY COMPANY AND WHOSE CONTROL OVER  OR  ECONOMIC  BENEFITS
 FROM  THE  LIMITED  LIABILITY COMPANY DERIVES SOLELY FROM THE EMPLOYMENT
 STATUS OF THE PERSON; (D) A PERSON WHOSE  ONLY  INTEREST  IN  A  LIMITED
 LIABILITY  COMPANY  IS THROUGH A RIGHT OF INHERITANCE, UNLESS THE PERSON
 ALSO MEETS THE REQUIREMENTS OF PARAGRAPH ONE OF THIS SUBDIVISION; (E)  A
 CREDITOR  OF A LIMITED LIABILITY COMPANY, UNLESS THE CREDITOR ALSO MEETS
 THE REQUIREMENTS OF PARAGRAPH  ONE  OF  THIS  SUBDIVISION;  OR  (F)  ANY
 NATURAL  PERSON WHOSE MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY
 DERIVES SOLELY FROM HIS OR HER  EMPLOYMENT  BY  SUCH  LIMITED  LIABILITY
 COMPANY  AND SUCH LIMITED LIABILITY COMPANY'S ORGANIZATION AS AN EMPLOY-
 EE-OWNED BUSINESS OR WORKER COOPERATIVE, AS EVIDENCED  BY  SUCH  LIMITED
 LIABILITY COMPANY'S BY-LAWS OR ARTICLES OF ORGANIZATION.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD13266-05-2

 S. 8439                             2
 
   (3) IF AN ENTITY OTHER THAN A NATURAL PERSON MEETS THE REQUIREMENTS OF
 A  BENEFICIAL OWNER AS DEFINED IN PARAGRAPH ONE OF THIS SUBDIVISION, THE
 BENEFICIAL OWNERS OF SUCH LIMITED LIABILITY COMPANY OR  FOREIGN  LIMITED
 LIABILITY  COMPANY SHALL INCLUDE THE NAMES AND BUSINESS ADDRESSES OF ALL
 MEMBERS,  MANAGERS, SHAREHOLDERS, DIRECTORS, OFFICERS, PARTNERS, AND ANY
 OTHER AUTHORIZED PERSONS, IF ANY, OF SUCH ENTITY. THE IDENTIFICATION  OF
 SUCH  NAMES AND ADDRESSES SHALL NOT BE DEEMED AN UNWARRANTED INVASION OF
 PERSONAL PRIVACY PURSUANT TO ARTICLE SIX OF THE PUBLIC OFFICERS LAW.  IF
 ANY  SUCH  MEMBER,  MANAGER  OR  AUTHORIZED  PERSON  IS ITSELF A LIMITED
 LIABILITY COMPANY OR OTHER BUSINESS ENTITY, THE NAMES AND  ADDRESSES  OF
 THE SHAREHOLDERS, DIRECTORS, OFFICERS, MEMBERS, MANAGERS AND PARTNERS OF
 THE  LIMITED  LIABILITY  COMPANY  OR OTHER BUSINESS ENTITY SHALL ALSO BE
 DISCLOSED UNTIL FULL DISCLOSURE OF ULTIMATE OWNERSHIP BY NATURAL PERSONS
 IS ACHIEVED. IF SUCH ENTITY IS PUBLICLY TRADED, A REIT, A UPREIT,  OR  A
 MUTUAL  FUND,  THE  REQUIREMENTS  OF  THIS PARAGRAPH SHALL ONLY APPLY TO
 SHAREHOLDERS POSSESSING A CONTROLLING INTEREST IN SUCH ENTITY.
   § 2. Paragraphs 6 and 7 of subdivision  (e)  of  section  203  of  the
 limited  liability  company  law, as added by chapter 470 of the laws of
 1997, are amended to read as follows:
   (6) if all or specified members are to be liable in their capacity  as
 members  for  all  or specified debts, obligations or liabilities of the
 limited liability company as authorized pursuant to section six  hundred
 nine  of  this chapter, a statement that all or specified members are so
 liable for such debts, obligations or liabilities in their  capacity  as
 members  of  the  limited  liability  company  as authorized pursuant to
 section six hundred nine of this chapter; [and]
   (7) A LIST OF THE BENEFICIAL OWNERS OF THE LIMITED  LIABILITY  COMPANY
 THAT  IDENTIFIES EACH BENEFICIAL OWNER BY (A) NAME; (B) CURRENT RESIDEN-
 TIAL OR BUSINESS STREET ADDRESS; AND (C)  A  UNIQUE  IDENTIFYING  NUMBER
 FROM A NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED
 DRIVER'S LICENSE OR IDENTIFICATION CARD ISSUED BY THIS OR ANOTHER STATE;
 AND
   (8)  any other provisions, not inconsistent with law, that the members
 elect to include in the articles [or] OF organization for the regulation
 of the internal affairs of the limited liability company, including, but
 not limited to, (A) the business purpose for which the limited liability
 company is formed, (B) a statement of whether there are  limitations  on
 the  authority  of  members or managers or a class or classes thereof to
 bind the limited liability company  and  (C)  any  provisions  that  are
 required  or  permitted to be included in the operating agreement of the
 limited liability company pursuant to section four hundred seventeen  of
 this chapter.
   §  3.  Section  209 of the limited liability company law is amended to
 read as follows:
   § 209. Filing with the department  of  state.  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.
 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, EXCEPT THAT IT MAY REVIEW SUCH ARTI-
 CLES OR CERTIFICATES FOR LEGAL SUFFICIENCY WITH REGARD  TO  REQUIREMENTS
 PERTAINING  TO  BENEFICIAL OWNERS PURSUANT TO SECTIONS TWO HUNDRED THREE
 S. 8439                             3
 
 AND TWO HUNDRED ELEVEN OF THIS ARTICLE; its review  shall  be  OTHERWISE
 limited to determining that the form has been completed.
   §  4.  The  limited  liability  company law is amended by adding a new
 section 215 to read as follows:
   § 215.  BENEFICIAL  OWNERSHIP  DISCLOSURE.  (A)  BENEFICIAL  OWNERSHIP
 INFORMATION  RELATING TO EACH LIMITED LIABILITY COMPANY FORMED UNDER THE
 LAWS OF THIS STATE IS REQUIRED TO BE  MAINTAINED  BY  THE  SECRETARY  OF
 STATE  UNTIL  THE END OF THE FIVE YEAR PERIOD BEGINNING ON THE DATE THAT
 THE LIMITED LIABILITY COMPANY TERMINATES PURSUANT TO THIS CHAPTER.
   (B) ANY PERSON WHO: (1) KNOWINGLY PROVIDES FALSE OR FRAUDULENT BENEFI-
 CIAL OWNERSHIP INFORMATION; OR (2) WILLFULLY FAILS TO  PROVIDE  COMPLETE
 OR  UPDATED  INFORMATION  SHALL BE GUILTY OF A MISDEMEANOR AND LIABLE TO
 THE STATE FOR A CIVIL PENALTY OF NOT MORE THAN TEN THOUSAND DOLLARS  AND
 SHALL  BE  PROHIBITED FROM ORGANIZING, FORMING, REGISTERING, OR MANAGING
 ANY LIMITED LIABILITY COMPANY OR PARTNERSHIP IN THE STATE  OF  NEW  YORK
 FOR A PERIOD NOT LESS THAN ONE YEAR OR GREATER THAN FIVE YEARS.
   §  5.  Section 1418 of the tax law is amended by adding a new subdivi-
 sion (j) to read as follows:
   (J) NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (A) OF THIS SECTION,
 THE COMMISSIONER OR ANY OFFICER OR EMPLOYEE OF THE DEPARTMENT  OF  TAXA-
 TION  AND  FINANCE  MAY  FURNISH  TO THE DEPARTMENT OF STATE INFORMATION
 RELATING TO BENEFICIAL  OWNERSHIP  THAT  IS  OBTAINED  OR  DERIVED  FROM
 RETURNS FILED PURSUANT TO THIS ARTICLE.
   §  6.  Paragraphs  7  and  8  of subdivision (a) of section 802 of the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7) a statement that the  foreign  limited  liability  company  is  in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of  its  formation where a copy of its articles of organization is filed
 or, if no public filing of its articles of organization is  required  by
 the  law  of the jurisdiction of formation, a statement that the foreign
 limited liability company shall provide, on request, a copy thereof with
 all amendments thereto (if such documents are in a foreign  language,  a
 translation  in  English  thereof  under oath of the translator shall be
 attached thereto), and the name and post office address  of  the  person
 responsible for providing such copies[.]; AND
   (9)  A  LIST OF THE BENEFICIAL OWNERS OF THE FOREIGN LIMITED LIABILITY
 COMPANY THAT IDENTIFIES EACH BENEFICIAL OWNER BY (A) NAME;  (B)  CURRENT
 RESIDENTIAL  OR  BUSINESS  STREET  ADDRESS; AND (C) A UNIQUE IDENTIFYING
 NUMBER FROM A NON-EXPIRED PASSPORT ISSUED BY  THE  UNITED  STATES  OR  A
 NON-EXPIRED  DRIVER'S  LICENSE  OR IDENTIFICATION CARD ISSUED BY THIS OR
 ANOTHER STATE.
   § 7. The limited liability company law is  amended  by  adding  a  new
 section 810 to read as follows:
   §  810.  BENEFICIAL  OWNERSHIP  DISCLOSURE.   (A) BENEFICIAL OWNERSHIP
 INFORMATION RELATING TO EACH FOREIGN  LIMITED LIABILITY  COMPANY  FORMED
 UNDER  THE LAWS OF THIS STATE IS REQUIRED TO BE MAINTAINED BY THE SECRE-
 TARY OF STATE UNTIL THE  END  OF  THE  FIVE  YEAR PERIOD   BEGINNING  ON
 THE  DATE THAT THE FOREIGN LIMITED LIABILITY COMPANY TERMINATES PURSUANT
 TO THIS CHAPTER.
   (B) ANY PERSON WHO: (1) KNOWINGLY PROVIDES FALSE OR FRAUDULENT BENEFI-
 CIAL OWNERSHIP INFORMATION OR (2) WILLFULLY FAILS TO PROVIDE COMPLETE OR
 UPDATED INFORMATION SHALL BE GUILTY OF A MISDEMEANOR AND LIABLE  TO  THE
 STATE  FOR  A  CIVIL  PENALTY  OF NOT MORE THAN TEN THOUSAND DOLLARS AND
 S. 8439                             4
 
 SHALL BE PROHIBITED FROM ORGANIZING, FORMING, REGISTERING,  OR  MANAGING
 ANY  LIMITED  LIABILITY  COMPANY OR PARTNERSHIP IN THE STATE OF NEW YORK
 FOR A PERIOD NOT LESS THAN ONE YEAR OR GREATER THAN FIVE YEARS.
   § 8. Paragraph 2 of subdivision (a) of section 1409 of the tax law, as
 amended  by  section  3  of part O of chapter 59 of the laws of 2021, is
 amended to read as follows:
   (2) When the grantor or grantee of a deed for a building used as resi-
 dential real property [containing up to four family dwelling units] is a
 limited liability company, the joint return shall not  be  accepted  for
 filing  unless  it  is  accompanied  by  a document which identifies the
 [names and business addresses of all members, managers,  and  any  other
 authorized  persons,  if  any, of such limited liability company and the
 names and business addresses or, if none, the business addresses of  all
 shareholders, directors, officers, members, managers and partners of any
 limited  liability  company  or other business entity that are to be the
 members, managers or authorized persons, if any, of such limited liabil-
 ity company. The identification of such names and addresses shall not be
 deemed an unwarranted invasion of personal privacy pursuant  to  article
 six  of  the public officers law. If any such member, manager or author-
 ized person of the limited liability company is itself a limited liabil-
 ity company or other business entity other than a publicly traded  enti-
 ty,  a  REIT, a UPREIT, or a mutual fund, the names and addresses of the
 shareholders, directors, officers, members, managers and partners of the
 limited liability  company  or  other  business  entity  shall  also  be
 disclosed until full disclosure of ultimate ownership by natural persons
 is  achieved]  BENEFICIAL  OWNERS OF SUCH LIMITED LIABILITY COMPANY. For
 purposes of this subdivision, the terms ["members", "managers", "author-
 ized person",] "BENEFICIAL OWNERS" AND "limited liability company"  [and
 "other  business entity"] shall have the same meaning as those terms are
 defined in section one hundred two of the limited liability company law.
   § 9. Subdivision h of section 11-2105 of the  administrative  code  of
 the  city  of  New York, as added by chapter 297 of the laws of 2019, is
 amended to read as follows:
   h. When the grantor or grantee of a deed for residential real property
 [containing one- to four-family dwelling units] is a  limited  liability
 company,  the joint return shall not be accepted for filing unless it is
 accompanied by a document  which  identifies  the  [names  and  business
 addresses of all members, managers, and any other authorized persons, if
 any,  of  such  limited  liability  company  and  the names and business
 addresses or, if none,  the  business  addresses  of  all  shareholders,
 directors,  officers,  members,  managers  and  partners  of any limited
 liability company or other business entity that are to be  the  members,
 managers or authorized persons, if any, of such limited liability compa-
 ny.  The  identification of such names and addresses shall not be deemed
 an unwarranted invasion of personal privacy pursuant to article  six  of
 the  public  officers  law.  If  any  such member, manager or authorized
 person of the limited liability company is itself  a  limited  liability
 company  or other business entity, the names and addresses of the share-
 holders, directors, officers, members,  managers  and  partners  of  the
 limited  liability  company  or  other  business  entity  shall  also be
 disclosed until full disclosure of ultimate ownership by natural persons
 is achieved] BENEFICIAL OWNERS OF SUCH LIMITED LIABILITY COMPANY.    For
 purposes of this subdivision, the terms ["members", "managers", "author-
 ized  person",] "BENEFICIAL OWNERS" AND "limited liability company" [and
 "other business entity"] shall have the same meaning as those terms  are
 defined in section one hundred two of the limited liability company law.
 S. 8439                             5
 
   §  10. The tax law is amended by adding a new section 171-x to read as
 follows:
   §  171-X.  INFORMATION  SHARING WITH THE DEPARTMENT OF STATE REGARDING
 BENEFICIAL OWNERS OF LIMITED LIABILITY  COMPANIES.  NOTWITHSTANDING  ANY
 OTHER  LAW,  THE  COMMISSIONER  SHALL RELEASE TO THE DEPARTMENT OF STATE
 INFORMATION REGARDING BENEFICIAL OWNERS OF LIMITED  LIABILITY  COMPANIES
 WHICH  IS  REPORTED  TO  THE  DEPARTMENT  EITHER ON A FORM ISSUED BY THE
 DEPARTMENT OR ANY OTHER  METHOD  OF  REPORT  TO  THE  DEPARTMENT.    FOR
 PURPOSES  OF  THIS  SECTION,  THE TERMS "BENEFICIAL OWNERS" AND "LIMITED
 LIABILITY COMPANY" SHALL HAVE  THE  SAME  MEANING  AS  THOSE  TERMS  ARE
 DEFINED IN SECTION ONE HUNDRED TWO OF THE LIMITED LIABILITY COMPANY LAW.
   §  11.  The  executive law is amended by adding a new section 100-b to
 read as follows:
   § 100-B. CORPORATION AND  BUSINESS  ENTITY  DATABASE;  INFORMATION  ON
 BENEFICIAL  OWNERS.  1. THE SECRETARY OF STATE SHALL ASSIGN EACH BENEFI-
 CIAL OWNER OF A LIMITED LIABILITY COMPANY A  UNIQUE  IDENTIFYING  NUMBER
 AND  PUBLISH SUCH NUMBER IN RELATION TO ANY AFFILIATED LIMITED LIABILITY
 COMPANIES IN THE CORPORATION AND BUSINESS ENTITY DATABASE OR ANY  SUBSE-
 QUENT DATABASE WHICH IS MAINTAINED BY THE DIVISION OF CORPORATIONS WITH-
 IN  THE  DEPARTMENT OF STATE.  THE IDENTIFICATION OF THE NAMES AND BUSI-
 NESS ADDRESSES OF BENEFICIAL OWNERS ASSOCIATED WITH A UNIQUE IDENTIFYING
 NUMBER IN THE CORPORATION AND BUSINESS  ENTITY  DATABASE  SHALL  NOT  BE
 DEEMED  AN  UNWARRANTED INVASION OF PERSONAL PRIVACY PURSUANT TO ARTICLE
 SIX OF THE PUBLIC OFFICERS LAW; PROVIDED, HOWEVER, THAT  THE  DEPARTMENT
 SHALL ALSO ESTABLISH, THROUGH REGULATIONS, PROCEDURES TO  ALLOW  BENEFI-
 CIAL  OWNERS WITH  SIGNIFICANT PRIVACY  INTERESTS TO APPLY  FOR A WAIVER
 TO  WITHHOLD THEIR NAMES AND BUSINESS ADDRESSES FROM DISCLOSURE PURSUANT
 TO THE FREEDOM OF INFORMATION LAW. FOR PURPOSES  OF  THIS  SECTION,  THE
 TERMS "BENEFICIAL OWNERS" AND "LIMITED LIABILITY COMPANY" SHALL HAVE THE
 SAME  MEANING  AS  THOSE TERMS ARE DEFINED IN SECTION ONE HUNDRED TWO OF
 THE LIMITED LIABILITY COMPANY LAW.
   2. THE SECRETARY OF STATE, IN COOPERATION WITH THE COMMISSIONER OF THE
 DEPARTMENT OF TAXATION AND FINANCE, MAY VERIFY THE BENEFICIAL  OWNERSHIP
 INFORMATION INCLUDED IN RETURNS PURSUANT TO SUBDIVISION TWO-B OF SECTION
 TWO HUNDRED ELEVEN OF THE TAX LAW USING BENEFICIAL OWNERSHIP INFORMATION
 SUBMITTED TO THE DEPARTMENT OF STATE PURSUANT TO SECTION TWO HUNDRED TWO
 OR  EIGHT  HUNDRED  TWO OF THE LIMITED LIABILITY COMPANY LAW IN ORDER TO
 IDENTIFY FRAUD OR SUSPICIOUS ACTIVITIES AND  MAY,  AT  HIS  OR  HER  OWN
 DISCRETION, REFER SUCH FRAUD TO APPROPRIATE AUTHORITIES.
   §  12.  Section 211 of the tax law is amended by adding a new subdivi-
 sion 2-b to read as follows:
   2-B. (A) THE COMMISSIONER SHALL PRESCRIBE REGULATIONS AND INSTRUCTIONS
 REQUIRING RETURNS OF INFORMATION TO BE MADE  AND  FILED  IN  CONJUNCTION
 WITH THE REPORTS REQUIRED TO BE FILED PURSUANT TO THIS ARTICLE, RELATING
 TO  BENEFICIAL  OWNERS  OF LIMITED LIABILITY COMPANIES.  FOR PURPOSES OF
 THIS SECTION, THE  TERMS  "BENEFICIAL  OWNERS"  AND  "LIMITED  LIABILITY
 COMPANY"  SHALL  HAVE  THE  SAME  MEANING  AS THOSE TERMS ARE DEFINED IN
 SECTION ONE HUNDRED TWO OF THE LIMITED LIABILITY COMPANY LAW.
   (B) NO REPORT SHALL BE ACCEPTED BY THE DEPARTMENT IF  THE  INFORMATION
 REQUIRED  TO BE INCLUDED IN THE RETURN PURSUANT TO PARAGRAPH (A) OF THIS
 SUBDIVISION IS NOT INCLUDED IN SUCH REPORT.
   (C) THE COMMISSIONER, IN COOPERATION WITH THE SECRETARY OF STATE,  MAY
 VERIFY THE BENEFICIAL OWNERSHIP INFORMATION INCLUDED IN RETURNS PURSUANT
 TO  THIS SUBDIVISION USING BENEFICIAL OWNERSHIP INFORMATION SUBMITTED TO
 THE DEPARTMENT OF STATE PURSUANT TO SECTION TWO  HUNDRED  TWO  OR  EIGHT
 HUNDRED  TWO  OF  THE LIMITED LIABILITY COMPANY LAW IN ORDER TO IDENTIFY
 S. 8439                             6
 
 FRAUD OR SUSPICIOUS ACTIVITIES AND MAY AT  HIS  OR  HER  OWN  DISCRETION
 REFER SUCH FRAUD TO APPROPRIATE AUTHORITIES. THE INFORMATION INCLUDED IN
 RETURNS  PERTAINING  TO  THE  NAMES AND BUSINESS ADDRESSES OF BENEFICIAL
 OWNERS SHALL BE TRANSMITTED TO THE SECRETARY OF STATE TO KEEP BENEFICIAL
 OWNERSHIP INFORMATION UP TO DATE, INCLUDING WITH RESPECT TO THE BUSINESS
 ENTITY DATABASE OR ANY SUBSEQUENT DATABASE MAINTAINED BY THE DIVISION OF
 CORPORATIONS  WITHIN  THE  DEPARTMENT  OF  STATE PURSUANT TO SECTION ONE
 HUNDRED-B OF THE EXECUTIVE LAW.
   (D) THE INFORMATION REQUIRED TO BE INCLUDED WITH RETURNS  PURSUANT  TO
 THIS SUBDIVISION SHALL BE FILED AND SHALL BE IN SUCH FORM AS THE COMMIS-
 SIONER MAY PRESCRIBE.
   §  13. This act shall take effect on the three hundred sixty-fifth day
 after it shall have become a law. Effective immediately,  the  addition,
 amendment  and/or  repeal  of  any  rule or regulation necessary for the
 implementation of this act on its effective date are  authorized  to  be
 made and completed on or before such effective date.

co-Sponsors

View additional co-sponsors

2021-S8439A - Details

Current Committee:: Senate Rules
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L
Versions Introduced in 2023-2024 Legislative Session:: S995

2021-S8439A - Summary

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

2021-S8439A - Sponsor Memo

                                 
BILL NUMBER: S8439A

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the limited liability company law, in relation to the
disclosure of beneficial owners of limited liability companies

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to modernize disclosure laws for limited liability compa-
nies by defining beneficial ownership and requiring the disclosure of
beneficial owners.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one is the short title.

Section two amends the LLC law to define beneficial ownership, exclude
certain individuals from qualifying as beneficial owners, and capture
indirect forms of beneficial ownership, including through trusts and
intermediaries.

Section three amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize an LLC in New York State.

Section four amends the LLC law to require an amendment to the documents
necessary to organize an LLC in New York State if there is a change to
the beneficial owners of the LLC.

Section five amends the LLC law to create a new section requiring the
disclosure of beneficial ownership and permits the LLC to file a copy of
the same form they file with the federal government.

Section six amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize a foreign LLC in New York State.

Section seven amends the LLC law, pertaining to foreign LLCS, to require
an amendment to the documents necessary to organize a foreign LLC in New
York State if there is a change to the beneficial owners of the foreign
LLC.

Section eight amends the LLC law, pertaining to foreign LLCS, to create
a new section requiring the disclosure of beneficial ownership and
permits the foreign LLC to file a copy of the same form they file with
the federal government.

Section nine is the effective date.

 
JUSTIFICATION:

Anonymous shell companies have been exploited as vehicles for money
laundering, tax evasion, organized crime, terrorist financing, and other
forms of corruption for decades. In the United States, the most common
form of a shell corporation is the limited liability company ("LLC"). To
form an LLC, a person needs less personal information than is required
to obtain a library card. The true owners of LLCs can be concealed even
further through trusts and nesting layers of corporate intermediaries,
facilitating money laundering, crime, and tax avoidance as assets become
washed through anonymous legal entities. Billions of dollars from the
illicit gains of international kleptocrats have been washed through LLCs
in the United States, becoming nearly impossible to trace without
tremendous effort. These phenomena have been thoroughly documented by
leaks and investigations such as the Panama Papers in 2016 and Pandora
Papers in 2021.

Anonymous LLCs have also been vehicles for narcotics and human traffick-
ers to launder their illicit profits and escape accountability. The
sociologist Adam Travis has documented an "LLC effect" in housing
markets, which is a statistically significant correlation between code
violations and the prevalence of LLC landlords caused by the combination
of anonymity and limited liability protections. This effect was demon-
strated by a 2019 Senate investigation into housing code violations in
the Hudson Valley.  Anonymous LLCs have also continued to facilitate
campaign finance violations despite recent legislation prohibiting this
practice.

Beneficial ownership transparency, which includes disclosure and public
reporting, is the internationally-recognized gold standard for combating
these forms of crime and corruption. This bill would make New York a
national leader in terms of addressing the public policy problems
created by anonymous shell corporations. This legislation would be a
significant deterrent to corruption, fraud, and organized crime. It
would ease the investigative burden on law enforcement authorities pros-
ecuting financial crimes and the regulatory burden imposed on businesses
required to report the beneficial owners of their customers pursuant to
federal law, such as title agencies and financial institutions. Tenants
would be able to know who their landlord is, researchers and policy-mak-
ers would be better able to understand business and investment patterns
otherwise made opaque by LLCs, and the government would be able to veri-
fy the beneficial owners of LLCs involved in procurement processes.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This bill is effective 365 days after becoming law, provided however
that the repeal, amendment, or enactment of any rule or regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive date is authorized to be made or completed before its effective
date.

2021-S8439A - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8439--A
 
                             I N  S E N A T E
 
                               March 1, 2022
                                ___________
 
 Introduced by Sens. HOYLMAN, BIAGGI, BRISPORT, KRUEGER, MYRIE, RIVERA --
   read  twice  and  ordered printed, and when printed to be committed to
   the Committee on Corporations, Authorities and Commissions --  commit-
   tee  discharged, bill amended, ordered reprinted as amended and recom-
   mitted to said committee
 
 AN ACT to amend the limited liability company law, in  relation  to  the
   disclosure of beneficial owners of limited liability companies
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "LLC transparency act".
   §  2.  Section  102 of the limited liability company law is amended by
 adding a new subdivision (ii) to read as follows:
   (II) (1) "BENEFICIAL OWNER" MEANS A NATURAL PERSON  WHO,  DIRECTLY  OR
 INDIRECTLY,  (A)  HOLDS  A  MEMBERSHIP  INTEREST  IN A LIMITED LIABILITY
 COMPANY; (B) EXERCISES SUBSTANTIAL  CONTROL  OVER  THE  DECISIONS  OF  A
 MEMBERSHIP  INTEREST  IN  A  LIMITED  LIABILITY COMPANY; OR (C) HAS BEEN
 ASSIGNED A MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY. THE IDEN-
 TIFICATION OF BENEFICIAL OWNERS SHALL NOT BE DEEMED AN UNWARRANTED INVA-
 SION OF PERSONAL PRIVACY PURSUANT TO ARTICLE SIX OF THE PUBLIC  OFFICERS
 LAW.  FOR  THE  PURPOSES  OF  THIS SUBDIVISION AND FOR ANY REFERENCES TO
 BENEFICIAL OWNERS OF ANY LIMITED LIABILITY COMPANY,  THE  TERM  "LIMITED
 LIABILITY  COMPANY"  SHALL  INCLUDE,  WHERE  APPLICABLE, FOREIGN LIMITED
 LIABILITY COMPANIES AND AUTHORIZED FOREIGN LIMITED LIABILITY COMPANIES.
   (2) THE TERM "BENEFICIAL OWNER" SHALL NOT INCLUDE: (A) A MINOR  CHILD;
 (B)  A  PERSON ACTING AS A NOMINEE, INTERMEDIARY, CUSTODIAN, OR AGENT ON
 BEHALF OF ANOTHER PERSON; (C) A PERSON ACTING SOLELY AS AN EMPLOYEE OF A
 LIMITED LIABILITY COMPANY AND WHOSE CONTROL OVER  OR  ECONOMIC  BENEFITS
 FROM  THE  LIMITED  LIABILITY COMPANY DERIVES SOLELY FROM THE EMPLOYMENT
 STATUS OF THE PERSON; (D) A PERSON WHOSE  ONLY  INTEREST  IN  A  LIMITED
 LIABILITY  COMPANY  IS THROUGH A RIGHT OF INHERITANCE, UNLESS THE PERSON
 ALSO MEETS THE REQUIREMENTS OF PARAGRAPH ONE OF THIS SUBDIVISION; (E)  A
 CREDITOR  OF A LIMITED LIABILITY COMPANY, UNLESS THE CREDITOR ALSO MEETS
 THE REQUIREMENTS OF PARAGRAPH  ONE  OF  THIS  SUBDIVISION;  OR  (F)  ANY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD13266-15-2
 S. 8439--A                          2

 NATURAL  PERSON WHOSE MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY
 DERIVES SOLELY FROM HIS OR HER  EMPLOYMENT  BY  SUCH  LIMITED  LIABILITY
 COMPANY  AND SUCH LIMITED LIABILITY COMPANY'S ORGANIZATION AS AN EMPLOY-
 EE-OWNED  BUSINESS  OR  WORKER COOPERATIVE, AS EVIDENCED BY SUCH LIMITED
 LIABILITY COMPANY'S BY-LAWS OR ARTICLES OF ORGANIZATION.
   (3) IF A BENEFICIAL OWNER OF A LIMITED  LIABILITY  COMPANY  INDIRECTLY
 MEETS THE REQUIREMENTS OF SUBPARAGRAPH (A), (B), OR (C) OF PARAGRAPH ONE
 OF  THIS SUBDIVISION, AND SUCH COMPANY IS REQUIRED TO DISCLOSE ITS BENE-
 FICIAL OWNERS, SUCH BENEFICIAL OWNER SHALL IDENTIFY EACH AND EVERY ENTI-
 TY OR PERSON LINKING SUCH BENEFICIAL  OWNER  TO  THE  LIMITED  LIABILITY
 COMPANY,  INCLUDING  BY  IDENTIFYING  EVERY  INTERMEDIARY  BY  NAME  AND
 EXPLAINING THE NATURE OF THE LEGAL OR ECONOMIC RELATIONSHIP OF THE BENE-
 FICIAL OWNER TO EACH SUCH INTERMEDIARY AND HOW EACH SUCH INTERMEDIARY IS
 LINKED TO EVERY OTHER INTERMEDIARY AND TO THE LIMITED LIABILITY COMPANY.
 THE BENEFICIAL OWNER MAY BE PERMITTED OR REQUIRED TO PROVIDE  A  DIAGRAM
 TO MEET THIS DISCLOSURE REQUIREMENT. IF INDIRECT BENEFICIAL OWNERSHIP IS
 EXERCISED THROUGH A PUBLICLY TRADED ENTITY, A REIT, A UPREIT, OR A MUTU-
 AL  FUND, THE REQUIREMENTS OF THIS PARAGRAPH SHALL ONLY APPLY TO BENEFI-
 CIAL OWNERS HOLDING OR CONTROLLING TWENTY-FIVE PERCENT OR  MORE  OF  THE
 EQUITY  IN  SUCH LIMITED LIABILITY COMPANY. THIS SUBDIVISION SHALL APPLY
 UNTIL FULL DISCLOSURE OF BENEFICIAL  OWNERSHIP  BY  NATURAL  PERSONS  IS
 ACHIEVED.
   (4)  IF  INDIRECT BENEFICIAL OWNERSHIP IS EXERCISED THROUGH A TRUST OR
 SIMILAR ARRANGEMENT WHICH HOLDS OR  CONTROLS,  DIRECTLY  OR  INDIRECTLY,
 TWENTY-FIVE  PERCENT  OR  MORE  OF  THE  EQUITY IN THE LIMITED LIABILITY
 COMPANY OR EXERCISES SUBSTANTIAL CONTROL OVER SUCH COMPANY, THE  LIMITED
 LIABILITY  COMPANY  SHALL  IDENTIFY  AS  A BENEFICIAL OWNER EACH NATURAL
 PERSON SERVING AS: (A) A TRUSTEE OF THE TRUST, A TRUST PROTECTOR, OR ANY
 OTHER INDIVIDUAL WITH AUTHORITY, DIRECTLY OR INDIRECTLY, TO  DISPOSE  OF
 TRUST  INCOME,  ASSETS,  OR  PRINCIPAL; (B) A TRUST BENEFICIARY WITH THE
 RIGHT, DIRECTLY OR INDIRECTLY, TO RECEIVE, DEMAND, OR WITHDRAW ANY TRUST
 INCOME, ASSETS, OR PRINCIPAL; AND (C) A  GRANTOR  OR  SETTLOR  WITH  THE
 RIGHT,  DIRECTLY  OR  INDIRECTLY,  TO  REVOKE  THE  TRUST OR TO RECEIVE,
 DEMAND, OR WITHDRAW TRUST INCOME, ASSETS OR PRINCIPAL.
   § 3. Paragraphs 6 and 7 of subdivision  (e)  of  section  203  of  the
 limited  liability  company  law, as added by chapter 470 of the laws of
 1997, are amended to read as follows:
   (6) if all or specified members are to be liable in their capacity  as
 members  for  all  or specified debts, obligations or liabilities of the
 limited liability company as authorized pursuant to section six  hundred
 nine  of  this chapter, a statement that all or specified members are so
 liable for such debts, obligations or liabilities in their  capacity  as
 members  of  the  limited  liability  company  as authorized pursuant to
 section six hundred nine of this chapter; [and]
   (7) A DOCUMENT  IDENTIFYING  THE  BENEFICIAL  OWNERS  OF  THE  LIMITED
 LIABILITY  COMPANY  IN  ACCORDANCE  WITH  SUBDIVISION (A) OF SECTION TWO
 HUNDRED FIFTEEN OF THIS ARTICLE; AND
   (8) any other provisions, not inconsistent with law, that the  members
 elect to include in the articles [or] OF organization for the regulation
 of the internal affairs of the limited liability company, including, but
 not limited to, (A) the business purpose for which the limited liability
 company  is  formed, (B) a statement of whether there are limitations on
 the authority of members or managers or a class or  classes  thereof  to
 bind  the  limited  liability  company  and  (C) any provisions that are
 required or permitted to be included in the operating agreement  of  the
 S. 8439--A                          3
 
 limited  liability company pursuant to section four hundred seventeen of
 this chapter.
   §  4.  Paragraphs 8, 9 and 10 of subdivision (d) of section 211 of the
 limited liability company law, paragraph 10 as added by  section  18  of
 part  KK  of chapter 56 of the laws of 2021, are amended and a new para-
 graph 11 is added to read as follows:
   (8) the discovery of a materially false or inaccurate statement in the
 articles of organization; [and]
   (9) the decision to change any other  statement  in  the  articles  of
 organization[.];
   (10)  to  specify,  change  or  delete  the email address to which the
 secretary of state shall email a notice of the fact that process against
 the limited liability company has been electronically served upon him or
 her[.]; AND
   (11) A CHANGE IN THE  BENEFICIAL  OWNERS  OF  SUCH  LIMITED  LIABILITY
 COMPANY  OR  THE  INFORMATION  REQUIRED  TO BE PROVIDED RELATING TO EACH
 BENEFICIAL OWNER PURSUANT TO SECTION TWO HUNDRED THREE OF THIS ARTICLE.
   § 5. The limited liability company law is  amended  by  adding  a  new
 section 215 to read as follows:
   §  215.  BENEFICIAL  OWNERSHIP  DISCLOSURE.    (A) A LIMITED LIABILITY
 COMPANY, WHEN DISCLOSING ITS  BENEFICIAL  OWNERS,  SHALL  IDENTIFY  EACH
 BENEFICIAL  OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT  RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S  LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER  STATE
 OR,  IF  NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF A NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING  INFORMATION  FOR THE BENEFICIAL OWNER; (5) A FEDERAL  OR  STATE
 TAXPAYER  IDENTIFICATION  NUMBER  OR, IF NONE, A LEGAL ENTITY IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B) A LIMITED LIABILITY COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS
 TO THE DEPARTMENT OF STATE OR DEPARTMENT OF TAXATION  AND  FINANCE,  MAY
 SUBMIT  A  COPY  OF  THE  BENEFICIAL  OWNERSHIP INFORMATION SUCH COMPANY
 SUBMITTED TO THE FEDERAL GOVERNMENT PURSUANT TO 31 U.S.C.  SECTION  5336
 IN  ORDER  TO  SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED THAT SUCH
 FEDERAL REGISTRATION IS CURRENT AND CONTAINS ALL INFORMATION REQUIRED BY
 STATE LAW.
   § 6. Paragraphs 7 and 8 of subdivision  (a)  of  section  802  of  the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7)  a  statement  that  the  foreign  limited liability company is in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of its formation where a copy of its articles of organization  is  filed
 or,  if  no public filing of its articles of organization is required by
 the law of the jurisdiction of formation, a statement that  the  foreign
 limited liability company shall provide, on request, a copy thereof with
 all  amendments  thereto (if such documents are in a foreign language, a
 translation in English thereof under oath of  the  translator  shall  be
 attached  thereto),  and  the name and post office address of the person
 responsible for providing such copies[.]; AND
   (9) A DOCUMENT IDENTIFYING THE BENEFICIAL OWNERS OF THE FOREIGN LIMIT-
 ED LIABILITY COMPANY IN ACCORDANCE WITH SUBDIVISION (A) OF SECTION EIGHT
 HUNDRED TEN OF THIS ARTICLE.
 S. 8439--A                          4
 
   § 7. Section 804 of the limited liability company law  is  amended  by
 adding a new subdivision (c) to read as follows:
   (C) EVERY FOREIGN LIMITED LIABILITY COMPANY THAT HAS RECEIVED A FILING
 RECEIPT  ENTITLED  "CERTIFICATE  OF  AUTHORITY  OF .... (NAME OF FOREIGN
 LIMITED LIABILITY COMPANY) UNDER  SECTION  EIGHT  HUNDRED  FIVE  OF  THE
 LIMITED  LIABILITY COMPANY LAW," EVIDENCING AUTHORITY AS PROVIDED HEREIN
 SHALL  AMEND  ITS APPLICATION FOR AUTHORITY UPON A CHANGE IN  BENEFICIAL
 OWNERSHIP  OR  THE  INFORMATION REQUIRED TO BE PROVIDED RELATING TO EACH
 BENEFICIAL OWNER PURSUANT TO SECTION   EIGHT   HUNDRED   TWO   OF   THIS
 ARTICLE WITHIN NINETY DAYS OF SUCH CHANGE.
   §  8.  The  limited  liability  company law is amended by adding a new
 section 810 to read as follows:
   § 810. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) A FOREIGN LIMITED LIABIL-
 ITY COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS, SHALL IDENTIFY  EACH
 BENEFICIAL  OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT  RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S  LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER  STATE
 OR,  IF  NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF A NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING  INFORMATION  FOR THE BENEFICIAL OWNER; (5) A FEDERAL  OR  STATE
 TAXPAYER  IDENTIFICATION  NUMBER  OR, IF NONE, A LEGAL ENTITY IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B) A FOREIGN LIMITED LIABILITY COMPANY, WHEN DISCLOSING  ITS  BENEFI-
 CIAL  OWNERS  TO  THE  DEPARTMENT OF STATE OR DEPARTMENT OF TAXATION AND
 FINANCE, MAY SUBMIT A COPY OF THE BENEFICIAL OWNERSHIP INFORMATION  SUCH
 COMPANY  SUBMITTED  TO  THE  FEDERAL  GOVERNMENT  PURSUANT  TO 31 U.S.C.
 SECTION 5336 IN ORDER TO SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED
 THAT SUCH FEDERAL REGISTRATION IS CURRENT AND CONTAINS  ALL  INFORMATION
 REQUIRED BY STATE LAW.
   §  9.  This act shall take effect on the three hundred sixty-fifth day
 after it shall have become a law; provided  further,  however,  that  if
 part KK of chapter 56 of the laws of 2021 shall not have taken effect on
 or  before  such date then section four of this act shall take effect on
 the same date and in the same manner as such part of such chapter of the
 laws of 2021 takes effect. Effective immediately, the  addition,  amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation  of  this act on its effective date are authorized to be made and
 completed on or before such effective date.

co-Sponsors

View additional co-sponsors

2021-S8439B (ACTIVE) - Details

Current Committee:: Senate Rules
Law Section:: Limited Liability Company Law
Laws Affected:: Amd §§102, 203, 211, 802 & 804, add §§215 & 810, Lim Lil L
Versions Introduced in 2023-2024 Legislative Session:: S995

2021-S8439B (ACTIVE) - Summary

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

2021-S8439B (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S8439B

SPONSOR: HOYLMAN
 
TITLE OF BILL:

An act to amend the limited liability company law, in relation to the
disclosure of beneficial owners of limited liability companies

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill aims to modernize disclosure laws for limited liability compa-
nies by defining beneficial ownership and requiring the disclosure of
beneficial owners.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one is the short title.

Section two amends the LLC law to define beneficial ownership, exclude
certain individuals from qualifying as beneficial owners, and capture
indirect forms of beneficial ownership, including through trusts and
intermediaries.

Section three amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize an LLC in New York State.

Section four amends the LLC law to require an amendment to the documents
necessary to organize an LLC in New York State if there is a change to
the beneficial owners of the LLC.

Section five amends the LLC law to create a new section requiring the
disclosure of beneficial ownership and permits the LLC to file a copy of
the same form they file with the federal government.

Section six amends the LLC law to require that a document identifying
the beneficial owners of an LLC be included with the documents necessary
to organize a foreign LLC in New York State.

Section seven amends the LLC law, pertaining to foreign LLCS, to require
an amendment to the documents necessary to organize a foreign LLC in New
York State if there is a change to the beneficial owners of the foreign
LLC.

Section eight amends the LLC law, pertaining to foreign LLCS, to create
a new section requiring the disclosure of beneficial ownership and
permits the foreign LLC to file a copy of the same form they file with
the federal government.

Section nine is the effective date.

 
JUSTIFICATION:

Anonymous shell companies have been exploited as vehicles for money
laundering, tax evasion, organized crime, terrorist financing, and other
forms of corruption for decades. In the United States, the most common
form of a shell corporation is the limited liability company ("LLC"). To
form an LLC, a person needs less personal information than is required
to obtain a library card. The true owners of LLCs can be concealed even
further through trusts and nesting layers of corporate intermediaries,
facilitating money laundering, crime, and tax avoidance as assets become
washed through anonymous legal entities. Billions of dollars from the
illicit gains of international kleptocrats have been washed through LLCs
in the United States, becoming nearly impossible to trace without
tremendous effort. These phenomena have been thoroughly documented by
leaks and investigations such as the Panama Papers in 2016 and Pandora
Papers in 2021.

Anonymous LLCs have also been vehicles for narcotics and human traffick-
ers to launder their illicit profits and escape accountability. The
sociologist Adam Travis has documented an "LLC effect" in housing
markets, which is a statistically significant correlation between code
violations and the prevalence of LLC landlords caused by the combination
of anonymity and limited liability protections. This effect was demon-
strated by a 2019 Senate investigation into housing code violations in
the Hudson Valley.  Anonymous LLCs have also continued to facilitate
campaign finance violations despite recent legislation prohibiting this
practice.

Beneficial ownership transparency, which includes disclosure and public
reporting, is the internationally-recognized gold standard for combating
these forms of crime and corruption. This bill would make New York a
national leader in terms of addressing the public policy problems
created by anonymous shell corporations. This legislation would be a
significant deterrent to corruption, fraud, and organized crime. It
would ease the investigative burden on law enforcement authorities pros-
ecuting financial crimes and the regulatory burden imposed on businesses
required to report the beneficial owners of their customers pursuant to
federal law, such as title agencies and financial institutions. Tenants
would be able to know who their landlord is, researchers and policy-mak-
ers would be better able to understand business and investment patterns
otherwise made opaque by LLCs, and the government would be able to veri-
fy the beneficial owners of LLCs involved in procurement processes.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This bill is effective 365 days after becoming law, provided however
that the repeal, amendment, or enactment of any rule or regulation
necessary to effectuate the meaning or purpose of this law on its effec-
tive date is authorized to be made or completed before its effective
date.

2021-S8439B (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8439--B
     Cal. No. 1192
 
                             I N  S E N A T E
 
                               March 1, 2022
                                ___________
 
 Introduced  by  Sens. HOYLMAN, BIAGGI, BRISPORT, CLEARE, KRUEGER, MYRIE,
   RIVERA, SALAZAR -- read twice and ordered printed, and when printed to
   be committed to the Committee on Corporations, Authorities and Commis-
   sions -- committee discharged,  bill  amended,  ordered  reprinted  as
   amended  and  recommitted to said committee -- reported favorably from
   said committee, ordered to first and second report, ordered to a third
   reading, amended and ordered reprinted, retaining  its  place  in  the
   order of third reading
 
 AN  ACT  to  amend the limited liability company law, in relation to the
   disclosure of beneficial owners of limited liability companies
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "LLC transparency act".
   § 2. Section 102 of the limited liability company law  is  amended  by
 adding a new subdivision (ii) to read as follows:
   (II)  (1)  "BENEFICIAL  OWNER" MEANS A NATURAL PERSON WHO, DIRECTLY OR
 INDIRECTLY, (A) HOLDS A  MEMBERSHIP  INTEREST  IN  A  LIMITED  LIABILITY
 COMPANY;  (B)  EXERCISES  SUBSTANTIAL  CONTROL  OVER  THE DECISIONS OF A
 MEMBERSHIP INTEREST IN A LIMITED LIABILITY  COMPANY;  OR  (C)  HAS  BEEN
 ASSIGNED  A MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY.  FOR THE
 PURPOSES OF THIS SUBDIVISION AND FOR ANY REFERENCES TO BENEFICIAL OWNERS
 OF ANY LIMITED LIABILITY COMPANY, THE TERM "LIMITED  LIABILITY  COMPANY"
 SHALL INCLUDE, WHERE APPLICABLE, FOREIGN LIMITED LIABILITY COMPANIES AND
 AUTHORIZED FOREIGN LIMITED LIABILITY COMPANIES.
   (2)  THE TERM "BENEFICIAL OWNER" SHALL NOT INCLUDE: (A) A MINOR CHILD;
 (B) A PERSON ACTING AS A NOMINEE, INTERMEDIARY, CUSTODIAN, OR  AGENT  ON
 BEHALF OF ANOTHER PERSON; (C) A PERSON ACTING SOLELY AS AN EMPLOYEE OF A
 LIMITED  LIABILITY  COMPANY  AND WHOSE CONTROL OVER OR ECONOMIC BENEFITS
 FROM THE LIMITED LIABILITY COMPANY DERIVES SOLELY  FROM  THE  EMPLOYMENT
 STATUS  OF  THE  PERSON;  (D)  A PERSON WHOSE ONLY INTEREST IN A LIMITED
 LIABILITY COMPANY IS THROUGH A RIGHT OF INHERITANCE, UNLESS  THE  PERSON
 ALSO  MEETS THE REQUIREMENTS OF PARAGRAPH ONE OF THIS SUBDIVISION; (E) A
 CREDITOR OF A LIMITED LIABILITY COMPANY, UNLESS THE CREDITOR ALSO  MEETS
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                       [ ] is old law to be omitted.
                                                            LBD13266-16-2
 S. 8439--B                          2

 THE  REQUIREMENTS  OF  PARAGRAPH  ONE  OF  THIS  SUBDIVISION; OR (F) ANY
 NATURAL PERSON WHOSE MEMBERSHIP INTEREST IN A LIMITED LIABILITY  COMPANY
 DERIVES  SOLELY  FROM  HIS  OR  HER EMPLOYMENT BY SUCH LIMITED LIABILITY
 COMPANY  AND SUCH LIMITED LIABILITY COMPANY'S ORGANIZATION AS AN EMPLOY-
 EE-OWNED BUSINESS OR WORKER COOPERATIVE, AS EVIDENCED  BY  SUCH  LIMITED
 LIABILITY COMPANY'S BY-LAWS OR ARTICLES OF ORGANIZATION.
   (3)  IF  A  BENEFICIAL OWNER OF A LIMITED LIABILITY COMPANY INDIRECTLY
 MEETS THE REQUIREMENTS OF SUBPARAGRAPH (A), (B), OR (C) OF PARAGRAPH ONE
 OF THIS SUBDIVISION, AND SUCH COMPANY IS REQUIRED TO DISCLOSE ITS  BENE-
 FICIAL  OWNERS  TO THE DEPARTMENT OF STATE OR DEPARTMENT OF TAXATION AND
 FINANCE, SUCH BENEFICIAL OWNER SHALL IDENTIFY EACH AND EVERY  ENTITY  OR
 PERSON  LINKING  SUCH BENEFICIAL OWNER TO THE LIMITED LIABILITY COMPANY,
 INCLUDING BY IDENTIFYING EVERY INTERMEDIARY BY NAME AND  EXPLAINING  THE
 NATURE  OF THE LEGAL OR ECONOMIC RELATIONSHIP OF THE BENEFICIAL OWNER TO
 EACH SUCH INTERMEDIARY AND HOW EACH SUCH INTERMEDIARY IS LINKED TO EVERY
 OTHER INTERMEDIARY AND TO THE LIMITED LIABILITY COMPANY. THE  BENEFICIAL
 OWNER  MAY  BE  PERMITTED  OR REQUIRED TO PROVIDE A DIAGRAM TO MEET THIS
 DISCLOSURE REQUIREMENT. IF INDIRECT BENEFICIAL  OWNERSHIP  IS  EXERCISED
 THROUGH  A  PUBLICLY  TRADED ENTITY, A REIT, A UPREIT, OR A MUTUAL FUND,
 THE REQUIREMENTS OF THIS PARAGRAPH SHALL ONLY APPLY TO BENEFICIAL OWNERS
 HOLDING OR CONTROLLING TWENTY-FIVE PERCENT OR MORE OF THE EQUITY IN SUCH
 LIMITED LIABILITY COMPANY.  THIS  SUBDIVISION  SHALL  APPLY  UNTIL  FULL
 DISCLOSURE OF BENEFICIAL OWNERSHIP BY NATURAL PERSONS IS ACHIEVED.
   (4)  IF  INDIRECT BENEFICIAL OWNERSHIP IS EXERCISED THROUGH A TRUST OR
 SIMILAR ARRANGEMENT WHICH HOLDS OR  CONTROLS,  DIRECTLY  OR  INDIRECTLY,
 TWENTY-FIVE  PERCENT  OR  MORE  OF  THE  EQUITY IN THE LIMITED LIABILITY
 COMPANY OR EXERCISES SUBSTANTIAL CONTROL OVER SUCH COMPANY, THE  LIMITED
 LIABILITY  COMPANY  SHALL  IDENTIFY  AS  A BENEFICIAL OWNER EACH NATURAL
 PERSON SERVING AS: (A) A TRUSTEE OF THE TRUST, A TRUST PROTECTOR, OR ANY
 OTHER INDIVIDUAL WITH AUTHORITY, DIRECTLY OR INDIRECTLY, TO  DISPOSE  OF
 TRUST  INCOME,  ASSETS,  OR  PRINCIPAL; (B) A TRUST BENEFICIARY WITH THE
 RIGHT, DIRECTLY OR INDIRECTLY, TO RECEIVE, DEMAND, OR WITHDRAW ANY TRUST
 INCOME, ASSETS, OR PRINCIPAL; AND (C) A  GRANTOR  OR  SETTLOR  WITH  THE
 RIGHT,  DIRECTLY  OR  INDIRECTLY,  TO  REVOKE  THE  TRUST OR TO RECEIVE,
 DEMAND, OR WITHDRAW TRUST INCOME, ASSETS OR PRINCIPAL.
   § 3. Paragraphs 6 and 7 of subdivision  (e)  of  section  203  of  the
 limited  liability  company  law, as added by chapter 470 of the laws of
 1997, are amended to read as follows:
   (6) if all or specified members are to be liable in their capacity  as
 members  for  all  or specified debts, obligations or liabilities of the
 limited liability company as authorized pursuant to section six  hundred
 nine  of  this chapter, a statement that all or specified members are so
 liable for such debts, obligations or liabilities in their  capacity  as
 members  of  the  limited  liability  company  as authorized pursuant to
 section six hundred nine of this chapter; [and]
   (7) A DOCUMENT  IDENTIFYING  THE  BENEFICIAL  OWNERS  OF  THE  LIMITED
 LIABILITY  COMPANY  IN  ACCORDANCE  WITH  SUBDIVISION (A) OF SECTION TWO
 HUNDRED FIFTEEN OF THIS ARTICLE; AND
   (8) any other provisions, not inconsistent with law, that the  members
 elect to include in the articles [or] OF organization for the regulation
 of the internal affairs of the limited liability company, including, but
 not limited to, (A) the business purpose for which the limited liability
 company  is  formed, (B) a statement of whether there are limitations on
 the authority of members or managers or a class or  classes  thereof  to
 bind  the  limited  liability  company  and  (C) any provisions that are
 required or permitted to be included in the operating agreement  of  the
 S. 8439--B                          3
 
 limited  liability company pursuant to section four hundred seventeen of
 this chapter.
   §  4.  Paragraphs 8, 9 and 10 of subdivision (d) of section 211 of the
 limited liability company law, paragraph 10 as added by  section  18  of
 part  KK  of chapter 56 of the laws of 2021, are amended and a new para-
 graph 11 is added to read as follows:
   (8) the discovery of a materially false or inaccurate statement in the
 articles of organization; [and]
   (9) the decision to change any other  statement  in  the  articles  of
 organization[.];
   (10)  to  specify,  change  or  delete  the email address to which the
 secretary of state shall email a notice of the fact that process against
 the limited liability company has been electronically served upon him or
 her[.]; AND
   (11) A CHANGE IN THE  BENEFICIAL  OWNERS  OF  SUCH  LIMITED  LIABILITY
 COMPANY  OR  THE  INFORMATION  REQUIRED  TO BE PROVIDED RELATING TO EACH
 BENEFICIAL OWNER PURSUANT TO SECTION TWO HUNDRED THREE OF THIS ARTICLE.
   § 5. The limited liability company law is  amended  by  adding  a  new
 section 215 to read as follows:
   §  215.  BENEFICIAL  OWNERSHIP  DISCLOSURE.    (A) A LIMITED LIABILITY
 COMPANY, WHEN DISCLOSING ITS  BENEFICIAL  OWNERS,  SHALL  IDENTIFY  EACH
 BENEFICIAL  OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT  RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S  LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER  STATE
 OR,  IF  NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF A NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING  INFORMATION  FOR THE BENEFICIAL OWNER; (5) A FEDERAL  OR  STATE
 TAXPAYER  IDENTIFICATION  NUMBER  OR, IF NONE, A LEGAL ENTITY IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B) A LIMITED LIABILITY COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS
 TO THE DEPARTMENT OF STATE OR DEPARTMENT OF TAXATION  AND  FINANCE,  MAY
 SUBMIT  A  COPY  OF  THE  BENEFICIAL  OWNERSHIP INFORMATION SUCH COMPANY
 SUBMITTED TO THE FEDERAL GOVERNMENT PURSUANT TO 31 U.S.C.  SECTION  5336
 IN  ORDER  TO  SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED THAT SUCH
 FEDERAL REGISTRATION IS CURRENT AND CONTAINS ALL INFORMATION REQUIRED BY
 STATE LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 AND  YEAR  OF  BIRTH OF A BENEFICIAL OWNER SHALL NOT BE DEEMED AN UNWAR-
 RANTED INVASION OF PERSONAL PRIVACY  PURSUANT  TO  ARTICLE  SIX  OF  THE
 PUBLIC  OFFICERS  LAW.  ALL OTHER PERSONAL OR IDENTIFYING INFORMATION OF
 SUCH BENEFICIAL OWNER  SHALL  BE  DEEMED  CONFIDENTIAL  EXCEPT  FOR  THE
 PURPOSES OF LAW ENFORCEMENT. IF CONFIDENTIAL INFORMATION ASSOCIATED WITH
 A  BENEFICIAL  OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS  SHALL BE
 ENCRYPTED.
   § 6. Paragraphs 7 and 8 of subdivision  (a)  of  section  802  of  the
 limited liability company law are amended and a new paragraph 9 is added
 to read as follows:
   (7)  a  statement  that  the  foreign  limited liability company is in
 existence in the jurisdiction of its formation at the time of the filing
 of such application; [and]
   (8) the name and address of the authorized officer in the jurisdiction
 of its formation where a copy of its articles of organization  is  filed
 or,  if  no public filing of its articles of organization is required by
 the law of the jurisdiction of formation, a statement that  the  foreign
 limited liability company shall provide, on request, a copy thereof with
 S. 8439--B                          4
 
 all  amendments  thereto (if such documents are in a foreign language, a
 translation in English thereof under oath of  the  translator  shall  be
 attached  thereto),  and  the name and post office address of the person
 responsible for providing such copies[.]; AND
   (9) A DOCUMENT IDENTIFYING THE BENEFICIAL OWNERS OF THE FOREIGN LIMIT-
 ED LIABILITY COMPANY IN ACCORDANCE WITH SUBDIVISION (A) OF SECTION EIGHT
 HUNDRED TEN OF THIS ARTICLE.
   §  7.  Section  804 of the limited liability company law is amended by
 adding a new subdivision (c) to read as follows:
   (C) EVERY FOREIGN LIMITED LIABILITY COMPANY THAT HAS RECEIVED A FILING
 RECEIPT  ENTITLED  "CERTIFICATE  OF  AUTHORITY  OF .... (NAME OF FOREIGN
 LIMITED LIABILITY COMPANY) UNDER  SECTION  EIGHT  HUNDRED  FIVE  OF  THE
 LIMITED LIABILITY COMPANY LAW," EVIDENCING AUTHORITY AS PROVIDED  HEREIN
 SHALL   AMEND  ITS APPLICATION FOR AUTHORITY UPON A CHANGE IN BENEFICIAL
 OWNERSHIP OR THE INFORMATION REQUIRED TO BE PROVIDED  RELATING  TO  EACH
 BENEFICIAL  OWNER  PURSUANT TO SECTION   EIGHT   HUNDRED   TWO  OF  THIS
 ARTICLE WITHIN NINETY DAYS OF SUCH CHANGE.
   § 8. The limited liability company law is  amended  by  adding  a  new
 section 810 to read as follows:
   § 810. BENEFICIAL OWNERSHIP DISCLOSURE.  (A) A FOREIGN LIMITED LIABIL-
 ITY  COMPANY, WHEN DISCLOSING ITS BENEFICIAL OWNERS, SHALL IDENTIFY EACH
 BENEFICIAL OWNER BY: (1) NAME; (2) DATE OF BIRTH; (3) CURRENT   RESIDEN-
 TIAL  OR BUSINESS STREET ADDRESS; (4) A UNIQUE IDENTIFYING NUMBER FROM A
 NON-EXPIRED PASSPORT ISSUED BY THE UNITED STATES OR A NON-EXPIRED  DRIV-
 ER'S   LICENSE  OR  IDENTIFICATION  CARD ISSUED BY THIS OR ANOTHER STATE
 OR, IF NONE, A LEGIBLE AND CREDIBLE COPY OF THE PAGES OF  A  NON-EXPIRED
 FOREIGN PASSPORT BEARING A PHOTOGRAPH, DATE OF BIRTH,  AND  UNIQUE IDEN-
 TIFYING   INFORMATION   FOR THE BENEFICIAL OWNER; (5) A FEDERAL OR STATE
 TAXPAYER IDENTIFICATION NUMBER OR, IF NONE, A  LEGAL  ENTITY  IDENTIFIER
 ISSUED BY THE GLOBAL LEGAL ENTITY IDENTIFIER FOUNDATION.
   (B)  A  FOREIGN LIMITED LIABILITY COMPANY, WHEN DISCLOSING ITS BENEFI-
 CIAL OWNERS TO THE DEPARTMENT OF STATE OR  DEPARTMENT  OF  TAXATION  AND
 FINANCE,  MAY SUBMIT A COPY OF THE BENEFICIAL OWNERSHIP INFORMATION SUCH
 COMPANY SUBMITTED TO  THE  FEDERAL  GOVERNMENT  PURSUANT  TO  31  U.S.C.
 SECTION 5336 IN ORDER TO SATISFY STATE DISCLOSURE REQUIREMENTS, PROVIDED
 THAT  SUCH  FEDERAL REGISTRATION IS CURRENT AND CONTAINS ALL INFORMATION
 REQUIRED BY STATE LAW.
   (C) THE IDENTIFICATION AND DISCLOSURE OF THE NAME,  BUSINESS  ADDRESS,
 AND  YEAR  OF  BIRTH OF A BENEFICIAL OWNER SHALL NOT BE DEEMED AN UNWAR-
 RANTED INVASION OF PERSONAL PRIVACY  PURSUANT  TO  ARTICLE  SIX  OF  THE
 PUBLIC  OFFICERS  LAW.  ALL OTHER PERSONAL OR IDENTIFYING INFORMATION OF
 SUCH BENEFICIAL OWNER  SHALL  BE  DEEMED  CONFIDENTIAL  EXCEPT  FOR  THE
 PURPOSES OF LAW ENFORCEMENT. IF CONFIDENTIAL INFORMATION ASSOCIATED WITH
 A  BENEFICIAL  OWNER  IS  HELD  ELECTRONICALLY,  SUCH  RECORDS  SHALL BE
 ENCRYPTED.
   § 9. This act shall take effect on the three hundred  sixty-fifth  day
 after  it  shall  have  become a law; provided further, however, that if
 part KK of chapter 56 of the laws of 2021 shall not have taken effect on
 or before such date then section four of this act shall take  effect  on
 the same date and in the same manner as such part of such chapter of the
 laws  of  2021 takes effect. Effective immediately, the addition, amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation of this act on its effective date are authorized to be  made  and
 completed on or before such effective date.

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Senate Bill S8439A

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2021-S8439 - Details

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2021-S8439 - Bill Text download pdf

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2021-S8439A - Details

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2021-S8439B (ACTIVE) - Details

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2021-S8439B (ACTIVE) - Bill Text download pdf

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