smiling-businessman-on-city-street-leaning-on-handrail
ComplianceJanuary 24, 2024

New York enacts LLC Transparency Act

On December 22, 2023, New York’s Governor Hochul signed Senate Bill 995B/Assembly Bill 3484A, effective December 21, 2024, enacting the New York LLC Transparency Act (NYLTA).  NYLTA amends New York’s LLC Law to require the disclosure of personal information about an LLC’s beneficial owners.  Below is a summary of NYLTA as currently enacted. 

Who has to file a beneficial ownership disclosure statement?

NYLTA requires LLCs formed in New York (domestic LLCs) and LLCs formed in other jurisdictions and authorized to do business in New York (foreign LLCs) that meet the definition of a reporting company to file a beneficial ownership disclosure statement with the Department of State and update the information upon any changes.  A reporting company is an LLC that is required to file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) pursuant to the federal Corporate Transparency Act (CTA) and reporting rule promulgated under the CTA – which means that all LLCs except those that qualify for one of the CTA’s 23 exemptions must file a beneficial ownership disclosure statement.  

What do exempt LLCs have to file?

An LLC that is exempt from filing a BOI report under the CTA, and therefore exempt under NYLTA, is required to file a statement with the Department of State, signed by a member or manager that indicates the provision or provisions of the CTA which qualifies it for an exemption. 

Who is a beneficial owner? 

NYLTA provides that the term “beneficial owner” has the same meaning as that provided to the term under the CTA and reporting rule – meaning that the beneficial owner of an LLC is any individual who, directly or indirectly, either exercises substantial control over the LLC or owns or controls at least 25% of its ownership interests.  

What information has to be reported to the Department of State?

Every LLC that is a reporting company must disclose the following information about its beneficial owners: 

  • full legal name
  • date of birth
  • current business street address 
  • unique identifying number from an acceptable document as specified in the CTA and reporting rule (current US passport, driver’s license, document issued by a state, local or tribal government to identify an individual, and if none of those are available, a current foreign passport)

NYLTA provides that a domestic LLC may submit to the Department of State a copy of the initial report filed with FinCEN as required by the CTA if the report contains all the information required to be disclosed under NYLTA. A foreign LLC must submit a copy of the initial report filed with FinCEN if the report contains all the information required by the NYLTA. 

Next Steps for Your Business
Is your company required to file a beneficial ownership report?

When does a beneficial ownership disclosure statement have to be filed? 

LLCs formed or applying for authority after the effective date of NYLTA file either the beneficial ownership disclosure information or the statement of exemption at the time of filing their articles of organization or application for authority.

LLCs formed or authorized to do business on or before the effective date of NYLTA must file their beneficial ownership disclosure information or the statement of exemption by January 1, 2025. 

An amendment must be filed upon a change in the reported information.

Penalties for failure to file  

An LLC that fails to file its beneficial ownership disclosure for a period exceeding 30 days will be shown as being past due on the Department of State’s records until an up-to-date beneficial ownership disclosure is filed. An LLC that fails to file its beneficial ownership disclosure for a period exceeding two years will be shown as delinquent on the Department of State’s records after a notice of delinquency has been mailed to the LLC and the LLC fails to file within 60 days of the mailing. The delinquency will be removed upon the filing of an up-to-date beneficial ownership disclosure and the payment of a civil penalty of $250. 

Who will have access to the personal identifying information of beneficial owners? 

The bill also amends the Executive Law to require the secretary of state to maintain a publicly available database on its website that will include Information about each domestic and foreign business entity, and in addition, will contain the full legal name of each beneficial owner of an LLC that is a reporting company. However, other personal or identifying information of the beneficial owners will be deemed confidential except for law enforcement or as required to be disclosed pursuant to a court order. The secretary of state is also directed to establish procedures to allow beneficial owners who cite significant privacy interests to apply for a waiver to withhold their name and/or business address from the database. 

How does NYLTA compare to the Corporate Transparency Act?

NYLTA resembles the Corporate Transparency Act (CTA) in some ways. For example, both require the disclosure of identifying information of the beneficial owners of LLCs, they have the same definition of the term beneficial owner and the same exemptions. However, there are some very significant differences, including the fact that the CTA applies not only to LLCs, but to corporations and certain other entities, the CTA does not require exempt entities to file anything to claim their exemption, the CTA requires the reporting of company applicants while NYLTA does not, the CTA requires an image of the identifying document while NYLTA does not, the names of beneficial owners of LLCs are not available to the public under the CTA while they are available to the public under NYLTA, and the CTA imposes criminal penalties for violations of the reporting rule while NYLTA does not.

What’s next?

Several issues need clarification, which may come through amendments to the current Act or Department of State regulations. In addition, legislation (Assembly Bill 8544/Senate Bill 8059) has already been introduced in the New York legislature that would repeal NYLTA and enact a different beneficial ownership reporting regime. CT Corporation will follow these developments and report on them where appropriate.

Senate Bill 995B/Assembly Bill 3484A, can be viewed here.

Sandra Feldman
Publications Attorney
Sandra (Sandy) Feldman has been with CT Corporation since 1985 and has been the Publications Attorney since 1988. Sandy stays on top of the most pressing and pertinent business entity law issues that impact CT customers of all sizes and segments.
Expert Insights
Don't miss out!
Ensure your business or your client’s business stays compliant and efficient with CT Corporation’s Beneficial Ownership Solution.
Back To Top