Business entities coming to understand the requirements of the Federal Corporate Transparency Act (“Federal CTA”) and its reporting obligations should be aware that New York State has enacted an LLC Transparency Act (“NY Act”). This is of particular importance to real estate companies which make frequent use of LLCs to hold real estate. The NY Act will require all limited liability companies formed or registered to do business in New York State (“NY LLCs”) to make a filing with the New York Department of State (“DOS”).

BACKGROUND:

The NY Act was prompted in part by an effort to promote transparency and hinder money laundering in Manhattan’s high-end residential real estate market. Governor Hochul initially signed the NY Act on December 22, 2023, subject to a ‘chapter amendment’ subsequently signed on March 1, 2024. The December iteration of the NY Act provided generally that entities’ beneficial owner information would be publicly accessible, with some minor exceptions. The principal reason for the March ‘chapter amendment’ was to amend this requirement, with the effect that reported beneficial owner information would be confidential and housed on a secure database, available only for certain stated reasons, including at the beneficial owner’s request or for law enforcement purposes.

TIMING:

The NY Act will become effective on January 1, 2026. All NY LLCs formed or registered to do business prior to January 1, 2026 will have one year to complete their DOS filings. NY LLCs formed on or after January 1, 2026 will have thirty (30) days from the date of formation or registration to complete their required DOS filings.

REQUIRED DISCLOSURE:

Every NY LLC will be required to file with DOS in some form, and to recertify such filings annually. The specific information contained in the DOS filing will depend on each NY LLC’s status as an exempt company, or a non-exempt company. The NY Act incorporates the list of twenty-three exempt entity types set forth in the Federal CTA, such that any NY LLC exempt under the Federal CTA is considered an exempt company under the NY Act.

i. Exempt Companies

Each exempt company must file an attestation, under penalty of perjury, stating the specific exemption claimed and “the facts on which such exemption is based.” This requirement differs from that of the Federal CTA, which does not require any filings from exempt companies.

ii. Non-Exempt Companies

NY LLCs that do not fall within one of the twenty-three exempt entity types must disclose the following information for each of their beneficial owners and applicants (as defined in the Federal CTA):

1. Full legal name,
2. Date of birth,
3. Current home or business street address, and
4. Unique identifying number from one of the following: (a) an unexpired passport, (b) an unexpired state driver’s license, or (c) an unexpired identification card or document issued by a state or local government agency or tribal authority for the purpose of identification of that individual.

SUMMARY AND CONSIDERATIONS:

Entities formed or registered to be business in the United States will greatly benefit from proactive planning in order to determine whether they qualify as an exempt company, and if so, which exemption(s) they fall within. NY LLC exempt companies will be required to substantiate their exemption by providing supporting facts, recertified annually. Business entities should monitor their exempt status to ensure that they continue to meet the requirements of the stated exemption(s) or otherwise be prepared to submit a filing disclosing their beneficial owner information at the Federal and New York state level.

Other states are considering imposing similar beneficial owner disclosure requirements. Although the NY Act narrowly avoided making the beneficial owner database public, other states may enact legislation that varies drastically from the Federal CTA and the NY Act, and filed beneficial owner information may not have the same protections.