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Important Updates to the New York LLC Transparency Act
Monday, April 15, 2024

The New York LLC Transparency Act (NYLTA) has recently been amended. The key take-aways are as follows:

  1. Effective Date has been pushed back a year to January 1, 2026.
  2. Reporting Companies formed or registered in New York prior to January 1, 2026 will have until January 1, 2027 to provide initial reporting information.
  3. Reporting Companies formed or registered in New York after January 1, 2026 will be required to provide initial information within 30 days after formed or registered in New York.

Set forth below in additional detail is an updated Client Alert on the NYLTA. 
 


New York Governor Kathy Hochul recently signed the New York LLC Transparency Act (NYLTA) into law. The act, which will become effective on January 1, 2026, shares many similarities with the Corporate Transparency ACT (CTA), which requires US entities to disclose the personal information of their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a division of the US Treasury Department.

The NYLTA is similar to the CTA but pertains exclusively to limited liability companies formed or authorized to do business in New York. The purpose of the NYLTA is to prevent the use of anonymous LLCs for illicit activities, including money laundering, fraud, tax evasion, and violations of real estate leasing, campaign finance, and government contracting laws.

What Is a Reporting Company?

The NYLTA incorporates the same definition of “Beneficial Owner” and “Reporting Company” as outlined in the CTA, but applies only to limited liability companies. The bill requires both existing and newly formed LLCs in New York - including foreign LLCs that register to do business in the state - to file a list of their Beneficial Owners with the New York Department of State (DOS).

The NYLTA adheres to the same list of 23 exemptions, including an exemption for “large operating companies” having (i) more than 20 full-time, US-based employees, (ii) a physical operating presence in the US, and (iii) more than $5 million in US-sourced gross receipts or sales. Other exemptions include investment advisers registered with, and venture capital fund advisers that report to, the SEC, charitable organizations, and companies such as banks and insurance companies that are regulated by other federal agencies.

Unlike the CTA, the NYLTA requires companies to submit a statement, signed by a Manager of the LLC, with the Department of State indicating the specific exemption(s) on which it relies.

Who Is a Beneficial Owner?

Beneficial Owners generally are (i) individuals that exercise “Substantial Control” OR (ii) individuals who directly or indirectly own or control 25% or more of the Reporting Company.

“Substantial Control” over the Reporting Company means the individual (i) is a senior officer (e.g., general counsel, chief executive officer, chief operating officer, etc.); (ii) has authority to appoint or remove certain officers or a majority of directors of the Reporting Company; (iii) is an important decision-maker; OR (iv) has any other form of substantial control over the Reporting Company.

Information to be Reported to the Department of State

All reporting companies must disclose the following information regarding each beneficial owner:

  • Full legal name
  • Date of birth
  • Current business street address
  • A unique identifying number from an acceptable identification document as defined in the CTA (such as a US passport or driver’s license)

Effective Date

The NYLTA has two key effective dates relating to initial reporting:

  • Reporting Companies formed or registered to do business after January 1, 2026 must file the disclosure within 30 days of an initial filing of articles of organization or an application for authority.
  • Reporting Companies formed or registered on or before January 1, 2026 have until January 1, 2027 to report.

Penalties Under the NYLTA

If a reporting company does not file its required disclosure for longer than 30 days after the applicable deadline, the state may mark it as “past due”. If a reporting company fails to file for a period exceeding two years, it will be classified as “delinquent” and may face suspension from conducting business in the state or dissolution of its LLC status.

Additionally, the attorney general may assign a penalty of up to $500 for each day a company has been considered past due or delinquent.

Past due or delinquent status can be removed once upon submission of required filings, payment of a $250 fine, and confirmation from the attorney general that all penalties have been settled.

Ongoing Reporting Requirements

Corrected Reports: If false information was reported, the reporter has 90 days to make the necessary corrections.

Annual Reports: Reporting companies and exempt companies must file an annual statement with the New York Department of State confirming or updating: (1) beneficial ownership disclosure information; (2) the principal executive office address; (3) status as exempt company, if applicable; and (4) such other information as may be designated by the Department of State.

Is Reported Information Publicly Available?

The information regarding the beneficial owners will be stored in a private database, accessible only to federal and state law enforcement agencies. Initially, the bill proposed that the database would be public, disclosing the names of reported beneficial owners. However, in response to privacy concerns, Governor Hochul opted to amend the bill, ensuring the database remains private except for law enforcement access. The amendment is slated to be in place before to the NYLTA going into effect.

How to File Reports

Reporting Companies must file with the DOS.

Next Steps

Clients cannot yet file but should stay aware of the key effective dates.

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