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New York Enacts Their New Corporate Transparency Act

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On March 1, 2024, Governor Kathy Hochul of New York signed into law Senate Bill 8059, revising the state’s approach to limited liability company (LLC) transparency. This new legislation mandates both domestic and foreign LLCs operating in New York to either disclose their beneficial ownership or assert an exemption. This move aims to enhance financial transparency and combat illicit activities.

The new law is a revision of the initial New York LLC Transparency Law (S.B. 995-B) enacted in December 2023. While the original law laid the groundwork, criticisms and practical challenges led to a reevaluation, culminating in the comprehensive reforms introduced in S.B. 8059.

Key Provisions of Senate Bill 8059:

1. Beneficial Ownership Disclosure:
Every LLC registered in NY, both domestic and foreign, fitting the definition of a ‘reporting company’ under the federal Corporate Transparency Act (CTA) must file a beneficial ownership disclosure. This includes providing detailed personal and identification information for each beneficial owner and LLC applicant.
2. Exemption Attestation:
LLCs that qualify for one of the 23 exemptions listed under the CTA are required to file an attestation of exemption, detailing the basis for their exemption under penalty of perjury.
3. Filing Requirements:
The new sections of the law will become effective on January 1, 2026. At that point, all LLCs must comply within 30 days of formation or registration in New York, with annual updates thereafter.
4. Confidentiality and Access to Information:
The disclosed information will be kept in a secure state database, accessible only under specific conditions such as court orders or law enforcement needs.
5. Penalties for Non-Compliance:
Failure to meet the filing deadlines can result in fines and other penalties, including the potential suspension or dissolution of the non-compliant LLC.

Implications for Business Owners:

LLC owners must be vigilant in understanding their obligations under this new law. The requirements not only necessitate regular administrative attention but also involve stringent compliance measures to avoid legal repercussions.

What’s Next?

The New York Department of State is expected to release further guidelines to facilitate the transition to these new requirements. Business leaders and legal advisors should monitor these developments closely to ensure full compliance by the effective date.
The revised New York LLC Transparency Law represents a significant step towards greater corporate transparency in the state. By requiring detailed disclosures of beneficial ownership, New York aims to prevent financial fraud and promote a more transparent business environment. As these changes are implemented, LLCs operating within New York will need to adapt swiftly to comply with the new regulatory landscape.

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