The New York State Assembly and New York State Senate have passed the LLC Transparency Act, which requires limited liability companies (“LLCs”) in New York to publicly disclose their beneficial owners. The initial version of the bill passed the senate, overwhelmingly passed the NY Assembly and is back with the senate before it is sent to the governor for signature. Once the bill is sent to the governor, the governor has ten days to veto before the bill becomes law. The LLC Transparency Act is a significant departure from past practice in which owners of corporations and LLCs held a certain level of protection from public disclosure of their investment. This bill affects both LLCs formed under the laws of New York and foreign LLCs, regardless of whether they are formed prior to or subsequent to the passing of the LLC Transparency Act. The bill will take effect one year after it is signed into law by the governor.
The LLC Transparency Act follows many of the reporting requirements enacted by the federal government in 2021 in the Corporate Transparency Act, which requires the U.S. Department of the Treasury to collect and store beneficial ownership information from both corporations and LLCs. Unlike this existing federal database, the New York database of beneficial owners would be publicly accessible. The New York law instructs the Secretary of State to establish a limited waiver process for beneficial owners with “significant privacy interests,” but information about this process will likely not be available until after the bill is signed into law and the Secretary of State enters into the rule making process.