Key Takeaways:

• No later than January 1, 2025, LLCs formed in New York or doing business in New York on or before December 22, 2024 will have to comply with the New York LLC Transparency Act (“NYLTA”) requirements by either (i) filing the required beneficial ownership, or (ii) submitting a statement specifying the applicable exemption for the filing requirement.
• The NYLTA was modeled after the federal Corporate Transparency Act (“CTA”).

Governor Kathy Hochul signed the law in December 2023^[1] setting out disclosure requirements for limited liability companies (“LLCs”) organized or doing business in New York and creating a database of beneficial owners of New York LLCs. As prefaced by its name, the NYLTA aims to promote transparency in an effort to decrease the use of LLCs for financial crimes, such as tax evasion, money laundering, fraud and other unlawful activities.

The NYLTA provides that all existing and newly formed LLCs organized, doing business in New York or seeking to do business in New York must disclose certain information of their "Beneficial Owners”^[2] to the New York Department of State (“NY DOS”) unless one of the 23 reporting exemptions^[3] applies. Such non-exempt LLCs will be required to disclose the following information with respect to their Beneficial Owners: full legal name, date of birth, business address and a unique identifying number from an acceptable verification document such as a passport. Information gathered by the Department of State will not be shared publicly. Instead, the information will be collected and stored in an internal database accessible to federal, state, and local government agencies and law enforcement across New York.

While the NYLTA was modeled after the CTA and overlaps in its requirements, there are several key differences. Below is a chart outlining the key similarities and differences between the CTA and the NYLTA.
 

No later than January 1, 2025, LLCs formed in New York or doing business in New York on or before December 22, 2024^[4] will have to comply with the NYLTA requirements by either (i) filing the required beneficial ownership, or (ii) submitting a statement specifying the applicable exemption for the filing requirement. Each Reporting Company^[5] (or exempt LLC) formed after December 22, 2024 must file a beneficial ownership report or statement of exemption at the time of formation or registration with the State of New York. Failure to comply with disclosure obligations for a period exceeding 30 days will result in the NY DOS showing the Company as “delinquent” in its records until the disclosure is appropriately filed and a civil penalty of $250 is paid.

Lastly, it shall be noted that other states are considering imposing similar disclosure obligations on LLCs. For example, the Massachusetts House of Representatives introduced a bill in March 2023 proposing disclosure of beneficial ownership of domestic and foreign LLCs.^[6] We will continue tracking developments in Massachusetts as the bill moves through the state legislature.

We have discussed the CTA in our prior client alert which can be found here. 

¹ S. 995B, 2023-2024 Legis. Sess. (N.Y. 2023).
² “Beneficial Owners” with respect to a Reporting Company is any individual who directly or indirectly either “(i) exercises substantial control over the entity, or (ii) owners of controls not less than 25 percent of the ownership interests of the entity.” See 31 CFR 1010.380(d).
³ See Sandra Feldman, The 23 exemptions from the Corporate Transparency Act’s beneficial ownership information reporting requirement, Wolters Kluwer (Jan. 2, 2024), https://www.wolterskluwer.com/en/expert-insights/the-23-exemptions-from-the-corporate-transparency-act for a full list of exemptions; see also 31 CFR 1010.380(c)(2).
⁴ Pursuant to Section 10 of S. 995B, 2023-2024 Legis. Sess. (N.Y. 2023), the NYLTA shall take effect 365 days after becoming a law.
⁵ The NYLTA incorporates the “Reporting Company” definition in the CTA by reference. See 31 CFR 1010.380(c).
⁶ H.3566, 193 Gen. Ct. (Ma. 2023).