Starting January 1, 2026, the New York LLC Transparency Act (the “Act”) will require limited liability companies (LLCs) formed or authorized to do business in the State of New York to disclose information to the NY Department of State (“NYDOS”) regarding beneficial owners or exemption from the Act.1 Many of the Act’s requirements are based on the federal Corporate Transparency Act (“CTA”), which went into effect on January 1, 2024, to prevent money laundering and promote a Know Your Customer policy.
Although the Act was originally set to go into effect on December 21, 2024, Governor Kathy Hochul signed a Chapter Amendment on March 1, 2024, modifying key provisions, including delaying the effective date of the Act by approximately one year.
Act Impacts all LLCs Formed or Authorized to do Business in New York
The Act impacts all LLCs formed or authorized to do business in the State of New York, regardless of size or industry. Even exempt LLCs are required to file a statement with the NYDOS indicating the specific exemption claimed and the facts on which the claimed exemption is based. This is a major difference between the Act and the CTA, which does not require exempt entities to make a filing at all. The Act represents the first state law of its kind that has passed, though similar laws have been proposed in other states, including in California.
Earlier versions of the Act had provided that the database of beneficial ownership information would be publicly accessible. The current version, however, provides beneficial ownership information will be maintained in a secured, confidential database, only accessible by written request of the beneficial owner; by court order; to federal, state, or local governmental agencies; or for a valid law enforcement purpose.
Act Imposes Initial and Annual Filing Requirements
The core requirement of the Act is that unless an LLC qualifies for one of 23 exemptions under the CTA, the LLC must report information regarding each individual “beneficial owner” of the LLC who, directly or indirectly, owns at least 25% of the LLC’s ownership interests or exercises “substantial control” over the LLC (as defined in the CTA).2
After January 1, 2026, LLCs formed or authorized to do business in New York must file either a beneficial ownership disclosure or an attestation of exemption (if it qualifies for one of the 23 exemptions) within 30 days of formation or authorization and annually thereafter in a statement filed with NYDOS confirming or updating: (i) beneficial ownership disclosure information; (ii) the street address of the LLC’s principal executive officer; (iii) status as an exempt company, if applicable; and (iv) such other information as may be designated by the NYDOS.
Note that this requirement to file an annual statement under the Act effectively replaces the obligation under the CTA to file an updated report within 30 days of any change to the beneficial ownership information, as the Act does not include such 30-day updating requirement. The Act also includes a 90-day safe harbor to correct any false or fraudulent ownership information provided to the NYDOS without penalty, unless such false or fraudulent information was willfully submitted for the purpose of evading the requirements of the Act.
Each beneficial owner and company applicant must report: (i) full legal name; (ii) date of birth; (iii) current home or business address (differs from the CTA, which requires residential address); and (iv) unique identifying number from an acceptable identification document under the CTA (such as a non-expired driver’s license or passport). Unlike the CTA, the Act does not require the submission of an image of the identification document. While the prior version of the Act did not include a requirement to report “company applicants” like under the CTA, now each individual who (i) files the document that creates or authorizes the LLC or (ii) is primarily responsible for directly or controlling such filing (if more than one individual is involved), must also be reported under the Act. A maximum of two company applicants may be reported under the CTA.
LLCs formed on or before the new effective date of the Act (January 1, 2026) will have until January 1, 2027, to make their initial filing. LLCs formed or authorized to do business after January 1, 2026, must file the initial beneficial ownership disclosure or attestation of exemption within 30 days of formation or authorization, as applicable.
NY Attorney General to Impose Penalties on Companies Past Due or Delinquent in Filings
Any LLC that fails to report the required beneficial ownership information, attestation of exemption, or the annual statement for a period exceeding 30 days will be shown as past due on the records of the NYDOS. If such period exceeds two years, the LLC will be shown as delinquent. The NY Attorney General may fine an LLC up to $500 for each day it has been past due or delinquent. Any past due or delinquency status may be cured by paying a civil penalty of $250 and filing an up-to-date beneficial ownership disclosure. The New York Attorney General may bring an action under the Act to dissolve or cancel any LLC that is delinquent in its beneficial ownership filings or has knowingly provided, or attempted to provide, false or fraudulent beneficial ownership information. The New York Secretary of State is empowered to promulgate further regulations under the Act.
1 New York Senate Bill 995-B (enacted December 22, 2023), as amended by Chapter Amendment on March 1, 2024 (Senate Bill 8059/Assembly Bill 8544).
2 See explanation of “substantial control” under the CTA in a prior G&S Advisory.
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