New York is poised to impose its own set of disclosure requirements on certain businesses later this year with a new law that mirrors the federal Corporate Transparency Act (CTA).

In December, Gov. Kathy Hochul signed into law the New York LLC Transparency Act (NYLLCTA). The law is set to take effect upon approval of a “chapter amendment” by the New York Legislature.

The NYLLCTA will apply to all limited liability companies (LLCs) formed under New York law, as well as those that are doing – or seeking to do – business in New York.

Covered LLCs must disclose to the NY Department of State the identities of their beneficial owners, their dates of birth and their business addresses, among other things, unless an exemption from the reporting requirements applies.

Data Won’t Be Public

Notably, Gov. Hochul struck a compromise with the Legislature to keep information on LLCs out of public view. This was in response to concerns raised by real estate professionals that the law as originally proposed would deter privacy-conscious buyers from purchasing homes in the state.

Like the federal CTA, which took effect on January 1 of this year, the NYLLCTA is aimed at curbing money laundering, tax evasion and other illicit activities made possible by anonymity.

The NYLLCTA adopts the same standards and requires the same information to be reported to the NY Department of State by LLCs as is required to be reported to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) under the CTA.

Identical Federal and State Forms

Each LLC that will be making a CTA filing with FinCEN will be permitted to file the same form with the NY Department of State.

The terms “beneficial owner,” “reporting company” and “exempt company” have the same meaning as the same terms are defined in the CTA. The two statutes also share the same 23 exemptions from their reporting requirements.

Information filed with the NY Department of State under the NYLLCTA will be compiled into an internal business entity database maintained by the NY Secretary of State which will be kept confidential and will not be shared publicly but will be made available to federal, state and local governmental agencies and law enforcement similar to information filed with FinCEN under the CTA, or as otherwise required to be disclosed pursuant to a court order.

Where the Federal and NY Laws Differ

Unlike the CTA – which applies to numerous types of entities such as corporations, limited partnerships and statutory trusts as well as LLCs – the NYLLCTA applies only to LLCs.

In addition, unlike the CTA which initially requires that beneficial ownership information for a newly formed entity to be provided to FinCEN no later than 90 days after the date of its formation, the NYLLCTA allows no extra time. It requires that beneficial ownership information be submitted concurrently with the filing of the articles of organization for an LLC being formed under New York law or with the filing of the initial application for authority filed by a foreign LLC.

Finally, although the NYLLCTA adopts an identical set of 23 exemptions from the reporting requirements as in the CTA, the New York law requires an affirmative assertion of the exemption. If a New York LLC or a foreign LLC seeking authority to do business in New York falls within one or more exemptions, the NYLLCTA requires the LLC to submit a statement signed by a member or manager of the LLC indicating the specific exemption(s) upon which it relies. There is no equivalent provision in the CTA.

Timing for Compliance

For New York LLCs formed prior to the NYLLCTA’s yet-to be-determined effective date, and foreign LLCs that obtained authority to do business in New York prior to that effective date, the deadline is already less than a year away.

No later than January 1, 2025, existing covered LLCs must file the required beneficial ownership report or the statement specifying the applicable exemptions(s) from the filing requirements.

The NYLLCTA is subject to further action by the New York Legislature later this year. Fox Rothschild will continue to monitor legislative developments.

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