ALBANY- More transparency could be on the way if Governor Hochul signs the Limited Liability Company (LLC) Transparency Act, a measure that would require LLCs to identify the owners in a public registry run by the Department of State.
LLCs are business entities that, among other things, can own real property and other assets, serve as employers, and apply for grants. Under the current law, owners of LLCs are not required to disclose their identities, but if Governor Hochul signs new transparency requirements, this could all change.
At the federal level, the Corporate Transparency Act, which takes effect next year, seeks similar disclosures from businesses, including LLCs, but stops short of making the information publicly available. New York’s proposed law would go a step further and make it easy to identify the owners of these companies.
A wide variety of businesses use the LLCs as an organizing business structure because they provide owners some limits on liabilities the company could face. State law governs the formation and regulation of these entities.
At present, LLCs offer the people who own them the ability to remain anonymous. Under current reporting requirements LLCs need only supply a company name, county of operation and a basic address where legal documents should be sent. Sometimes the address is a post office box, an attorney’s office, or a registered agent.
The LLC Transparency Act, which passed the Assembly and Senate earlier this year, has the support of good government groups such as Common Cause and the League of Women Voters, just to name a few.
The Business Council of New York opposes the law, saying it will violate the privacy of law-abiding businesses, including thousands of small businesses organized as LLCs. The Business Council believes that owner’s security could be put at risk.
Included in the legislation are provisions that allow for the public disclosure to be waived specifically when “a significant privacy interest exists.” If authorized by the governor, the law’s efficacy will be determined, in part, in how waiver requests are handled.
Governor Hochul has yet to indicate whether she plans to sign or veto the legislation. If approved, the bill would take effect one year after it is signed.
