New York has become the first state to enact an analogue to the federal Corporate Transparency Act (the “CTA”), having signed the New York Limited Liability Company Transparency Act (“NYLTA”) into law on December 22, 2023, and later amending it on March 1, 2024. The NYLTA, which will become effective on January 1, 2026, aims to curb money laundering and other financial crimes by requiring certain entities to disclose information about their beneficial owners and company applicants.
This advisory will outline important information related to the NYLTA, including ways in which this law will differ from the CTA.
Who must report?
The NYLTA applies to LLCs formed or qualified to do business in New York that meet the CTA definition of a “reporting company.” But there are a couple of key differences between the two laws, namely:
- The NYLTA only applies to LLCs, while the CTA applies to any entity that is created by the filing of a document with a secretary of state or an Indian tribe.
- Under the CTA, an entity is exempt from reporting if it meets one of the 23 enumerated exemptions. But under the NYLTA, an exempt entity is not automatically relieved from reporting requirements. The LLC must file an attestation of exemption under penalty of perjury with the New York Department of State within 30 days of its formation or qualification to do business in New York, describing which specific exemption applies and the basis for the exemption.
What must be reported?
Like the CTA, the NYLTA requires reporting companies to file a beneficial ownership disclosure form identifying each beneficial owner and company applicant. A “beneficial owner” is defined as any individual who, directly or indirectly, (i) exercises “substantial control” over the entity or (ii) who owns or controls at least 25% of ownership interests of the company. A “company applicant” is the individual who directly files the document that forms the LLC or registers the LLC to do business in New York, and the individual primarily responsible for directing or controlling such filing.
For each beneficial owner and company applicant, companies must provide the following:
- Full legal name;
- Date of birth;
- Current residential or business street address; and
- A unique identification number from a valid identification document, specifically, (i) a non-expired US passport, (ii) a non-expired driver’s license, (iii) a non-expired identification card or document issued by a state or local government agency or tribal authority, or (iv) a non-expired passport issued by a foreign government if none of the foregoing documents are available. The NYLTA does not require that an image of the identification document for the beneficial owner be included with the disclosure filing; the CTA requires images of the identifying document.
Note that—unlike the CTA—the NYLTA requires the reporting of company applicants for LLCs formed or qualified prior to the January 1, 2026, effective date. In contrast, the CTA requires company applicant disclosure only for entities formed or registered on or after its effective date.
When are filings due?
Reporting companies that are formed before January 1, 2026, will have until January 1, 2027, to make their initial filings. Reporting companies formed on or after January 1, 2026, will be required to make their initial filings within 30 days of the filing of the articles of organization or an application for authority to conduct business in New York pursuant to New York’s Limited Liability Company Law.
The NYLTA also requires all reporting and exempt companies to file an annual statement confirming or updating: (1) the beneficial ownership disclosure information; (2) the principal executive’s office address; (3) the LLC’s status as an exempt company, if applicable; and (4) such other information as may be designated by the New York Department of State. The CTA requires changes to be reported as they occur, but does not require annual affirmations of information like the NYLTA does.
What are the penalties for Non-Compliance under the NYLTA?
Unlike the CTA, there are no criminal penalties for violation of the NYLTA’s reporting obligations. Failure to comply under the NYLTA can result in a past due or delinquent status, a suspension from conducting business in New York, or dissolution of the LLC. The New York attorney general may also assess fines up to $500 for each day that an LLC is past due or delinquent in its filings.