New York's LLC Transparency Act: What You Need to Know

In Short

The Situation: On March 1, 2024, New York State Governor Kathy Hochul signed into law a revised version of New York State's LLC Transparency Act, which is modeled on FinCEN's Beneficial Ownership Information Rule. Other states are considering similar legislation, but the LLC Transparency Act is the first state BOI law to be enacted.

The Result: Beginning January 1, 2026, all non-exempt LLCs that are formed in or are registered to do business in New York State must report personal information about their "beneficial owners" and "applicants." In addition, LLCs claiming to be exempt will be required to make filings detailing the basis of their exemptions. 

Looking Ahead: With assistance from outside counsel, entities should assess whether they will be required to file reports, analyze exemption eligibility, and identify beneficial owner and applicant information. 

What Entities Must File Reports? 

All LLCs formed in or registered to do business in New York will be required to make annual filings with the New York Department of State. 

Non-exempt LLCs formed in or registered to do business in New York will be required to report beneficial ownership information. Because FinCEN's BOI Rule applies to entities other than LLCs, there will be entities formed or operating in New York—including corporations, limited partnerships, and certain trusts—that are required to comply with FinCEN's BOI Rule but not the LLC Transparency Act. In contrast, all entities required to report beneficial ownership information under New York's LLC Transparency Act must also do so pursuant to FinCEN's BOI Rule. 

The LLC Transparency Act incorporates the 23 exemptions to FinCEN's BOI Rule, which include, among other things, "large operating companies," as defined by the BOI Rule; banks; publicly traded entities with shares registered under the Exchange Act; and subsidiaries of certain exempt entities. However, unlike FinCEN's BOI Rule, which does not require exempt entities to make any filings, the LLC Transparency Act requires all entities claiming an exemption to file a sworn attestation each year identifying the exemption claimed and the facts supporting that exemption. LLCs that are formed or registered to do business in New York and that claim an exemption should take note of this difference, as they will not be required to make any filings with FinCEN but will be required to make annual filings with the New York Department of State. 

What Must be Reported?

Non-exempt New York LLCs must report personal information about their "beneficial owners" and "applicants." The LLC Transparency Act incorporates the definitions of "beneficial owner" and "applicant" from FinCEN's BOI Rule. Accordingly, beneficial owners are individuals who: (i) own or control at least 25% of the LLC; and/or (ii) exercise substantial control over the LLC. An individual exerts "substantial control" by:  

  • Serving as a senior officer of the reporting company, including as CEO, COO, or general counsel;
  • Having authority over the appointment or removal of senior officers or a majority of the board of directors;
  • Directing, determining, or having substantial influence over important decisions made by the reporting company; or
  • Holding any other form of substantial control over the reporting company.

Applicants are individuals who filed or directed the filing of papers with the Department of State to form the LLC or register it to do business in New York. 

The personal information to be reported about beneficial owners and applicants is: 

  • Full legal name;
  • Date of birth; 
  • Current home or business street address, as applicable; and 
  • An identifying number from a government-issued identifying document, such as a driver's license or passport. 

Unlike FinCEN's BOI Rule, the LLC Transparency Act requires disclosure of information about applicants even if the LLC was in existence before January 1, 2026. However, compliance with this requirement will be difficult (if not impossible) for LLCs formed or registered long before the January 1, 2026 effective date, and even if it is available, stale applicant information may not serve any legitimate law enforcement purpose. Accordingly, entities should be on the lookout for changes to reporting requirements for LLC applicants. 

As noted above, entities claiming an exemption from the reporting requirement will be required to file sworn attestations identifying the exemption claimed and the facts supporting that exemption. 

When Are Reports Due? 

All applicable LLCs, including exempt LLCs, in existence on January 1, 2026, must file their initial reports on or before December 31, 2026. All New York LLCs that file for formation or registration in New York on or after January 1, 2026, will have thirty days from the date of formation or registration to file initial reports. 

What Are the Updating Requirements? 

All New York LLCs will be required to file an annual statement confirming or updating:  

  • Beneficial ownership disclosure information (non-exempt LLCs only); 
  • The street address of the LLC's principal executive office; 
  • The LLC's status as an exempt company, if applicable; and
  • Such other information as may be designated by the Department of State.

The LLC Transparency Act's annual reporting requirement differs from FinCEN's BOI Rule, which requires reporting companies to update company and beneficial ownership information within 30 calendar days of any change to the information. Entities subject to both rules should be mindful of this difference and should ensure appropriate compliance procedures are in place. 

How Will Reports be Filed? 

At this time, the only concrete information about filing logistics is that reports will be filed electronically with the New York Department of State. 

Who Can Access the Information Reported?

As originally enacted, the LLC Transparency Act would have made beneficial ownership information broadly available to the public. However, Governor Hochul signed that version of the Act on the condition that the New York legislature would amend it to ensure that personal ownership information could only be accessed by law enforcement or with a court order. 

As amended, the LLC Transparency Act provides that beneficial ownership information will be maintained in a secure database, and disclosure will only be permitted: 

  • Pursuant to the written request of or by voluntary written consent of the beneficial owner; 
  • By court order; 
  • To officers or employees of another federal, state, or local government agency where disclosure is necessary for the agency to perform its official duties as required by statute or necessary to operate a program specifically authorized by law; or 
  • For a valid law enforcement purpose including as relevant to any law enforcement investigation by the office of the attorney general. 

What are the Penalties for Non-Compliance? 

Penalties for non-compliance include:

  • Upon 30-days' notice, automatic "suspension," meaning the LLC may not conduct business in New York until it becomes compliant; 
  • The Attorney General may assess a late fee of $500 per day of noncompliance; and 
  • The Attorney General may bring an action to dissolve or annul the authority of the non-compliant LLC to do business in New York if that entity remains non-compliant for two years or more. 

The LLC Transparency Act prohibits individuals from knowingly providing or attempting to provide false information but does not identify the penalties for such conduct.

Three Key Takeaways

  1. Beginning January 1, 2026, non-exempt LLCs formed or registered to do business in New York will be required to report personal information about beneficial owners and applicants to the Department of State. 
  2. Personal information reported to the Department of State will be confidential and may be accessed only upon consent of the beneficial owner or applicant, pursuant to a court order, or in connection with law enforcement activities. 
  3. While New York's LLC Transparency Act is modeled on FinCEN's BOI Rule, there are key differences, and entities should be careful to ensure compliance with both regimes. Entities should also be mindful that other states are considering their own BOI reporting legislation, which could lead to additional reporting requirements. 
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