Legislation that would unveil the identities of LLC owners by creating a publicly searchable database is on hold until Governor Kathy Hochul signs the Limited Liability Company (LLC) Transparency Act into law — and on Wednesday dozens of elected officials, advocates, union members and housing groups gathered on Billionaires’ Row to urge her to pick up her pen.
“The simple fact is that New York requires more information to get a public library card than to set up a limited liability company,” said State Senator Brad Hoylman-Sigal. “We’re sending a warning signal today to shady employers, wage thieves, foreign oligarchs and bad landlords that their days of anonymity are numbered.”
Both the Assembly and State Senate passed the legislation in June and it is only missing Governor Hochul’s signature to formally become law. A study published last week by Reinvent Albany, a watchdog organization, found that anonymous LLCs own 37 percent of all buildings in Manhattan.
“They hide behind these LLCs why? Because they’re trying to hide something from good working people,” said Assemblymember Tony Simone. “This will shine a light on those folks who are trying to stop us from creating a New York for everyone.”
If signed by Hochul, anonymous LLCs would be forced to disclose their beneficial owners to the Department of State (DOS) which would take effect a year after passing into law. The DOS will put in place privacy protection where disclosure does not serve the public interest.
Companies that fail to comply with the filing requirements for two years will be fined up to $250, which is seen by many as no more onerous than a speeding ticket. “That’s the cost of lunch,” Jeffrey Margolis of The Margolis Law Firm told Commercial Observer in July.
However, failure to comply with the new law would result in the LLC being stripped of their authority to conduct business in NY State. As a result, they would not be able to enforce contracts or bring any other legal action in NYS courts, which would be problematic. “For example, an LLC landlord could lose the ability to evict their tenants, but the tenants would still be able to sue the LLC landlord,” according to a spokesperson for Senator Hoylman-Sigal.
The bill was sponsored in the Assembly by Emily Gallagher and in the Senate by Brad Hoylman-Sigal. It also has support from Manhattan District Attorney Alvin Bragg and New York State Comptroller Tom DiNapoli.
“There’s been a lot of talk over the last two years about what it means to be tough on crime and I want to tell you that number one in New York State is white-collar crime,” said Assemblymember Gallagher.
On Monday, a letter was sent to Governor Hochul from over 20 union and advocacy groups imploring her to sign the bill into law.
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“Anonymous shell companies have been used for far too long to break the law and harm New Yorkers. They are a favorite tool of narcotics traffickers, tax cheats, and oligarchs, including those responsible for supporting Russia’s bloody invasion of Ukraine,” reads a section of the letter.
Beneficial ownership transparency laws have been created or implemented in numerous countries worldwide, including the United Kingdom, Germany and Canada.
“In New York there isn’t a single constituent of mine or any of us who doesn’t have to disclose all our information when trying to get a lease on an apartment or signing up for school,” said Bronx Assemblymember Karines Reyes, speaking this morning underneath the 84-story, 1,428-foot Steinway Tower on Billionaires’ Row. “We have to disclose so much of our personal information; however, LLC companies can get away with not disclosing anything at all.”
Why do urgently needed bills like this LLC Transparency Act always have clauses that delay implementation (even after passing the bill it doesn’t take effect for a YEAR), and have exemptions for “privacy protection where disclosure doesn’t protect the public interest”. When it does finally go into effect, the LLC’s can go TWO MORE YEARS not complying before a $250 fine is imposed!!! This is a bill that needs a lot of tightening up, imho.
How about at least $250/ day or $1000/day? And drop wait to 1year!
Meanwhile, Hochul: SIGN NOW!!!