A 8662: Amends the definitions of the terms "beneficial owner", "reporting company" and "exempt company" to set the scope of certain provisions relating to beneficial owners of limited liability companies; authorizes the department of state to further clarify any such definitions.

  
  STATE OF NEW YORK ________________________________________________________________________ 8662 2025-2026 Regular Sessions  IN ASSEMBLY May 23, 2025 ___________ Introduced by M. of A. GALLAGHER -- read once and referred to the Committee on Corporations, Authorities and Commissions AN ACT to amend the limited liability company law, in relation to the scope of certain provisions relating to beneficial owners of limited liability companies The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivisions (a), (b) and (c) of section 1106 of the limit- 2 ed liability company law, as added by chapter 102 of the laws of 2024, 3 are amended and a new subdivision (e) is added to read as follows: 4 (a) "Beneficial owner" shall [have the same meaning as defined in 31 5 U.S.C. § 5336(a)(3), as amended, and any regulations promulgated there- 6 under] mean, with respect to any entity or individual who, directly or 7 indirectly, through any contract, arrangement, understanding, relation- 8 ship, or otherwise: 9 (1) exercises substantial control over the entity; or 10 (2) owns or controls not less than twenty-five percent of the owner- 11 ship interests of the entity. 12 (b) "Reporting company" shall [have the same meaning as defined in 31 13 U.S.C. § 5336(a)(11), as amended, and any regulations promulgated there- 14 under, but shall only include limited liability companies formed or 15 authorized to do business in New York state]: 16 (1) mean a corporation, limited liability company, or other similar 17 entity that is: 18 (i) created by the filing of a document with the secretary of state; 19 or 20 (ii) authorized to do business in this state pursuant to article eight 21 of this chapter; and 22 (2) not mean or include: 23 (i) an issuer: 24 (A) of a class of securities registered under section twelve of the 25 federal securities exchange act of 1934 (15 U.S.C. 78l); or EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13229-02-5 
 A. 8662 2 1 (B) that is required to file supplementary and periodic information 2 under section 15(d) of the federal securities exchange act of 1934 (15 3 U.S.C. 78o(d)); 4 (ii) an entity that exercises governmental authority on behalf of a 5 municipality, agency, authority, political subdivision of the state; 6 (iii) a banking organization, as defined in: 7 (A) section 3 of the federal deposit insurance act (12 U.S.C. 1813); 8 (B) section 2(a) of the federal investment company act of 1940 (15 9 U.S.C. 80a-2(a)); 10 (C) section 202(a) of the federal investment advisers act of 1940 (15 11 U.S.C. 80b-2(a)); 12 (D) a federal credit union or a state credit union, as such terms are 13 defined by section 101 of the federal credit union act (12 U.S.C. 1752); 14 (E) a bank holding company as defined by section two of the federal 15 bank holding company act of 1956 (12 U.S.C. 1841), and as defined by 16 section one hundred forty-one of the banking law; a savings and loan 17 holding company as defined in section 10(a) of the federal home owners' 18 loan act (12 U.S.C. 1467a(a)); 19 (F) a money transmitting business registered with the federal secre- 20 tary of the treasury under 31 U.S.C. § 5330; or a licensee as defined by 21 section six hundred forty of the banking law; or 22 (G) a broker or dealer, as such terms are defined by section three of 23 the federal securities exchange act of 1934 (15 U.S.C. 78c), that is 24 registered under section fifteen of such act (15 U.S.C. 78 o); or a 25 broker or dealer as defined by section three hundred fifty-nine-e of the 26 general business law; 27 (iv) an exchange or clearing agency, as such terms are defined by 28 section three of the federal securities exchange act of 1934 (15 U.S.C. 29 78c), that is registered under section six or 17A of such act (15 U.S.C. 30 78f, 78q-1); 31 (v) any other entity not described in subparagraphs (i), (vii), or 32 (viii) of this paragraph that is registered with the federal securities 33 and exchange commission under the federal securities exchange act of 34 1934 (15 U.S.C. 78a et seq.); 35 (vi) an entity that: 36 (A) is an investment company, as defined by section three of the 37 federal investment company act of 1940 (15 U.S.C. 80a-3) or an invest- 38 ment adviser, as defined by section two hundred two of the federal 39 investment advisers act of 1940 (15 U.S.C. 80b-2); and 40 (B) is registered with the federal securities and exchange commission 41 under the federal investment company act of 1940 (15 U.S.C. 80a-1 et 42 seq.) or the federal investment advisers act of 1940 (15 U.S.C. 80b-1 et 43 seq.); 44 (vii) an investment adviser: 45 (A) 1. described in section 203(l) of the federal investment advisers 46 act of 1940 (15 U.S.C. 80b-3(l)); and 47 2. that has filed item 10, schedule A, and schedule B of part 1A of 48 form ADV, or any successor thereto, with the federal securities and 49 exchange commission; or 50 (B) as defined in article twenty-three-A of the general business law. 51 (viii) an insurance company, as defined in section two of the federal 52 investment company act of 1940 (15 U.S.C. 80a-2); 53 (ix) an entity that: 54 (A) is an insurer that is authorized by the state and subject to 55 supervision by the commissioner of financial services; and 56 (B) has an operating presence within New York state; 
 A. 8662 3 1 (x) (A) a registered entity, as defined in section 1a of the federal 2 commodity exchange act (7 U.S.C. 1a); or 3 (B) an entity that is: 4 1. (I) a futures commission merchant, introducing broker, swap dealer, 5 major swap participant, commodity pool operator, or commodity trading 6 advisor, as such terms are defined in section 1a of the federal commod- 7 ity exchange act (7 U.S.C. 1a); or 8 (II) a retail foreign exchange dealer, as described in section 9 2(c)(2)(B) of the federal commodity exchange act (7 U.S.C. 2(c)(2)(B)); 10 and 11 2. registered with the federal commodity futures trading commission 12 under the federal commodity exchange act (7 U.S.C. 1 et seq.); 13 (xi) a public accounting firm registered in accordance with section 14 102 of the federal sarbanes-oxley act of 2002 (15 U.S.C. 7212); 15 (xii) a public utility corporation that provides telecommunications 16 services, electrical power, natural gas, or water and sewer services 17 within the state; 18 (xiii) a financial market utility designated by the federal financial 19 stability oversight council under section 804 of the federal payment, 20 clearing, and settlement supervision act of 2010 (12 U.S.C. 5463); 21 (xiv) any pooled investment vehicle that is operated or advised by a 22 person described in clause (A), (B), (C), (D) or (F) of subparagraph 23 (iii) or subparagraph (v) or (vi) of this paragraph; 24 (xv) any: 25 (A) organization that is described in section 501(c) of the federal 26 internal revenue code of 1986 (determined without regard to section 27 508(a) of such code) and exempt from tax under section 501(a) of such 28 code, except that in the case of any such organization that loses an 29 exemption from tax, such organization shall be considered to be contin- 30 ued to be described in this subclause for the one hundred eighty-day 31 period beginning on the date of the loss of such tax-exempt status; 32 (B) political organization, as defined in section 527(e)(1) of the 33 federal internal revenue code of 1986, that is exempt from tax under 34 section 527(a) of such code; or 35 (C) trust described in paragraph (1) or (2) of section 4947(a) of such 36 code; 37 (xvi) any corporation, limited liability company, or other similar 38 entity that: 39 (A) operates exclusively to provide financial assistance to, or hold 40 governance rights over, any entity described in subparagraph (xiv) of 41 this paragraph; 42 (B) is a United States resident; 43 (C) is beneficially owned or controlled exclusively by one or more 44 United States residents that are United States citizens or lawfully 45 admitted for permanent residence; and 46 (D) derives at least a majority of its funding or revenue from one or 47 more United States residents that are United States citizens or lawfully 48 admitted for permanent residence; 49 (xvii) any entity that: 50 (A) employs more than twenty employees on a full-time basis in the 51 United States; 52 (B) filed in the previous year federal income tax returns in the 53 United States demonstrating more than five million dollars in gross 54 receipts or sales in the aggregate, including the receipts or sales of: 55 1. other entities owned by the entity; and 56 2. other entities through which the entity operates; and 
 A. 8662 4 1 (C) has an operating presence at a physical office within the state; 2 (xviii) any corporation, limited liability company, or other similar 3 entity of which the ownership interests are owned or controlled, direct- 4 ly or indirectly, by one or more entities described in subparagraph (i), 5 (ii), (iii), (iv), (v), (vii), (viii), (ix), (x), (xi), (xii), (xiii), 6 (xv) or (xvii) of this subparagraph; 7 (xix) any corporation, limited liability company, or other similar 8 entity: 9 (A) in existence for over one year; 10 (B) that is not engaged in active business; 11 (C) that is not owned, directly or indirectly, by a foreign person; 12 (D) that has not, in the preceding twelve-month period, experienced a 13 change in ownership or sent or received funds in an amount greater than 14 one thousand dollars, including all funds sent to or received from any 15 source through a financial account or accounts in which the entity, or 16 an affiliate of the entity, maintains an interest; and 17 (E) that does not otherwise hold any kind or type of assets, including 18 an ownership interest in any corporation, limited liability company, or 19 other similar entity; and 20 (xx) any entity or class of entities that the department of state, by 21 regulation, determined should be exempt from the requirements of section 22 eleven hundred seven of this article because requiring beneficial owner- 23 ship information from the entity or class of entities: 24 (A) would not serve the public interest; and 25 (B) would not be highly useful in national security, intelligence, and 26 law enforcement agency efforts to detect, prevent, or prosecute money 27 laundering, the financing of terrorism, proliferation finance, serious 28 tax fraud, or other crimes. 29 (c) "Exempt company" shall mean a limited liability company or foreign 30 limited liability company not otherwise defined as a reporting company 31 that meets [a condition for exemption enumerated in 31 U.S.C. § 32 5336(a)(11)(B)] one or more of the following conditions: 33 (1) a minor child, which shall mean an individual under the age of 34 eighteen; 35 (2) an individual acting as a nominee, intermediary, custodian, or 36 agent on behalf of another individual; 37 (3) an individual acting solely as an employee of a corporation, 38 limited liability company, or other similar entity and whose control 39 over or economic benefits from such entity is derived solely from the 40 employment status of the person; 41 (4) an individual whose only interest in a corporation, limited 42 liability company, or other similar entity is through a right of inheri- 43 tance; or 44 (5) a creditor of a corporation, limited liability company, or other 45 similar entity, unless the creditor meets the requirements of paragraph 46 one of this subdivision. 47 (e) The department of state is hereby authorized to promulgate rules 48 and regulations to further clarify any definitions outlined in this 49 section. 50 § 2. This act shall take effect immediately; provided, however, that 51 if the provisions of chapter 772 of the laws of 2023 shall not have 52 taken effect on or before such date then section one of this act shall 53 take effect on the same date and in the same manner as such chapter of 54 the laws of 2023 takes effect.