ALBANY, N.Y. (HedgeWorld.com)–The governor of New York signed a bill into law last month that changes the requirements of publication for limited liability business entities, including both limited liability companies and limited partnerships; it takes effect June 1, 2006.
Prior to passage of this bill, S.85-A, New York law already required the publication of certain information with regard to any such entity: the name of the entity, the date on which it filed its articles of organization with the secretary of state, the county in which its headquarters are located, etc. The rule had been that entities must publish this information once each week for six successive weeks soon after creation.
The new law is more specific than the old about the manner of publication, and more lenient about the frequency. Within one hundred and twenty days of the establishment of the entity, it is now required to publish each week for four successive weeks, in two newspapers of the county in which its headquarters is located–one weekly newspaper and one daily newspaper PDF of Bill.
Another new provision is that the names of 10 persons who are actively engaged in the business and affairs of the entity and have valuable membership interests with it must be included in the publication–except if the entity in question is an investment adviser as defined in the Investment Advisers Act of 1940 or a commodity pool operator or commodity trading adviser. If the entity is not covered by that exemption but has fewer than 10 people with an active interest, it can publish the names of “such lesser number of persons.”
The law is still in flux. The New York legislature is considering an amendment that would reinstate the older, six weeks rule, but that would eliminate the requirement of the disclosure of 10-or-fewer.
The new statute also differs from the older rule in the manner of enforcement. The older rule provided only that an entity not in compliance couldn’t maintain any action or special proceeding in New York State. The new law provides that such an entity’s “authority … to carry on, conduct, or transact any business in this state shall be suspended, effective as of the expiration of such one hundred and twenty day period.”
In an alert, the law firm Sadis Goldberg LLC in New York said that it was uncertain what the practical effect of the “suspension” provision would be, and that there was no case law on the issue.
The proposed amendment, if enacted, would delete the suspension language of the bill Governor George Pataki signed last month but would add personal liability for the members, limited partners, or partners of an entity for failure to publish.
Sadis Goldberg concluded: “If you have already formed an entity … we recommend that you publish your entity before the Effective Date [June 1] to avoid the consequences arising from the uncertainty of the new law and proposed amendment,” including the possibility of personal liability.
Contact Bob Keane with questions or comments at firstname.lastname@example.org.