What's happening
Writing a plain-English summary… Track this bill to get it by email.
Why it matters
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Sponsors
No co-sponsors yet.
History
- Referred to corporations, authorities and commissions
- Referred to corporations, authorities and commissions
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
Title of bill
An act to amend the limited liability company law, in relation to eliminating certain publication requirements for limited liability companies; to amend the partnership law, in relation to eliminating certain publication requirements for limited partnerships and registered limited partnerships; and to repeal certain provisions of the limited liability company law and the partnership law relating thereto
Purpose
This bill eliminates the need to publish a notice after (i) the formation or qualification of a limited partnership ("LP"), limited liability partnership ("LLP"), limited liability company ("LLC"), and professional service limited liability company ("PSLLC") or (ii) the conversion of a partnership or LP to a LLC.
Summary of provisions
1. Repeals Section 102 (a-1) and (e-1) of the LLC Law; 2. Repeals Sections 206 of the LLC Law; 3. Amends Section 802(a) of the LLC Law and in relation to the publication/notification requirements for the application of authority of foreign LLCs; 4. Repeals Section 802 (b) of the LLC Law; 5. Amends Section 1006(e) of the LLC Law; 6. Repeals Section 1101(s) of the LLC Law; 7. Amends Section 1203(l)(c) of the LLC Law; 8. Repeals Section 1203 (2)(c) of the LLC Law; 9. Repeals Section 1306(d) of the LLC Law; 10. Repeals Sections, 121-101(a-l) and (a-2) of the Partnership Law; 11. Repeals, Section l2l-201(c) of the Partnership Law; 12. Repeals Section 121-902(d) of the Partnership Law; 13. Repeals Section 121-1300 of the Partnership Law; 14. Amends Section 121-1500(I)(a) of the Partnership Law; 15. Repeals Section 121-1500(II)(a) of the Partnership Law; 16. Amends Section 121-1502(I)(f) of the Partnership Law; 17. Repeals Section 121-1502(m(f) of the Partnership Law; and 18. Amends Section 121-1507 of the Partnership Law.
Read the full memo (1,209 words)
Justification
The LLC in New York is the most modern form of business entities. New York State's main objective in the LLC enabling statute was to accommodate the practical needs of small business owners by affording them the managerial flexibility and favorable tax benefits of the partnership, while also providing the conventional limited liability protection of the corporation. See Anthony Q. Fletcher, Publish or Perish: The New York Limited Liability Company Law Publication Requirement: The Fundamental Flaw of an Otherwise Flawless Law, 1 N.Y.U. J.L. & Bus. 139 (2004-2005). Yet the publication requirement which was recently amended in 2006, and applies to all limited liability entities, is unnecessary, overly-burdensome, cost prohibitive, and ultimately anti-business (it can cost upwards to $1,800.00 to satisfy publication); publication countervails the policy objectives as outlined in the LLC enabling Act. Fletcher at 142. The original objective of a publication requirement in New York, dating back to 1844, no longer exists: providing information to third parties who may transact business with a limited partnership as to which partners had limited liability. However, unlike in 1844, this information is now easily and readily accessible at minimal cost from the Secretary of State, and much of it is available at no cost from the Secretary of State's website: http://www.dos.state.ny.us/. As a result, publication is no longer needed to disseminate information to the public. Anyone who wants or needs to know information about an LLC, LP, LLP, or PSLLC can easily ascertain it without the burden of perusing newspaper classifieds on a regular basis. Thus, currently, publication serves no public purpose. The state does not gain any extra revenue; the public gains no benefit. In fact, the publication requirement is unique. Almost all states, most notably Delaware and New Jersey, do not require it; and other business entities (e.g. corporations) in New York do not require publication. As a result New York is losing revenue. Other states have more than a 2 to 1 ratio (closer to 3 to 1) in the formation of LLC's to traditional "C" Corporations. According to the International Association of Commercial Administrators (hereinafter referred to as "IACA"), the following shows the number of new corporations compared to the number of new LLCs in Delaware, New Jersey, and New York in 2005 and 2006: 2005 2006 "C" CORP LLC "C" CORP LLC Delaware 34,377 87,360 33,449 97,508 New Jersey 19,968 51,690 18,819 52,344 New York 76,999 48,564 76,474 48,451 As exemplified, in New York, the proportion of "C" Corporations formed to LLCs is still nearly 2 to 1, whereas the opposite is true in New Jersey and Delaware where, because of flexibility and other advantages nearly 3 times as many LLCs are formed as compared with the number of new corporations. In the absence of the publication requirement in New York, it should be presumed that the LLC would be more frequently used, particularly among small business entrepreneurs in New York because small business entrepreneurs in other states, where there is no publication requirement, form LLCs at a higher rate than the rate of formation in New York. See Fletcher at Page 159; See also Id at 161 ("Outside New York, the LLC has experienced unbridled popularity and usage... The primary difference between the New York LLC and the limited liability companies in almost every other state is that the former is subject to the Publication Requirement. This difference discourages small business entrepreneurs from forming LLCs in New York"). And it should not be underestimated what small businesses mean to our State's economy: Small businesses employ the majority of the State's workforce and, excluding non-farm returns, accounted for more than $85.4 billion in business income in 2006. U.S. Small Bus. Admin, Office of Advocacy, 2003 State Small Business Profile' New York, at 1 (2007). Between 2003 and 2003, the most recent year for which statistics are available, small businesses added a net total of 87,000 employees. Id. Thus, it is no surprise that in November, 2001, the New York County Supreme Court held that the publication provision in Section 206 of the LLCL served no countervailing state interest and violated both the plaintiff's right to due process and right to equal protection under the NYS Constitution. See Barklee Realty v. George E. Pataki. Index No. 120456/99. In October, 2003, however, the Appellate Division, First Department in determining whether publication bore a rational connection to promotion of a legitimate state interest, reversed the Supreme Court's decision stating "that it is for the legislature alone to determine the advantages and drawbacks of the legislation in achieving a legitimate purpose." Nevertheless, the court did note that it is an "obvious stretch to assume" that persons seeking to commence actions against LLC's "would be perusing the classifieds on a regular basis so as to note the organizing information provided by a newly formed LLC." As such, publication merely serves as an indirect subsidy to the newspaper industry. As Justice Schlesinger observed in Barklee: "The only coffers enriched by the publication requirement is the newspapers."
Legislative history
2008: S.7596 - Referred to Corporations.
Fiscal implications
While the State will no longer be collecting the $25 fee for each Affidavit of Publication filed, it is anticipated that there will be an increase in the number of LLCs, LLPs, and LPs formed resulting in additional revenue from filing and other related fees, and associated taxes incurred by the persons operating and owning these entities, to more than negate the loss of fee for Affidavits of Publication.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.