New publication requirements were adopted by the State of New York as of June 1, 2006. Many entities formed in or qualified to do business in New York will have to take action to comply by June 1, 2007.
New York law requires domestic and foreign limited liability companies, professional service limited liability companies, limited liability partnerships, and limited partnerships (collectively, "Limited Liability Entities") to publish a newspaper notice within one hundred and twenty (120) days after formation or qualification to do business in New York.
Principal Aspects Of Publication Requirements Retained
The State Senate initially proposed significant changes to the publication requirements for Limited Liability Entities (such as reducing the number of publications necessary and requiring the publications to include a listing of the names of the ten persons with the most valuable ownership interests in the Limited Liability Entity). These proposals were ultimately rejected and new Bill No. 6831-B was signed into law, restoring the number of publications required to once per week for six successive weeks in two newspapers (one printed daily and one printed weekly) of the county in which the office of the business entity is intended to be located, and eliminating the proposed requirement that the newspaper publication include a listing of the interest holders. The Bills did, however, effectuate certain other modifications to the publication requirements for Limited Liability Entities, which are outlined below.
Requirement For A Certificate Of Publication
The Bills impose a requirement for a certificate of publication to be completed by the Limited Liability Entity, executed under penalty of perjury, and filed with the Department of State (along with affidavits of publication from the newspapers) within one hundred and twenty (120) days after formation or qualification to do business in New York. The certificate of publication must provide that the published notices contain all the required information and that the publishing newspapers satisfy the requirements set forth by law.
New Penalty For Non-Compliance
Under the law in effect prior to the Effective Date, the failure to satisfy the publication requirement resulted in a prohibition against the non-compliant entity's availing itself of the New York State courts to maintain an action or special proceeding until the entity was in compliance. This did not serve as a powerful motivator for the majority of entities. Under the new laws, however, the failure to satisfy the publication requirement within the time allotted will result in suspension of the domestic or foreign Limited Liability Entity's authority to carry on, conduct or transact business in the State of New York. This should prove a more effective penalty. It should be noted, however, that the Bills expressly provide that the suspension of the authority to carry on, conduct or transact business in New York will not result in any member, manager, limited partner, or agent of the Limited Liability Entity becoming liable for the contractual obligations or other liabilities of the entity.
Summary Of Impact Based On Date Of Formation
Limited Liability Entities Formed & Qualified Before January 1, 1999: Automatically deemed in compliance with the publication requirements.
Entities Formed & Qualified on or After January 1, 1999, but Before June 1, 2006 (and fully complied with then-applicable publication requirements ): Deemed in compliance with the publication requirements.
Entities Formed & Qualified on or After January 1, 1999, but Before June 1, 2006 (and did not fully comply with then-applicable publication requirements) :
If Previously Filed at Least One Affidavit of the Printer or Publisher: Automatically deemed in compliance with the publication requirements.
All Others: Have until June 1, 2007 to satisfy the publication requirement (in the manner required prior to the Effective Date, but including the requirement of a certificate of publication).
Formed & Qualified on or After June 1, 2006: Must comply with the new publication requirements.
For further Information please contact Lowenstein Sandler's Investment Management Practice Group, (973) 597-2500.