What New York's LLC Transparency Act Requires After Governor Hochul's Veto
Foreign LLCs already authorized to do business in New York must disclose beneficial owners by December 31, 2026, but the veto exempted all U.S.-formed entities from the requirement.
When New York's LLC Transparency Act took effect on January 1, 2026, the business community expected broad beneficial ownership disclosure requirements. Governor Kathy Hochul vetoed clarifying legislation on December 19, 2025, however, effectively narrowing the law to a single category of entities: limited liability companies formed outside the United States and authorized to do business in New York State. The veto left U.S.-formed LLCs—including those incorporated in New York and in every other state—exempt from any reporting obligations.
The distinction matters because non-U.S. LLCs authorized to do business in New York must now comply. These entities now face a December 31, 2026 deadline to file beneficial ownership information with the New York Department of State or face escalating penalties, including suspension of their authority to conduct business in the state. The Act mirrors aspects of the federal Corporate Transparency Act, creating parallel compliance obligations for entities that already report to federal authorities, though filing systems and procedures differ between the two regimes.
Which entities must comply
The Act applies exclusively to non-U.S. LLCs authorized to do business in New York. A foreign LLC is one formed in a jurisdiction outside the United States—Canada, the United Kingdom, Germany or any other country. The key trigger is authorization: the LLC must have filed paperwork with New York's Department of State to legally operate here. Purely domestic entities organized in New York, California, Delaware, or any other state are exempt.
Entities that were already authorized to do business in New York before January 1, 2026 face a single compliance deadline: December 31, 2026. Foreign LLCs formed or authorized after January 1, 2026 must file within 30 days of submitting their application for authority. The Department of State must receive filings electronically through its secure portal; there is no option to file by mail or in person.
Governor Hochul's veto eliminated what would have been a much broader requirement. The original legislation, before the veto, would have applied to all LLCs authorized to do business in New York, regardless of where they were formed. That change exempted U.S.-formed LLCs operating across state lines or in multiple jurisdictions. The final version aligns New York's approach more closely with federal beneficial ownership reporting rules, which focus on combating money laundering by tracking foreign entities' ownership structures.
Defining beneficial owners and substantial control
The law requires disclosure of every beneficial owner—defined as an individual who owns 25 percent or more of the LLC's ownership interests or exercises "substantial control" over it. The law adopts the federal Corporate Transparency Act's "substantial control" test, which lists several nonexclusive criteria rather than a single precise definition, creating ambiguity for foreign entities unfamiliar with New York's regulatory framework. The term generally encompasses individuals who make significant operational, financial, or strategic decisions for the LLC.
For each beneficial owner, the foreign LLC must provide full legal name, date of birth, street address, and a government-issued identification number such as a driver's license, passport, or state-issued ID. The company must also report the individual who filed the application for authority in New York—known as the "applicant"—or, if a different individual directed that filing, the person primarily responsible for it.
Some beneficial owners may be exempt from individual disclosure. These exemptions include individuals under 18 years old, nominees or agents acting on behalf of others, individuals employed by the LLC in a capacity unrelated to ownership or control, heirs to beneficial ownership interests through inheritance, and creditors of the LLC. A foreign LLC claiming exemption for a beneficial owner must document the basis for that exemption.
Exemptions for foreign LLCs
An attestation of exemption is filed instead of a beneficial ownership disclosure if the entity qualifies for one of 23 exemptions under the Corporate Transparency Act. These include banking organizations and credit unions, broker-dealers registered with the Securities and Exchange Commission, securities issuers that are publicly traded, registered investment advisers, pooled investment vehicles, insurance companies, and certain subsidiaries of exempt companies.
Large operating companies can claim exemption if they employ more than 20 U.S. employees, generated more than $5 million in federal tax returns, and operate from a place of business in New York. Accounting firms also qualify for exemption. An LLC claiming exemption must provide evidence supporting that claim when filing its attestation.
The exemptions matter significantly for foreign investment funds and operating companies that might otherwise need to disclose their ownership structure. An LLC that files an exemption attestation when it does not actually qualify commits a violation comparable to filing false beneficial ownership information, with potential criminal penalties for knowing misrepresentations. Foreign entities uncertain about their exemption status face a compliance choice: file the more detailed beneficial ownership disclosure and bear the administrative burden, or risk penalties if an exemption claim fails upon state audit.
What to disclose and how to file
Foreign LLCs must file either a beneficial ownership disclosure statement or an attestation of exemption. Both filings must be submitted electronically through the New York Department of State's secure online portal. Each filing incurs a $25 fee, whether disclosing beneficial ownership or attesting to exemption. Unlike the federal FinCEN system for Corporate Transparency Act filings, New York's system is expected to involve more manual data entry of beneficial owner information, with less automation than the federal system.
The filings are not one-time events. The Act requires annual updates each year to confirm that beneficial ownership information or exemption status remains accurate. An LLC that experiences a change in beneficial ownership must update its filing to reflect that change. The Department of State has not yet published detailed procedures for these annual updates or specified the deadline within each calendar year when updates must be submitted, though the requirement to update annually is clear.
The Department of State maintains the filed information in its database but does not appear to have created a public-facing portal for searching beneficial ownership disclosures. This means that the beneficial ownership information is available to state regulators and law enforcement but not automatically accessible to competitors, customers, or other private parties.
“An LLC claiming exemption must provide evidence supporting that claim when filing its attestation, and filing a false exemption claim can result in criminal penalties.”
Penalties for non-compliance
Missing the December 31, 2026 deadline triggers progressive enforcement by the Department of State. An entity that fails to file by that date is marked "past due" in state records once 30 days have passed. The status appears on state filings and may affect the LLC's standing with New York authorities. If an entity remains 60 or more days late, the Department of State can suspend it, revoking its authority to conduct business in New York until it files both the required disclosure or attestation and pays any outstanding fees.
An LLC that fails to file for two consecutive years is marked "delinquent," and the state can pursue civil penalties up to $500 per day of non-compliance. The Department of State may also pursue dissolution or cancellation of the LLC's authority to do business in New York, effectively terminating the entity's legal right to operate in the state.
For an entity that knowingly files false beneficial ownership information, civil penalties apply, and criminal prosecution is possible.
Timeline and practical steps
Foreign LLCs authorized before January 1, 2026 should treat December 31, 2026 as a hard deadline. Filing early eliminates the risk that last-minute technical issues, staff availability, or document-gathering delays push a company into past-due status. The Department of State's system accepts filings on a rolling basis, and entities have no reason to wait until November or December to submit information they can gather now.
Entities that formed or received authorization on or after January 1, 2026 must file within 30 days of their authorization date. These newer entities should prioritize filing during their registration process rather than waiting until later in the year. A foreign LLC that receives its Certificate of Authority on February 15, 2026, for example, has until March 17, 2026 to file a beneficial ownership disclosure or exemption attestation.
For a foreign LLC that cannot determine whether it qualifies for an exemption, the safer choice is to file the beneficial ownership disclosure rather than guess at exemption status. Attesting to exemption when the entity does not actually qualify constitutes filing false information, which can result in civil penalties and criminal prosecution. Foreign entities unfamiliar with New York law should consider consulting with U.S. counsel about exemption eligibility before choosing this path.
Foreign LLCs should also note that the Department of State has not resolved all interpretive questions under the Act, including how to determine whether a non-U.S. business entity qualifies as an "LLC" when foreign law does not clearly categorize it as one. As more entities file and the Department gains experience with the system, guidance may emerge. In the interim, foreign LLCs must do their best to comply with the stated requirements or file an exemption attestation.
