New York Law Undercut by Planned US Corporate Disclosure Limits

A proposal to apply the Corporate Transparency Act only to foreign entities and non-US persons would effectively undermine the only existing state-level disclosure initiative, the New York Limited Liability Company Transparency Act.

Because the NYLTA incorporates the statutory language of the CTA and any regulations under its definitions of “beneficial owner” and “reporting company,” limiting these terms in the CTA will likely have the same limiting effect on the NYLTA. Despite this, there is little recent commentary regarding the NYLTA, which is set to take effect on Jan. 1, 2026.

Initial supporters of the CTA and the NYLTA had emphasized that the primary goal of the laws was combating money laundering in the US by requiring disclosures about the beneficial owners of entities. When signing the NYLTA into law in 2023, New York Gov. Kathy Hochul highlighted that it would enhance transparency to tackle issues such as “wage theft, money laundering, tenant mistreatment and other unlawful activity.”

Both laws apply only to “reporting companies,” which the CTA initially defined as all entities formed or registered to do business in the US unless they met some limited, enumerated exemptions. Now, under the CTA’s proposed interim final rule, only foreign entities registered to do business in the US would have to comply with the CTA and its beneficial ownership information reporting requirements.

While the NYLTA encompasses a narrower scope of entities than the CTA—limiting reporting companies to limited liability companies formed or registered to do business in New York state—that group may be even narrower because of the new proposed federal regulations. While the US government has made changes to its law, it’s unclear that the New York lawmakers intended for those changes to affect the NYLTA.

Where does this leave companies formed or registered to do business in New York? Arguably, without further amendment of the NYLTA, the proposed changes to the CTA likely means that only foreign limited liability companies registered to do business in New York will have to comply.

If New York lawmakers clarify or expand the definition of reporting companies under the NYLTA to include entities that were previously included when the law was enacted, then the NYLTA would be a much bigger burden on businesses that choose to do business in New York compared to other states.

The reporting requirements under NYLTA for covered entities are more stringent than the CTA. The NYLTA requires reporting companies to submit beneficial ownership disclosures to the New York Department of State, unless one of 23 exceptions (which mirror the exemptions in the CTA) is met.

Exempt entities aren’t required to file under the CTA (except where a newly exempt entity filed a report in the past), but entities meeting an exemption under the NYLTA must submit an attestation of exemption to the Department of State to affirmatively claim such exemption.

A reporting company under the NYLTA must disclose information about the entity itself, its beneficial owners, and its applicants, where the meanings of “beneficial owner” and “applicant” match that of “beneficial owner” and “company applicant” under the CTA.

While the CTA limits the reporting of company applicant information to reporting companies formed on or after the CTA’s effective date, the NYLTA doesn’t have a similar limitation. Beneficial owners or company applicants can obtain a FinCEN ID number to be reported in lieu of personal information under the CTA, but the NYLTA offers no similar alternative.

Entities formed or registered in New York before Jan. 1, 2026, must file either a beneficial ownership disclosure or an attestation of exemption by Jan. 1, 2027. Entities formed or registered in New York on or after Jan. 1, 2026, must do so within 30 days of filing the articles of organization or an application for authority.

Where the CTA only requires additional filings in the event of a change to reported information, the NYLTA requires reporting companies to file an annual statement to confirm or update beneficial ownership disclosure information; the principal executive officer street address; status as exempt company, if applicable; and other information that the Department of State may designate.

Whether recent challenges to the CTA will similarly impact the scope, enforcement, and applicability of the NYLTA is unclear. New York lawmakers may or may not clarify or amend the New York LLC Transparency Act to encompass a larger group of reporting companies than under the CTA. Limited liability companies and their legal advisers should monitor further changes to the law and be prepared to comply with the law by Jan. 1, 2026, if necessary.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Caitlin Hartsell is partner at BCLP in San Francisco focused on corporate transactions and governance matters.

Emma McEnery is an associate in BCLP’s private client practice in St. Louis.

Adam Fink is an associate in the BCLP’s corporate transactions practice group in New York.

Aaron Lang and Lauren Beeman contributed to this article.

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