What Is The Purpose Behind The NY LLC Publication Requirement?
A limited liability corporation (LLC) has been an effective vessel for allowing entrepreneurs to join together without risking their personal wealth on the corporation’s success. Since its inception, businesses have increasingly turned to the LLC format as their preferred business structure. As with any form of legal advantage, the benefits come with requirements. One such requirement is the NY LLC Publication Law detailed in section 206 of the state code, which mandates that all LLCs issue a specific type of notification in local newspapers when it is formed.
Completing The NY LLC Publication Law Requirements
The first step in fulfilling the NY LLC publication requirement is filing the articles of the organization and paying the current fee of $200 to form the LLC. This document establishes the county that hosts the LLC’s office, which influences the specifics of the publication law requirements.
After the LLC is established, they must make a series of regular announcements in newspapers assigned to them by the county clerk of the county where the LLC was established. This also applies to cases where another business structure is converted to an LLC, such as changing from a limited partnership. A list of clerks by county is available via the New York State Association of Clerks, and the LLC must contact the clerk to receive their assigned newspapers.
One advertisement will run in a daily newspaper, and the other will run in a weekly paper. The publications must occur within 120 days of the LLC’s formation, and they have to run for six consecutive weeks to meet the requirements. The LLC is responsible for paying any fees that the newspaper has for the publication of the notice, and that price will vary between publications. The normal operations of the LLC can continue while the process is ongoing.
Required Notification Information
Within the advertisement, the LLC must include the following information to be considered valid:
- The LLC’s name.
- The filing date of the LLC’s articles of organization.
- The date of the LLC’s formation, if different from the filing date of the articles of organization.
- The county where the LLC is located.
- The LLC office’s street address.
- A statement notifying that the secretary of state has been designated as agent of the LLC.
- The name and address of any registered agent of the LLC.
- The specific date of dissolution, if one exists.
- The LLC’s reason for forming.
It is up to the LLC to ensure to a reasonable degree that all published information is correct.
Filing The Completed Requirements
Once the publications have run for the required time, the LLC must report the completion to the Department of State by filing a Certificate of Publication. Each newspaper will send the LLC an affidavit of publication that confirms the notifications run in their printings. The current fee for filing the certificate is $50. Once filed, the LLC is free to conduct business within the state of New York. The LLC does not need to publish any changes to their information if they have previously completed the requirement. However, they do have to file an amendment of their articles of organization with the Department of State.
Why Does New York Have An LLC Publication Requirement?
The public announcement of company creation informs the general population about the new entity forming in their area. Many other types of actions by corporations have similar public notification requirements. Still, the LLC publication law is one of the few remaining versions of these laws that specify publication in a newspaper.
For example, corporations holding a shareholder meeting are required by BSC § 605 to give notice before the meeting takes place. Unlike the LLC publication law, corporations have more freedom to decide how they announce these meetings, including the ability to count electronic notifications. This disparity can be confusing and frustrating when it seems like more convenient options are denied for no reason.
Before the relatively recent surge in electronic communication capabilities, newspapers were the primary way communities shared information on a large scale. Early on in the nation’s history, President Washington signed the U.S. Postal Service Act of 1792 into law, giving preferential treatment to newspapers and similar publications in the new postal system for this reason. The section of the state code regarding LLCs was first put into effect in 2006 when the average Internet connection speed and the availability of broadband Internet access in the U.S. were beginning to become more widespread. To ensure fairness to those who may not have Internet access, the publication law opted to use newspapers as the required press medium. Splitting the publications between two different newspapers with different publication intervals was chosen to disseminate the notification as broadly as possible without placing an undue burden on the LLC.
Newspapers can still provide a lingering information source to a specific region with no major infrastructure requirements, and many will host digital formats of their papers that are available to subscribers. This makes replacing the newspaper requirement a fairly low priority, and some other form of required notification medium is likely to replace it if it becomes more pertinent.
Penalties For Failing To Complete The NY LLC Publication Requirement
When an LLC fails to complete the NY LLC publication law requirements within 120 days of formation, the LLC temporarily suffers a suspension of its authority to conduct business in the state of New York. Without this authority, other companies within the state may be reluctant to do business with that LLC; however, not every company will care. The contracts made during the suspension period maintain their legality. The terms of any contract can still be enforced, and the LLC members do not face legal liability. The primary downside will be losing the ability to proactively engage as an LLC, including losing the right to sue in court. Once the LLC successfully completes the requirement, the suspension is annulled, and all contracts the LLC made during that period remain in effect as if it never happened. This makes the penalties for failure to complete the requirements relatively mild with no incurred fees. Still, it can cause losses in the form of missed business opportunities and the inability to seek compensation for breached contracts until fixed.
The law is harsher if the LLC is found to have made false statements on their Certificate of Publication or other LLC filing requirements. Those who manage or execute on behalf of the LLC and knowingly make false statements or should have reasonably been aware that they were false will lose their liability protection (§ 210). Anyone who suffers a loss due to the reliance of any knowingly or negligently false statements from the LLC can sue the persons who made the false statements in an attempt to recover damages. There is a 90-day grace period to fix any false statements. Still, it is essential to note that the Department of State does not check any certificates for their legality at the time of filing, instead only ensuring that the certificates have been filed (§ 209). This means that any false statements lingering in the notifications may open the LLC’s agents to liability dating back to the time of filing.
Getting Help with The NY LLC Publication Law Requirements
Navigating the NY LLC publication law is a hiccup that can stifle the growth of a new business. A legally savvy LLC agent can manage the process. Still, it does involve parsing dense legal language and ensuring that all of the steps are carefully followed to maintain the company’s status and the members’ freedom from liability. An unnoticed typo in the advert may directly cause a drastic amount of damage to the members’ finances. While it may seem trivial and outdated, it is a legal obligation that cannot be ignored if an LLC wishes to form in the state of New York.
Windsor Corporate Services can take all of the hassles out of the process. With our LLC Publication service, every step from contacting the county clerk to filing the Certificate of Publication with the Department of State will be handled with a guarantee of efficiency and accuracy. After a budding LLC places an order, we contact the clerks to receive the assigned newspapers, draft a notice that fulfills all the necessary requirements, place the advertisements, file the Certificate of Publication, and send the LLC all of the evidence required after the process is complete. Filling out the order form is a simple process that can be completed online in just a few minutes. The upfront pricing automatically adjusts according to the LLC’s county of operation. With Windsor Corporate Services’ fast and affordable help, the LLC members can get back to more important tasks like growing their new organization.