*For assistance with New York Limited Liability Companies, call (347) 878-9324. I offer flat fees for particular services.
Preliminary Points / Articles of Organization
1. How Many Members Must an LLC Have in New York
At the time of its formation, a limited liability company must have at least one member.[1] However, there are tax implications to having only one member. The LLC will be considered “invisible;” and its sole member will be taxed as if there was no LLC. If a single Corporation is a member, then the LLC will be considered a division.
2. When is the LLC formed in New York?
An LLC is formed at the time of the filing of the articles of organization with the department of state or a time specified in the articles of organization (no later than 60 days from the filing). The filing of the articles of organization is conclusive evidence that the LLC has been formed.
3. What are the articles of organization?
The articles of organization provide basic information about the LLC to the public.
4. What must the articles of organization contain?
(1) LLC’s name; (2) LLC’s county; (3) date of dissolution (if LLC has one); (4) designation of the NY Secretary of State as agent for process and address and LLCs mailing address for process; (5) if the LLC has a registered agent, the name and address of that agent; (6) whether LLC members will be personally liable; (7) any other provisions, not inconsistent with law, that the members elect to include.
It is important to note that if a provision is not included under the last section (7) concerning management by managers, then the LLC will be managed by all members.[2]
5. How Are the Articles of Organization Executed?
The Articles must be (1) signed by an organizer and (2) include the name and capacity of signer. The articles may be signed by an attorney in fact, but the power of attorney must be kept on file with the LLC. [3]
6. Where Must the Article of Organization Be Filed? How Will They Be Reviewed?
The Articles must be filed with the Secretary of State. The Department of State, however, will not review the Articles (or Certificates) for legal sufficiency; it will just determine if the forms are completed.
7. What if Someone Makes a False Statement in the Article of Organization?
If someone suffers loss because of a reasonable reliance on a false statement in the Articles, that person can recover from essentially anyone who filed the Articles or anyone manager who knew the statements were false. This includes any manager who “with reasonable diligence” should have known about the falsehood.[4]
8. Can the Articles of Organization be Amended?
Yes. In some cases, they must be amended.
One must prepare a certificate of Amendment entitled “Certificate of Amendment of the Article of Organization of [Name of LLC] Under Section Two Hundred and Eleven of the Limited Liability Company Law.”[5] The specific requirements of the certificate are contained in Section 211 of the Limited Liability Company Law.[6]
One can also file a “certificate of change” in order to change the LLCs office location or address; or the registered agent or agent’s address.[7]
A “certificate of correction” can be filed to correct any error in the Articles.[8]
There are some circumstances in which the Articles must be amended (essentially any of the information originally required to be in the Articles).
9. Who Must Authorize an Amendment to the Articles of Organization?
Unless the operating agreement provides otherwise, amendment of the Articles must be authorized by at least a majority in interest of the members entitled to vote.[9] A majority of interest means, unless otherwise provided in the operating agreement, the members whose aggregate share of the current profits of the LLC constitutes more than one-half of the aggregate of such shares of all members.[10]
Some minor changes may be made by one or more managers (e.g., the address of the registered agent), of course, assuming the operating agreement doesn’t specify otherwise.
Name of the LLC
1. What Are the Requirements for an LLC Name?
(a) The name of the LLC must contain the words “Limited Liability Company,” or “L.L.C.” or “LLC.”
(b) the name must distinguish the LLC from other LLCs and corporations (with some caveats).
(c) The name chosen shall be the name used in the conduct of its business, unless the LLC complies with New York General Business Law § 130, which requires registration of fictitious names.
(d) Shall not contain the words listed in § 230(e), (f), and (i) (words such as “school,” “state trooper” “finance” or “guarantee”).
(e) Shall not contain the words “blind” or “handicapped” unless approved by the state department of social services.
2. Can An LLC Reserve A Name Before It Is Formed?
Yes, under section 205 and subject to section 205(c)’s particular requirements (e.g., requirements for a certificate of reservation).
Publishing Requirement
1. What is the Publishing Requirement?
Within 120 days of the effective date of the Articles, a notice containing the articles or “the substance thereof” must be published once a week for six weeks in two newspapers designated by the clerk in the county where the LLC is formed. Proof of publication then must be filed with the department of state.[11]
2. What Must the Notice Include?
The (1) name of the company; (2) date of formation; (3) county in which the LLC is located and street address; (4) statement that Secretary of State is designated agent; (5) name and address of registered agent (if there is one); (6) date of dissolution (if there is one); (7) character and purpose of the business.[12]
3. What Happens if the LLC Does not Publish?
If proof of publication is not provided within 120 days, the LLC’s authority to conduct business in New York will be suspended. But this suspension will not impair the validity of any contract or act made by the LLC, or the ability of others to sue the LLC. The LLC would not be able to sue in New York.
One court allowed an LLC to annul its suspension by fixing an error in its notice.
Example: An LLC filed suit without having met the publishing requirement. The court held that the LLC could cure the publication defect after having commenced the proceeding.[13]
4. What is the Point of the Publishing Requirement?
Ostensibly, to give notice to the public. But this makes little sense. Some important information is not included in the publishing requirement such as whether the LLC is member managed. In addition, a system in which this information could be published on the internet would be (1) easier to access for the public and (2) less costly (the publishing may cost over $1,000). Nevertheless, the publishing requirement has withstood constitutional attack[14] as well as an attack on the clerk’s ability to choose the particular publications.[15]
*For assistance with New York Limited Liability Companies, call (347) 878-9324. I offer flat fees for particular services.
Preliminary Points / Articles of Organization
1. How Many Members Must an LLC Have in New York
At the time of its formation, a limited liability company must have at least one member.[1] However, there are tax implications to having only one member. The LLC will be considered “invisible;” and its sole member will be taxed as if there was no LLC. If a single Corporation is a member, then the LLC will be considered a division.
2. When is the LLC formed in New York?
An LLC is formed at the time of the filing of the articles of organization with the department of state or a time specified in the articles of organization (no later than 60 days from the filing). The filing of the articles of organization is conclusive evidence that the LLC has been formed.
3. What are the articles of organization?
The articles of organization provide basic information about the LLC to the public.
4. What must the articles of organization contain?
(1) LLC’s name; (2) LLC’s county; (3) date of dissolution (if LLC has one); (4) designation of the NY Secretary of State as agent for process and address and LLCs mailing address for process; (5) if the LLC has a registered agent, the name and address of that agent; (6) whether LLC members will be personally liable; (7) any other provisions, not inconsistent with law, that the members elect to include.
It is important to note that if a provision is not included under the last section (7) concerning management by managers, then the LLC will be managed by all members.[2]
5. How Are the Articles of Organization Executed?
The Articles must be (1) signed by an organizer and (2) include the name and capacity of signer. The articles may be signed by an attorney in fact, but the power of attorney must be kept on file with the LLC. [3]
6. Where Must the Article of Organization Be Filed? How Will They Be Reviewed?
The Articles must be filed with the Secretary of State. The Department of State, however, will not review the Articles (or Certificates) for legal sufficiency; it will just determine if the forms are completed.
7. What if Someone Makes a False Statement in the Article of Organization?
If someone suffers loss because of a reasonable reliance on a false statement in the Articles, that person can recover from essentially anyone who filed the Articles or anyone manager who knew the statements were false. This includes any manager who “with reasonable diligence” should have known about the falsehood.[4]
8. Can the Articles of Organization be Amended?
Yes. In some cases, they must be amended.
One must prepare a certificate of Amendment entitled “Certificate of Amendment of the Article of Organization of [Name of LLC] Under Section Two Hundred and Eleven of the Limited Liability Company Law.”[5] The specific requirements of the certificate are contained in Section 211 of the Limited Liability Company Law.[6]
One can also file a “certificate of change” in order to change the LLCs office location or address; or the registered agent or agent’s address.[7]
A “certificate of correction” can be filed to correct any error in the Articles.[8]
There are some circumstances in which the Articles must be amended (essentially any of the information originally required to be in the Articles).
9. Who Must Authorize an Amendment to the Articles of Organization?
Unless the operating agreement provides otherwise, amendment of the Articles must be authorized by at least a majority in interest of the members entitled to vote.[9] A majority of interest means, unless otherwise provided in the operating agreement, the members whose aggregate share of the current profits of the LLC constitutes more than one-half of the aggregate of such shares of all members.[10]
Some minor changes may be made by one or more managers (e.g., the address of the registered agent), of course, assuming the operating agreement doesn’t specify otherwise.
Name of the LLC
1. What Are the Requirements for an LLC Name?
(a) The name of the LLC must contain the words “Limited Liability Company,” or “L.L.C.” or “LLC.”
(b) the name must distinguish the LLC from other LLCs and corporations (with some caveats).
(c) The name chosen shall be the name used in the conduct of its business, unless the LLC complies with New York General Business Law § 130, which requires registration of fictitious names.
(d) Shall not contain the words listed in § 230(e), (f), and (i) (words such as “school,” “state trooper” “finance” or “guarantee”).
(e) Shall not contain the words “blind” or “handicapped” unless approved by the state department of social services.
2. Can An LLC Reserve A Name Before It Is Formed?
Yes, under section 205 and subject to section 205(c)’s particular requirements (e.g., requirements for a certificate of reservation).
Publishing Requirement
1. What is the Publishing Requirement?
Within 120 days of the effective date of the Articles, a notice containing the articles or “the substance thereof” must be published once a week for six weeks in two newspapers designated by the clerk in the county where the LLC is formed. Proof of publication then must be filed with the department of state.[11]
2. What Must the Notice Include?
The (1) name of the company; (2) date of formation; (3) county in which the LLC is located and street address; (4) statement that Secretary of State is designated agent; (5) name and address of registered agent (if there is one); (6) date of dissolution (if there is one); (7) character and purpose of the business.[12]
3. What Happens if the LLC Does not Publish?
If proof of publication is not provided within 120 days, the LLC’s authority to conduct business in New York will be suspended. But this suspension will not impair the validity of any contract or act made by the LLC, or the ability of others to sue the LLC. The LLC would not be able to sue in New York.
One court allowed an LLC to annul its suspension by fixing an error in its notice.
Example: An LLC filed suit without having met the publishing requirement. The court held that the LLC could cure the publication defect after having commenced the proceeding.[13]
4. What is the Point of the Publishing Requirement?
Ostensibly, to give notice to the public. But this makes little sense. Some important information is not included in the publishing requirement such as whether the LLC is member managed. In addition, a system in which this information could be published on the internet would be (1) easier to access for the public and (2) less costly (the publishing may cost over $1,000). Nevertheless, the publishing requirement has withstood constitutional attack[14] as well as an attack on the clerk’s ability to choose the particular publications.[15]
[1] N.Y. Limited Liability Company Law § 203(c).
[2] N.Y. Limited Liability Company Law § 401.
[3] N.Y. Limited Liability Company Law § 208
[4] N.Y. Limited Liability Company Law § 210
[5] N.Y. Limited Liability Company Law § 211
[6] N.Y. Limited Liability Company Law § 211
[7] N.Y. Limited Liability Company Law § 211-A
[8] N.Y. Limited Liability Company Law § 212
[9] N.Y. Limited Liability Company Law § 213(a)
[10] N.Y. Limited Liability Company Law § 102(o)
[11] N.Y. Limited Liability Company Law § 206
[12] N.Y. Limited Liability Company Law § 206(a)
[13] Acquisition America VI, LLC v. Lamadore, 784 N.Y.S.2d 329 (2004).
[14] Barklee Realty Co., LLC v. Pataki, 765 N.Y.S.2d 599 (1st Dept. 2003).
[15] NCJ Cleaners, LLC v. ALM Media, Inc. (2d Dept 2008).