FOR IMMEDIATE RELEASE
CONTACT: Anita Aboulafia (212) 267-6646, ext. 225, firstname.lastname@example.org
NYCLA OPPOSES LEGISLATION AMENDING THE LIMITED LIABILITY COMPANY
AND PARTNERSHIP LAWS
NEW YORK, NY – MAY 9, 2006 – The New York County Lawyers’ Association (NYCLA) has sent a letter to New York State government officials expressing opposition to amendments of the Limited Liability Company and Partnership Laws that make further changes to publication requirements for entities formed or conducting business in New York. NYCLA joins the New York State Bar Association, New York City Bar and other private and public organizations in opposing the measures – Senate Bill S6831 and Assembly Bill A 10399 – and Chapter 767 of the New York Laws of 2005 relating to Limited Liability Company Law and Partnership Law.
In its letter, which was prepared by the NYCLA Corporation Law Committee, NYCLA states, “…Chapter 767 and the amendments thereto posed by the Bills are unclear in certain respects, do not serve their stated objectives in others, impose (in many instances) a financial hardship on start-up businesses, and will discourage the formation of business entities in this state.” According to Norman L. Reimer, NYCLA President, “The proposed legislation is nothing more that a sop to special interests that neither promotes commerce nor protects the public. It should be rejected.”
Historically, foreign limited liability entities seeking qualification to conduct business in New York have been required to publish selected information about their formation in certain newspapers as a way of shielding the owners from personal liability for the debts, obligations and liabilities of the business entity. This policy is now widely considered antiquated as only two other states – Arizona and Nebraska – continue to impose such a mandate on limited liability entities.
The most alarming change presented by the proposed legislation is the penalty for noncompliance. In lieu of the suspension of authority to conduct business, the proposed legislation provides for the imposition of personal liability on each and every member or partner (as applicable) for all of the debts, obligations and liabilities of the business entity incurred or arising at any time before or after the entity’s failure to comply with the publication requirements. The proposed legislation also increases the duration of the already costly publication requirement from four weeks to six weeks and reduces the amount of time a limited liability entity not yet in compliance with the publication requirement has to remedy its noncompliance from a liberal 18 months to 120 days.
The New York County Lawyers’ Association (www.nycla.org) was founded in 1908 as the first major bar association in the country that admitted members without regard to race, ethnicity, religion or gender. Since its inception, it has pioneered some of the most far-reaching and tangible reforms in American jurisprudence and has continuously played an active role in legal developments and public policy.
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To read the letter, log on to www.nycla.org and scroll down to the News section on the homepage.