STATE OF NEW YORK
________________________________________________________________________
10060
IN ASSEMBLY
March 14, 2018
___________
Introduced by M. of A. PAULIN, ERRIGO -- read once and referred to the
Committee on Corporations, Authorities and Commissions
AN ACT to amend the limited liability company law, in relation to estab-
lishing the L3C act regarding low-profit limited liability companies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act may be known and shall be cited as the "L3C act".
2 § 2. Section 102 of the limited liability company law is amended by
3 adding a new subdivision (n-1) to read as follows:
4 (n-1) "Low-profit limited liability company" means a limited liability
5 company that has set forth in its articles of organization a business
6 purpose that satisfies, and that is at all times operated to satisfy,
7 each of the following requirements:
8 (i) the limited liability company significantly furthers the accom-
9 plishment of one or more charitable or educational purposes within the
10 meaning of section 170(c)(2)(B) of the internal revenue code of 1986 (26
11 U.S.C. § 170(c)(2)(B)), and would not have been formed but for its
12 relationship to the accomplishment of charitable or educational
13 purposes;
14 (ii) no significant purpose of the limited liability company is the
15 production of income or the appreciation of property; provided, however,
16 that the fact that the limited liability company produces significant
17 income or capital appreciation shall not, in the absence of other
18 factors, be conclusive evidence of a significant purpose involving the
19 production of income or the appreciation of property; and
20 (iii) no purpose of the limited liability company is to accomplish one
21 or more political or legislative purposes within the meaning of section
22 170(c)(2)(D) of the internal revenue code of 1986 (26 U.S.C. §
23 170(c)(2)(D)).
24 § 3. Paragraph 6 of subdivision (e) of section 203 of the limited
25 liability company law, as added by chapter 470 of the laws of 1997, is
26 amended, paragraph 7 of subdivision (e) is renumbered paragraph 8 and a
27 new paragraph 7 is added to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01524-02-8
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1 (6) if all or specified members are to be liable in their capacity as
2 members for all or specified debts, obligations or liabilities of the
3 limited liability company as authorized pursuant to section six hundred
4 nine of this chapter, a statement that all or specified members are so
5 liable for such debts, obligations or liabilities in their capacity as
6 members of the limited liability company as authorized pursuant to
7 section six hundred nine of this chapter; [and]
8 (7) if the company is a low-profit limited liability company, as
9 defined in subdivision (n-1) of section one hundred two of this chapter,
10 that the company is a limited liability company; and
11 § 4. Subdivisions (g), (h) and (i) of section 204 of the limited
12 liability company law, subdivision (i) as added by chapter 316 of the
13 laws of 2005, are amended and three new subdivisions (j), (k) and (l)
14 are added to read as follows:
15 (g) shall not, unless the approval of the state department of social
16 services or its successors in function is attached to the articles of
17 organization or application for authority, contain the word "blind" or
18 "handicapped." Such approval shall be granted by the state department of
19 social services or its successors in function if in its opinion the word
20 "blind" or "handicapped" as used in the limited liability company's
21 proposed name will not tend to mislead or confuse the public into
22 believing that the limited liability company is organized for charitable
23 or nonprofit purposes related to the blind or the handicapped; [and]
24 (h) shall not, unless the approval of the attorney general is attached
25 to the articles of organization or application for authority, contain
26 the word "exchange" or any abbreviation or derivative thereof. Such
27 approval shall not be granted by the attorney general if in his or her
28 opinion the use of the word "exchange" in the limited liability compa-
29 ny's proposed name would falsely imply that the limited liability compa-
30 ny conducts its business at a place where trade is carried on in securi-
31 ties or commodities by brokers, dealers or merchants[.];
32 (i) shall not contain the following terms: "school," "education,"
33 "elementary," "secondary," "kindergarten," "prekindergarten,"
34 "preschool," "nursery school," "museum," "history," "historical,"
35 "historical society," "arboretum," "library," "college," "university" or
36 other term restricted by section two hundred twenty-four of the educa-
37 tion law; "conservatory," "academy," or "institute" or any abbreviation
38 or derivative of such terms, shall have endorsed thereon or annexed
39 thereto the consent of the commissioner of education[.];
40 (j) shall, in the case of a low-profit limited liability company,
41 contain the words "low-profit limited liability company" or the abbrevi-
42 ations "L3C" or "l3c", with or without periods or other punctuation;
43 (k) shall not, in the case of a low-profit limited liability company
44 unless the approval of the state department of social services or its
45 successors in function is attached to the articles of organization or
46 application for authority, contain the word "blind" or "handicapped."
47 Such approval shall be granted by the state department of social
48 services or its successors in function if in its opinion the word
49 "blind" or "handicapped" as used in the limited liability company's
50 proposed name will not tend to mislead or confuse the public into
51 believing that the limited liability company is organized for charitable
52 or nonprofit purposes related to the blind or the handicapped; and
53 (l) shall not, in the case of a low-profit limited liability company
54 unless the approval of the attorney general is attached to the articles
55 of organization or application for authority, contain the word
56 "exchange" or any abbreviation or derivative thereof. Such approval
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1 shall not be granted by the attorney general if in his or her opinion
2 the use of the word "exchange" in the limited liability company's
3 proposed name would falsely imply that the limited liability company
4 conducts its business at a place where trade is carried on in securities
5 or commodities by brokers, dealers or merchants.
6 § 5. Paragraphs 8 and 9 of subdivision (d) of section 211 of the
7 limited liability company law are renumbered paragraphs 9 and 10 and a
8 new paragraph 8 is added to read as follows:
9 (8) if the limited liability company is a low-profit limited liability
10 company, its failure to meet any of the requirements set out in subdivi-
11 sion (n-1) of section one hundred two of this chapter;
12 § 6. Paragraph 4 of subdivision (a) of section 701 of the limited
13 liability company law, as amended by chapter 420 of the laws of 1999, is
14 amended, paragraph 5 of subdivision (a) is renumbered paragraph 6 and a
15 new paragraph 5 is added to read as follows:
16 (4) at any time there are no members, provided that, unless otherwise
17 provided in the operating agreement, the limited liability company is
18 not dissolved and is not required to be wound up if, within one hundred
19 eighty days or such other period as is provided for in the operating
20 agreement after the occurrence of the event that terminated the contin-
21 ued membership of the last remaining member, the legal representative of
22 the last remaining member agrees in writing to continue the limited
23 liability company and to the admission of the legal representative of
24 such member or its assignee to the limited liability company as a
25 member, effective as of the occurrence of the event that terminated the
26 continued membership of the last remaining member; [or]
27 (5) if the limited liability company is a low-profit limited liability
28 company that has ceased to meet any of the requirements set out in
29 subdivision (n-1) of section one hundred two of this chapter and has
30 failed for ninety days after ceasing to meet those requirements to file
31 articles of amendment with the department of state amending its name to
32 conform with the requirements of section two hundred four of this chap-
33 ter governing limited liability company names; or
34 § 7. This act shall take effect immediately.
