New York’s LLC Publication Requirement

I don’t often get emotional one way or the other about corporate laws, but one requirement that truly irritates me is New York’s “publication” requirement for limited liability companies.  LLCs that are formed in New York, or LLCs formed elsewhere that are qualifying to do business in New York, are required to publish an advertisement in the county where the LLC is located for a period of time.  Depending on the county, this can be an expensive undertaking, and it exceeds the state filing fees associated with the formation itself.  The requirement does not apply to corporations.

LLC Publication Requirements NYS | Andrew Abramowitz, PLLC

There is absolutely, utterly no valid policy reason for this requirement, especially in this era of easy internet search for business entities by name.  No one sees one of these ads in a paper and says, “Wow, Acme Widgets LLC was just formed.  Good to know.”  Nevertheless, the requirement remains in place because of Albany:  the publications that benefit financially from the advertising revenue have lobbied heavily to keep the requirement in place.

What are the consequences of not complying with the rule?  Not many, surprisingly.  Really, the only practical one is that an LLC that has not published cannot sue someone else in a New York court.  However, should a non-compliant LLC determine later that it needs to sue someone, it can comply at that time, with no penalty for the delay.  Another matter that triggers the need to comply with publication is the LLC’s need to obtain an opinion of counsel that the LLC is in good standing with the state (e.g., in connection with a bank loan).  But again, this is something that can be dealt with when needed, not necessarily at the time of formation.

Needless to say, I never advise clients to break the law, but I think part of being a responsible attorney is telling clients which risks are real and which aren’t, and particularly for cash-strapped LLC startups, they should be told about the lack of practical consequence of compliance with this particular requirement, and they can make the decision for themselves.