New limited liability companies formed in New York are forced to clear an additional hurdle that is only required in two other states: publication of notice of formation and the filing of a certificate of publication. After the initial formation of an LLC, the New York LLC Law requires that notice of formation be published in two newspapers (one daily and one weekly) once a week for six consecutive weeks. The newspapers are designated by the county clerk in which the LLC’s office is located.
After publication has been accomplished, a certificate of publication, affidavits from the newspapers, and copies of the published notices must be filed with the New York Department of State (DOS). The certificate must be filed within 120 days of the effectiveness of the LLC’s articles of organization. The entire publication process, from engaging the newspaper up until the filing of the certificate of publication, can take up to twelve weeks.
There’s a reason that only three states in the nation continue to have a publication requirement: it’s totally unnecessary.
First, with the advent of the online filing of articles of organization with DOS, it has become easier for individuals to form LLCs without the engagement of an attorney or even the help of online legal services such as LegalZoom (the latter of which is never recommended). After the initial formation of the LLC, those who form LLCs without outside help often neglect the publication requirement.
Failure to carry out publication carries a penalty, at least on paper, of the suspension of the LLC’s authority to carry on business. While this sounds serious, practitioners in both corporate and real estate matters have come to recognize that the DOS has rarely, if ever, suspended or revoked an LLC’s authority for that reason. Additionally, late filing of the certificate of publication effectively cures the violation. The lack of enforcement of the publication requirement and the fact that it is so easy to cure essentially render the requirement obsolete.
While publication and the filing of the certificate of publication are not expensive, it is an unnecessary cost imposed on individuals who are often looking to start a small business. The newspapers are the ones who reap the financial benefit of the publication requirement at the expense of business owners.
Some counties impose additional requirements relative to publication. Perhaps the most ridiculous example of this occurs in Queens County, where the county clerk’s office requires those who form LLCs to send a copy of the filing receipt for the articles of organization. The newspapers will not publish notice of formation until they receive a letter from the county clerk (with a gold seal!) designating that newspaper for publication. Overkill? We think so.
The purpose of requiring the notices of formation to be published was to provide notice to the public. Have you ever found yourself reading the list of limited liability company notices of formation in your local newspaper’s legal notices, which are tucked in the back pages and in tiny print? Neither have we. It is not sensible to continue imposing the publication requirement if its elimination would not harm the public. Further, with the existence of DOS’s online business entity database, are twelve publications in an obscure section of the newspaper truly necessary?
New York would be better off joining the majority of states in eliminating its publication requirement. It does nothing to achieve its purpose, and only serves as a trap for the unwary.