Bill H.3566

HOUSE DOCKET, NO. 3076 FILED ON: 1/20/2023

HOUSE . . . . . . . . . . . . . . . No. 3566

By Representative Uyterhoeven of Somerville, a petition (accompanied by bill, House, No. 3566) of Erika Uyterhoeven relative to limited liability companies. Economic Development and Emerging Technologies.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act to ensure LLC transparency.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 2 of chapter 156C of the General Laws, as appearing in the 2020 Official Edition, is hereby amended by inserting after clause (1) the following clause:-

(1½) “Beneficial owner”, a person who, directly or indirectly: (i) holds a membership interest in a limited liability company or foreign limited liability company; (ii) exercises substantial control over the decisions of a membership interest in a limited liability company or foreign limited liability company; or (iii) has been assigned a membership interest in a limited liability company or foreign limited liability company. A beneficial owner shall also include any ultimate beneficial owner regardless of the place of registration of the limited liability company.

A beneficial owner shall not include: (i) a minor child; (ii) a person acting as a nominee, intermediary, custodian or agent on behalf of another person; (iii) a person acting solely as an employee of a limited liability company or foreign limited liability company and whose control over or economic benefits from the limited liability company or foreign limited liability company derives solely from the employment status of the person; (iv) a person whose only interest in a limited liability company or foreign limited liability company is through a right of inheritance unless, the person meets the beneficial owner requirements in this chapter; (v) a creditor of a limited liability company or foreign limited liability company unless, the creditor meets the beneficial owner requirements in this subsection; (vi) any person whose member interest in a limited liability company or foreign limited liability company derives solely from their employment by such limited liability company or foreign limited liability company; and (vii) any person whose member interest in a limited liability company or foreign limited liability company derives solely from a limited liability company’s certificate of organization in sections 12 or 13 or a foreign limited liability company’s application for registration in sections 48 or 52.

SECTION 2. Subsection (a) of section 12 of said chapter 156C, as so appearing, is hereby amended by adding the following subparagraph:-

(10) the disclosure of each beneficial owner of the limited liability company.

SECTION 3. Section 13 of said chapter 156C, as so appearing, is hereby amended by adding the following subsection:-

(f) A certificate of organization shall be amended to reflect a change in the beneficial owners of a limited liability company or the information required to be provided relating to each beneficial owner.

SECTION 4. The second paragraph of section 48 of said chapter 156C, as so appearing, is hereby amended by adding the following subparagraph:-

(10) the disclosure of each beneficial owner of the foreign limited liability company.

SECTION 5. Said chapter 156C is hereby amended by striking out section 52, as so appearing, and inserting in place thereof the following section:-

Section 52. (1) If any statement in the application for registration of a foreign limited liability company was false when made or any arrangements or other facts described have changed, making the application inaccurate in any respect, the foreign limited liability company shall promptly file in the office of the state secretary a certificate, signed and sworn to by an authorized person, correcting or amending such statement.

(2) An application for registration shall be amended to reflect a change in the beneficial owners of a foreign limited liability company or the information required to be provided relating to each beneficial owner. The amended application for registration shall be filed with the state secretary within 30 days of the beneficial owner change of the foreign limited liability company.

SECTION 6. Said chapter 156C, as so appearing, is hereby amended by adding the following section:-

Section 73. (a)(1) A limited liability company shall disclose its beneficial owners to the state secretary. The beneficial owner shall identify each and every entity or person linking such beneficial owner to the limited liability company, including: (i) identifying every intermediary by name and explaining the nature of the legal or economic relationship of the beneficial owner to each such intermediary; and (ii) how each such intermediary is linked to every other intermediary and to the limited liability company. The state secretary may permit or require the beneficial owner to provide a diagram in order to meet the disclosure requirement.

(2) Disclosure requirements of this section shall only apply to beneficial owners if: (i) indirect beneficial ownership is exercised through a publicly traded entity, a REIT, a UPREIT or a mutual fund; and (ii) the beneficial owner is holding or controlling 25 per cent or more of the equity in such limited liability company. This subsection shall apply until full disclosure of a beneficial owner by person is achieved.

(3) If a beneficial owner indirectly exercises ownership through a trust or similar arrangement which holds or controls, directly or indirectly, 25 per cent or more of the equity in the limited liability company or exercises substantial control over such company, the limited liability company shall identify as a beneficial owner each person serving as:

(i) a trustee of the trust, a trust protector or any other individual with authority, directly or indirectly, to dispose of trust income, assets or principal;

(ii) a trust beneficiary with the right, directly or indirectly, to receive, demand or withdraw any trust income, assets or principal; and

(iii) a grantor or settlor with the right, directly or indirectly, to revoke the trust or to receive, demand or withdraw trust income, assets or principal.

(b)(1) A limited liability company, when disclosing its beneficial owners pursuant to sections 12 and 13, shall identify each beneficial owner by: (i) name; (ii) date of birth; (iii) their current residential or business address; (iv) a unique identifying number from a non-expired United States passport or a non-expired driver's license or identification card issued by the commonwealth or another state or a non-expired foreign passport bearing a photograph, date of birth and unique identifying information for the beneficial owner; and (5) a federal or state

taxpayer identification number or a legal entity identifier issued by the global legal entity identifier foundation.

(2) A limited liability company, when disclosing its beneficial owners to the state secretary, may submit a copy of the beneficial ownership information submitted to the federal government pursuant to 31 U.S.C. §5336 in order to satisfy disclosure requirements; provided, that such federal registration is current and contains all information required under this section.

(3) A limited liability company, when disclosing its beneficial owners pursuant to sections 12 and 13, shall identify the total number of properties, if any, each beneficial owner owns in the commonwealth and the city or town each property is located in the commonwealth.

(c)(1) A foreign limited liability company, when disclosing its beneficial owners pursuant to sections 48 and 52, shall identify each beneficial owner by: (i) name; (ii) date of birth; (iii) their current residential or business address; (iv) a unique identifying number from a non-expired United States passport or a non-expired driver's license or identification card issued by the commonwealth or another state or a non-expired foreign passport bearing a photograph, date of birth and unique identifying information for the beneficial owner; and (5) a federal or state taxpayer identification number or a legal entity identifier issued by the global legal entity identifier foundation.

(2) A foreign limited liability company, when disclosing its beneficial owners to the state secretary, may submit a copy of the beneficial ownership information submitted to the federal government pursuant to 31 U.S.C. §5336 in order to satisfy disclosure requirements, provided that such federal registration is current and contains all information required under this section.

(3) A foreign limited liability company, when disclosing its beneficial owners pursuant to sections 12 and 13, shall identify the total number of properties, if any, each beneficial owner owns in the commonwealth and the city or town each property is located in the commonwealth.

(d) All disclosed information filed with the state secretary under this section shall be a matter of public record and subject to chapter 66.

Name:	District/Address:	Date Added:
Erika Uyterhoeven	27th Middlesex	1/20/2023
Marcus S. Vaughn	9th Norfolk	7/10/2023