There are a handful of states which require the publication of notices for certain types of entity filings. Ostensibly, the purpose of these requirements is to protect the community by providing notice of formation of new businesses or changes to existing businesses. Many people in New York State are questioning the purpose of these requirements in the modern world of instant access to most public records via the Internet and the decline of print journalism in general. It is interesting to note that publication requirements in other states do not appear to be a source of controversy as they are in New York, likely due to the fact that the costs involved are much lower in those states.
Other states with publication requirements for entity filings include Arizona, Pennsylvania, Georgia, Nevada and Nebraska. Let’s compare the publication requirements and costs for Arizona, Georgia and Pennsylvania to those of New York. (Note that while Arizona, Georgia and a handful of other states have trade name publication requirements, these are not included in this analysis.)
PUBLICATION REQUIREMENTS BY STATE:
Arizona:
- Entity types: Publication is required for domestic and foreign business and nonprofit corporations, LLPs, LLLPs and domestic LLCs
- Filings requiring publication: formation, amendment, merger, dissolution, withdrawal and qualification
- Notice requirements: Three consecutive publications in a newspaper in the county of entity’s known place of business
- Proof of publication filing required? Optional
- Average costs: $80 to $100
- Entity types: Publication is required for domestic business and nonprofit corporations
- Filings requiring publication: Incorporation, name change amendments, mergers and dissolutions
- Notice requirements: Two consecutive publications in a newspaper meeting certain requirements in county of registered office. Listing of approved papers available
- Proof of publication filing required? Not Required
- Average costs: $40 (set by statute)
- Entity types: Domestic and Foreign Business and Non-Profit Corporations
- Filings requiring publication: Incorporation, dissolution, termination of authority
- Notice requirements: Single publication in two newspapers (general circulation and legal newspaper where possible) in county where business is located
- Proof of publication filing required? Not Required
- Average costs: $40 - $60
- Entity types: Domestic and Foreign LLCs, LPs, and LLPs
- Filings requiring publication: Formation, Conversion, Qualification
- Notice requirements: Six consecutive publications in two newspapers (one a daily paper) in county of registered office. Newspapers designated by county clerk
- Proof of publication filing required? Required
- Average costs: $200 - $2500
Why Publication in New York is a Source of Controversy
As you can see, publication in other states can affect a great many more filings and/or entity types than in New York. Yet, while Internet articles and blog postings condemn these requirements in New York, the same is not true for other states. The likely reason for this is that New York’s process is both the most cumbersome, requiring publication for six weeks in two separate papers and subsequent filing of the proof of publication, and the most expensive, regularly costing hundreds of dollars and costing thousands of dollars for entities with registered offices in certain counties such as New York County. Many argue that such excessive start-up costs hamper small businesses and drive business away from New York State.
In June 2006, the legislature re-affirmed the publication requirements. By requiring that the papers chosen include both a daily and a weekly paper, it actually made them more expensive to fulfill, since the price to advertise in a daily paper is usually higher. (For further information on the changes made in June of 2006 , click here)
Repeal of Publication Requirement Coming Soon?
Since 2006, there have been efforts to get the publication requirement in New York repealed. Recently, on January 5, 2011 identical bills S437 and A885 were introduced in the Senate and Assembly respectively. Michael Kellner, the member who introduced the bill in the Assembly, states on his web site that the purpose is to remove unnecessary roadblocks for the start-up of small businesses. The bill, as introduced, repeals Section 206 which relates to publication requirements for domestic limited liability companies only. Publication requirements for limited partnerships, limited liability partnerships and foreign limited liability companies would remain intact. (To view the text of the bill click here.)Another bill (A06559) introduced in the Assembly on March 21st, 2011 would repeal publication requirements for all types of entities. To view the text of this bill, click here.
These bills have been referred to the Committee on Corporations, Authorities and Commissions. It is unknown whether they will continue to languish in committee or whether some action will be taken. It seems safe to assume that newspapers, struggling with a loss of both readership and advertising revenue in recent years, do not want to see a change that will further harm their bottom line. Yet, the argument that New York’s requirements are onerous for small businesses seems a valid one, especially when comparing our requirements to those of other states requiring publication. Finally, in this age where public records of entity filings are readily available on line, it is difficult to argue that a newspaper notice is needed in order to alert the general public. Many feel that publication is an idea whose time has passed, but it is still a requirement in New York State and may be for some time to come.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
