BILL NUMBER: S8397
SPONSOR: MARTINEZ
TITLE OF BILL:
An act to amend the business corporation law, general associations law,
limited liability company law, not-for-profit corporation law, partner-
ship law and real property law, in relation to electronic service of
process
PURPOSE OF THE BILL:
To reduce the amount of time and effort it takes the state and munici-
palities to serve process on the Secretary of State and alert corpo-
rations and other business entities of service of process much sooner.
SUMMARY OF PROVISIONS:
Section 1 amends section 306 of the Business Corporation Law to author-
ize the state and municipalities to serve process electronically on the
Secretary of State as the agent of a business corporation and for a copy
of such process to be provided to the corporation by certified mailed or
notice of service to be provided to the corporation by email.
Section 2 amends section 19 of the General Associations Law to authorize
the state and municipalities to serve process electronically on the
Secretary of State as the agent of an association and for a copy of such
process to be provided to the association by certified mailed or notice
of service to be provided to the association by email.
Section 3 amends section 303 of the Limited Liability Company Law to
authorize the state and municipalities to serve process electronically
on the Secretary of State as the agent of a limited liability company
and for a copy of such process to be provided to the limited liability
company by certified mailed or notice of service to be provided to the
limited liability company by email.
Section 4 amends section 306 of the Not-for-Profit Corporation Law to
authorize the state and municipalities to serve process electronically
on the Secretary of State as agent of a not-for-profit corporation and
for a copy of such process to be provided to the not-for-profit corpo-
ration by certified mailed or notice of service to be provided to the
not-for-profit corporation by email.
Section 5 amends section 121-109 of the Partnership Law to authorize the
state and municipalities to serve process electronically on the Secre-
tary of State as agent of a limited partnership and for a copy of such
process to be provided to the partnership by certified mailed or notice
of service to be provided to the limited partnership by email.
Section 6 amends section 121-1505 of the Partnership Law to authorize
the state and municipalities to serve process electronically on the
Secretary of State as agent of a limited liability partnership and for a
copy of such process to be provided to the limited liability partnership
by certified mailed or notice of service to be provided to the partner-
ship by email.
Section 7 amends section 339-n of the Real Property Law to authorize the
state and municipalities to serve process electronically on the Secre-
tary of State and for a copy of such process to be provided to the
condominium board of managers by certified mailed or notice of service
to be provided to the condominium board of managers by email.
Section 8 provides for an effective date of one hundred eighty days
after it shall have become law.
JUSTIFICATION:
Most corporations, business entities, and not-for-profit corporations
formed or authorized to do business in New York must designate the
Secretary of State as agent for service of process. The Department of
State is served with process approximately 130,000 times annually.
Process received must be promptly sent by certified mail to the entity
being sued or notice provided electronically for those entities that
have opted into electronic service of process (ESOP). The manual proc-
ess employed by DOS as it relates to certified mailings is inefficient,
costly and creates risks that the entity will not receive prompt notice
of the pending litigation. Those serving the Secretary of State as agent
of the corporation or other business entity, must create hard copies of
the process and travel to Albany to effectuate service, unless the enti-
ty being sued has opted into ESOP. This can be costly and time consuming
as well.
This proposal will allow the state and municipalities to electronically
serve the Secretary of State even when business entities have not opted
into ESOP. In those instances, DOS would print and transmit process to
the entity served via certified mail, thus reducing the amount of time
and effort it takes the state and municipalities to serve the Secretary
of State and alerting business entities of the process much sooner. This
would specifically reduce a burden on New York City which serves a
significant amount of process on the Secretary of State in connection
with a local NYC law.
PRIOR LEGISLATIVE HISTORY:
None.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
One hundred eighty days after it shall have become law.
Statutes affected:
S8397: 306 business corporation law, 19 general associations law, 303 limited liability company law, 121-109 partnership law, 121-1505 partnership law, 339-n real property law, 339-n(7) real property law