STATE OF NEW YORK
25 BEAVER STREET
NEW YORK, NEW YORK 10004
|George E. Pataki
Gregory V. Serio
The Office of General Counsel issued the following informal opinion on December 2, 2003, representing the position of the New York State Insurance Department.
RE: Licensing of Limited Liability Companies.
May a limited liability company ("LLC") that is seeking to be licensed as an insurance broker have a sublicensee who is a non-member manager?
Yes, provided the non-member manager is otherwise qualified to act as a sublicensee for an insurance broker.
An LLC that intends to apply for an insurance broker license wishes to have a non-member manager as sublicensee.
The New York Limited Liability Company Law ("LLCL") was enacted in 1994. Shortly after the LLCL became effective, this Department adopted a policy of granting the kinds of licenses authorized by Article 21 of the Insurance Law (such as insurance agent and insurance broker) to limited liability companies even though the relevant provisions of Article 21 had not been amended to specifically authorize the issuance of such licenses to LLCs.
The various types of licenses authorized by Article 21 may be issued to either a natural person or an entity. If issued to an entity there must be a sublicensee, who is a natural person who must meet the same requirements that a person seeking to be licensed as an individual for the same kind of license would be required to meet. Sublicensees of a partnership (or "firm", as it is called in the Insurance Law) must be partners, while sublicensees of a corporation must be officers or directors of that corporation (see, for example, Insurance Law 2103(c)).
When the Department began issuing the kinds of licenses authorized by Article 21 to LLCs, it took the position that since the structure of an LLC resembled a partnership more closely than a corporation the sublicensees of an LLC had to be members of the LLC, who were seen as analogous to the partners in a partnership. The concept of allowing non-member managers of Article 21 LLC licensees to be sublicensees was rejected. This is the position in our informal opinion of May 13, 2002, which the inquirer referenced in his letter. Subsequent to the issuance of the May 13, 2002 opinion, we reconsidered our position on this issue. We have considered the role of a non-member manager of an LLC as permitted by Section 408 of the LLCL and have concluded that the non-member manager of an LLC occupies an analogous position to the non-shareholder officer or director of a corporation. Since a non-shareholder officer or director of a corporation may be a sublicensee pursuant to Insurance Law Section 2103(c) and related statutes, it is our conclusion that a non-member manager of an LLC may be a sublicensee of the LLC licensee, provided that the non-member manager meets all requirements to be a sublicensee for the kind of license involved. To the extent that any previous letters or opinions issued by this Department express a contrary position on this issue, they have been overruled by the opinion of October 2, 2002.
For further information you may contact Associate Attorney Patrick M. Harrigan at the Albany Office.