Important Notice Impacting Business Entities:
An Update on the Corporate Transparency Act as of January 1, 2024.

A new reporting requirement mandated by the passage of the federal Corporate Transparency Act (CTA) will require most existing and newly formed businesses to report information about their beneficial owners to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). This new requirement applies to limited liability companies, corporations, real estate holding companies, and more – all entities registered with a Secretary of State are now required to make these mandatory reports which require specific and detailed information, and a failure to file these reports can result in serious civil and criminal penalties.

The CTA’s new beneficial ownership information reporting system is like nothing that has ever been required for the majority of businesses, either locally or elsewhere in the country. The Beneficial Owner Information (BOI) Report requires that anyone who owns more than 25% of the business, and anyone who exercises “substantial control” over the business, provide, for each beneficial owner, their full legal name, date of birth, current residential address, governmental identification information from a passport or driver’s license, and a copy of that identification document.

Certain companies have been exempted from the CTA beneficial ownership requirements. However, many of the exemptions apply to companies in industries that are already heavily regulated (e.g., securities, banking, insurance). We believe that a substantial majority of the business clients that our firm serves will not qualify for an exemption and will therefore be required to file an initial BOI Report and then update it as required.

The BOI Reporting obligations under the CTA commence on January 1, 2024, businesses have a 90-day period of time after that date to file their initial BOI Report. All non-exempt businesses existing on or before December 31, 2023 will have the entire 2024 calendar year to file their initial BOI Report.

We suspect that business entities may have questions regarding the new beneficial ownership information reporting requirements. While much of the information required to be disclosed in a

BOI Report will be relatively easy to obtain and report, the CTA’s broad definition of a beneficial owner may require a more complex analysis to determine the beneficial owners, particularly in cases involving more complex ownership structures. Additionally, the question of whether an entity qualifies for one of the 23 exemptions often requires a deeper dive into the specific qualifications of the company.

We have set up a team to assist our clients in understanding the new reporting requirements, evaluating the exemptions, and we are additionally providing FinCEN reporting services.

We would be happy to help you with any questions you may have about the CTA or its reporting requirements. Feel free to contact our team at [email protected].