The Corporate Transparency Act (the “Act”) requires companies to complete a new form (“BOI Report”) with the Treasury Department’s Finance Crimes Enforcement Network (“FinCEN”), unless certain exemptions apply. Companies that must complete the BOI Report typically include all non-public US companies that have filed with a secretary of state and/or tribal level office to create a company. The Act picks up many closely held private companies in an effort to crack down on financial crimes. Thus, the exemptions to reporting typically apply to publicly traded, large or highly regulated companies that are already subject to required disclosure.

Who is a beneficial owner?

Anyone that is a twenty-five percent (25%) or greater owner of a non-exempt company must report.  Additionally, anyone with “substantial control” over the company is also required to report. “Substantial Control” includes all senior officers (e.g., C-Suite), or, regardless of title, anyone who performs similar functions with the authority to appoint or remove key people (e.g., majority of directors on the board of the company), and “important decision makers.”

Who is a company applicant?

The person who physically submits the formation paperwork to the secretary of state (e.g., paralegal on behalf of attorney, owner of company, etc.), is the first company applicant. If using a filing service, they are the first applicant.

The second applicant is the person who requested such filing. For example:

• Attorney asks paralegal to form company in Delaware. Paralegal is applicant 1, Attorney is applicant 2.
• Client asks attorney to form company in Delaware. Attorney does so directly. Attorney is applicant 1, Client is applicant 2.
• Attorney asks service company to form company in Delaware. Service company is applicant 1, attorney is applicant 2. Client is not a company applicant in this scenario because there are maximum of two company applicants.

Company applicant information is only needed if the applicable entity is formed after January 1, 2024. Note: This does not mean entities formed prior to this date do not need to comply with the Act; rather, it means that the portion of the registration where a company applicant would be listed on the registration is removed.

What information is reported?

Companies must report:

• Legal name;
• Any trade names, “doing business as” (d/b/a) or “trading as” (t/a) names;
• The current street address of its principal place of business if that address is in the United States or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States;
• The company’s jurisdiction of formation or registration; and
• a Taxpayer Identification Number (EIN, SSN, etc.).

Beneficial owners must report:

• The individual’s name, date of birth and residential address;
• An identifying number from an acceptable form of identification (e.g., driver’s license or passport) with an image (which image gets uploaded); and
• The name of the state or jurisdiction that issued the identification document.

When do the reporting requirements apply and what happens if a deadline is missed?

Reporting companies created or registered before Jan. 1, 2024, will have until Jan. 1, 2025 to file their initial BOI reports.

If a company formally dissolved within its jurisdiction before January 1, 2024, then reporting requirements are never attached to the entity and it is not required to file the BOI Report. Generally, administrative dissolution is not going to qualify for this (i.e., where dissolution is not formal).

Reporting companies created or registered after Jan. 1, 2024, will have 30 days after creation or registration to file. Once the applicable entity has filed an initial report, both existing and new reporting companies will be required to provide updates of any BOI changes within 30 days of any change.

FinCEN enforcement is only against “willful” violations of the Act.

Jessica L. Dubowski, Esq. is an Attorney in Twomey Latham’s Corporate Group and Labor and Employment Group, practicing in the areas of business and corporate law, real estate, and labor and employment. This publication is for general information purposes only and is not legal advice. If you have specific questions regarding your particular business situation, Twomey Latham urges you to consult the author of this publication or other competent legal counsel.