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Corporate Transparency Act

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On January 1, 2024, the Corporate Transparency Act (“CTA”) will become effective, requiring millions of companies to report beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). Non-exempt companies (referred to under the CTA as “Reporting Companies”) that are created or registered on or after January 1, 2024, will have 30 days from formation to comply with CTA requirements. Reporting Companies created before January 1, 2024, will have until December 31, 2024 to make their initial filing. Certain companies, such as public companies, highly regulated entities, and “large operating companies” (that meet specific requirements) are exempt from reporting requirements, and a full list of exemptions is available here. Note, FinCEN has proposed an extension from 30 to 90 days for Reporting Companies created or registered between January 1, 2024 and January 1, 2025, but such extension has not yet been approved.

We understand that our clients will have questions and concerns about the new CTA requirements and we take these inquiries seriously. We are preparing a list of resources and filing options, which we will have available prior to December 31, 2023. At this time, we anticipate recommending that our clients use a third-party filing service, such as CT Corporation or Cogency Global.

We recommend that all companies take the following steps before December 31, 2023:

  • Identify all of the legal entities for which you are handling U.S. compliance matters, including non-U.S. companies;

  • Determine which entities may qualify for an exemption;

  • Identify individuals who (a) directly or indirectly “substantially control” a Reporting Company; (b) own or control 25% or more of the Reporting Company; or (c) have “any other form of substantial control” over the Reporting Company;

  • Clean-up any unneeded or inactive entities and consider whether it may make sense to form any new entities; and

  • Begin gathering requisite information from beneficial owners for upcoming filings (e.g. name, DOB, address, passport # or other identifier).

Failure to comply with the CTA requirements, including failure to update changes within 30 days of occurrence, could result in civil and criminal penalties.

We remain committed to helping our clients assess complex legal issues and welcome your questions as you navigate this process. For additional information about the CTA requirements, please reference the following: