CTA Beneficial Ownership Information Filing
- We are writing to inform you about a new legal requirement that you will need to either comply with or confirm that your company is exempt from before the end of this year.
- The Corporate Transparency Act (the “CTA”) is a new law that will require almost all small businesses in the US to:
- file information with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) database (https://boiefiling.fincen.gov/); and
- update that database within 30 days if any of the information changes.
- There are 23 exemptions (https://www.fincen.gov/boi-faqs#C_2), including a “large operating company” exemption for companies that (i) own or lease a US office, (ii) have more than 20 full-time employees, and (iii) more than $5M in revenue.
- If your company is not exempt and your company was formed before the start of this calendar year 2024, then you must file beneficial ownership information with the FinCEN database no later than January 1, 2025.
- If your company is not exempt and your company formed during 2024, then you must file beneficial ownership information with the FinCEN database no later than 90 days after the company’s date of formation.
- There are civil and criminal penalties for failure to comply.
- The information that a company will have to provide to FinCEN includes certain company information and information about the company’s “beneficial owners.”
- Beneficial owners include 25% or greater owners, senior officers, directors, and other individuals who can direct or control significant decisions for the company.
- Companies that are not exempt will need to collect the following information from beneficial owners to file with FinCEN, either (i) the beneficial owner’s FinCEN number (if they have applied for and obtained one) or (ii) full legal name, date of birth, residence address, non-expired passport or state identification number, and copy of such document.
- If any beneficial ownership information or any other information changes, companies will only have 30 days to update the FinCEN database. If beneficial owners provide companies with their FinCEN numbers, companies will file that number with their report, and it will be the responsibility of each beneficial owner to keep their information up to date.
- Confirming continuing compliance with the continuous database update requirement will require companies to put policies and procedures in place to assure continued compliance.
If you have any questions about this, we have a group of lawyers who have spent a considerable amount of time educating themselves about the rules so we can answer them promptly. Please do not hesitate to reach out to us.