Beneficial Ownership Information (BOI) Reporting Requirements Beginning January 1, 2024.

The Corporate Transparency Act (CTA) has introduced a significant reporting requirement in the corporate landscape. Effective January 1, 2024, companies are now mandated to disclose their beneficial ownership information, fostering transparency and accountability by providing authorities with crucial insights into the individuals or entities exerting substantial control over the organization.

What is Beneficial Ownership Reporting?

Beneficial ownership reporting is a regulatory requirement that mandates businesses to disclose information about the individuals who ultimately own or control the company. These individuals are often referred to as “beneficial owners.” The purpose of beneficial ownership reporting is to enhance transparency in corporate structures and prevent financial crimes such as money laundering, terrorism financing, and corruption.

What Is a Beneficial Owner?

A beneficial owner of a company is any individual who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25 percent of the ownership interests of a reporting company.

What Companies Are Considered Reporting Companies?

Entities obligated to submit reports are referred to as reporting companies, and they fall into two categories:

1. Domestic reporting companies encompass corporations, limited liability companies, and other entities established through the submission of documents to a secretary of state or a similar office within the United States.

2. Foreign reporting companies are entities, including corporations and limited liability companies, created under the laws of a foreign country and authorized to conduct business in the United States by filing documents with a secretary of state or an equivalent office.

What is the reason behind companies being required to submit information on beneficial ownership to the U.S. Department of the Treasury?

In a bipartisan effort in 2021, Congress approved the Corporate Transparency Act, establishing a fresh reporting obligation for beneficial ownership information. This legislation is a proactive measure by the U.S. government to increase the difficulty for individuals with malicious intent to conceal or profit from unlawfully obtained assets using shell companies or other concealed ownership frameworks.

What Information Will Be Required to Report About The Reporting Company, Beneficial Owner and Applicant?

A Reporting Company will have to report:

1. The full legal name of the business
2. Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
3. The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), 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 (for example, a foreign reporting company’s U.S. headquarters)
4. Its jurisdiction of formation or registration
5. Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction)

A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

A Beneficial Owner will have to report:

1. Individual full name
2. Date of Birth
3. Residential Address
4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document (for examples of acceptable identification)

Who Is a Company Applicant of a Reporting Company?

Only reporting companies created or registered on or after January 1, 2024, will need to report their company applicants.

A company that must report its company applicants will have only up to two individuals who could qualify as company applicants:

1. The individual who directly files the document that creates or registers the company; and
2. If more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing.

The following flowchart can help identify the company applicant.

**Contact us for more details.

What Information Will Be Required to Report For an Applicant?

For each individual who is a company applicant, a reporting company will have to provide:

1. The individual’s name;
2. Date of birth;
3. Address; and
4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document.

The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.

If the company applicant works in corporate formation—for example, as an attorney or corporate formation agent—then the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the company applicant’s residential address.

The ONLY Acceptable Forms of Identification:

1. A non-expired U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States);
2. A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
3. A non-expired passport issued by the U.S. government; or
4. A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above)

Deadline to Report my Company’s Beneficial Ownership Information to FinCen.

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.

A reporting company created or registered on or after January 1, 2024, will have 30 days to file its initial beneficial ownership information report. This 30-day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.

What Happens If My Company Doesn’t Report Beneficial Ownership to FinCen or Fails to Update the Information Within the Allotted timeframe?

If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized. However, you could face civil and criminal penalties if you disregard your beneficial ownership information reporting obligations.

To Learn More About The Reporting of Beneficial Ownership Information contact us!