Timing of Beneficial Ownership Reports

Timing of Beneficial Ownership Reports

When Are Beneficial Ownership Reports Due?


The Corporate Transparency Act defines a "reporting company" as any corporation, limited partnership, limited liability company or other entity that is formed by the filing of a document with a secretary of state or tribal government.

A "foreign reporting company" is any legal entity that registers to do business in the United States by the filing of a document with a secretary of state or tribal government.

If a reporting company is not exempt, the reporting company must file a beneficial ownership information report with FinCEN that contains specified items of personally identifiable information about each beneficial owner of the reporting company.

Complying with these Corporate Transparency Act requirements will have a significant impact on entrepreneurs, business owners, attorneys and others in forming and managing companies.

When Does the Corporate Transparency Act Take Effect?

The Corporate Transparency Act takes effect on January 1, 2024.

Any domestic reporting company created on or after January 1, 2024 must file a report within 30 calendar days of the earlier of the date on which it receives actual notice that its creation has become effective or the date on which a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the domestic reporting company has been created.

Any entity that becomes a foreign reporting company on or after January 1, 2024 must file a report within 30 calendar days of the earlier of the date on which it receives actual notice that it has been registered to do business or the date on which a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the foreign reporting company has been registered to do business.

Any domestic reporting company created before January 1, 2024 and any entity that became a foreign reporting company before January 1, 2024 shall file a report not later than January 1, 2025.

What is a Company Applicant?

The Final Rule defines "company applicant" as

(1) For a domestic reporting company, the individual who directly files the document that creates the domestic reporting company;

(2) For a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company in the U.S.; and

(3) Whether for a domestic or a foreign reporting company, the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.

What Information Must a Reporting Company Disclose Regarding its Company Applicant?

Reporting companies created or registered before January 1, 2024 do not need to report information regarding their company applicant.

Companies created or registered on or after January 1, 2024, must provide the same information for their company applicant as they provide for their beneficial owners; provided, however, that in the case of a company applicant who forms or registers an entity in the course of the company applicant's business, the reporting company should report the street address of the company applicant's business in lieu of the company applicant's residential address.

What is the Penalty for Violating the Corporate Transparency Act?

Violations of the CTA, including the failure to report beneficial ownership information or the reporting of false or fraudulent information, may lead to civil or criminal penalties.

A reporting company that fails to file its beneficial ownership report on time may be fined up to $500 for each day the violation continues.

A willful failure to file or an intentional misstatement in a filing may lead to criminal penalties include fines up to $10,000 and/or imprisonment for up to two years.

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