Part II: A Detailed Look at Beneficial Ownership Information Reporting

In Part I of this series, we reviewed the background information surrounding the Corporate Transparency Act (CTA) and the new Beneficial Ownership Information Reporting (BOIR) requirement pursuant to the legislation.

In Part II, we are going to look at which companies are required to report their information to FINCEN- these entities are called "reporting companies." Prior to diving into that, I want to include two quick notes on filing. First, the BOIR is not an annual requirement. A reporting company must file just an initial BOI report and then update or correct the BOI as needed. An example of a situation that would require an updated filing is if your company hired a new CEO. In this scenario, the company would file an updated report to reflect the new CEO and provide his/her information.

Second, the BOI can file be filed online at the FinCEN website. This includes filing an updated or corrected filing, if necessary.

If you have questions about how to file your BOIR, please do not hesitate to contact our office.

Generally, there are two types of companies that will need to report information about their beneficial owners:

1. Domestic Reporting Companies

   1. Corporation, limited liability company (LLC), or an entity otherwise created in the United States by filing a document with a Secretary of State or equivalent office under the law of any U.S. state or Indian tribe; or
      

2. Foreign Reporting Companies

   1. Foreign company registered to do business in any U.S. state or Indian tribe by a filing with a Secretary of State or equivalent office under the law of any U.S. state or Indian tribe.

For purposes of reporting beneficial ownership information to FinCEN, “Indian Tribe” means any Indian or Alaska Native tribe, band, nation, pueblo, village, or community that the Secretary of the Interior acknowledges to exist as an Indian tribe. The Secretary of the Interior is required to publish annually a list of all recognized Indian Tribes in the Federal Register.

However, there is a carveout exempting 23 types of entities from reporting their BOI. These exemptions are:

1. Securities reporting issuer

2. Governmental authority

3. Bank

4. Credit union

5. Depository institution holding company

6. Money services business

7. Broker or dealer in securities

8. Securities exchange or clearing agency

9. Other Exchange Act registered entity

10. Investment company or investment adviser

11. Venture capital fund adviser

12. Insurance company

13. State-licensed insurance producer

14. Commodity Exchange Act registered entity

15. Accounting firm

16. Public utility

17. Financial market utility

18. Pooled investment vehicle

19. Tax-exempt entity

20. Entity assisting a tax-exempt entity

21. Large operating company

22. Subsidiary of certain exempt entities

23. Inactive entity
    

Part III, which will be released next week, will cover which individuals are considered beneficial owners and must be reported to FinCEN in your BOIR.

If you have any questions about Beneficial Ownership Information, including compliance with the filing requirements and whether or not you are exempt, please do not hesitate to contact our office to schedule a meeting or call.

Hope everyone has a Happy 4th of July!

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