NCET Biz Tips: Beneficial ownership information reports (and why they matter)
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David Lewandowski
Effective Jan. 1, 2024, the Corporate Transparency Act (the “CTA”) requires every “reporting company” to file with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) a beneficial ownership information report (a “BOI Report”) containing information about the company as well as its beneficial owners and decisionmakers.
Understanding these new filing requirements is extremely important for companies, as a willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine up to $10,000.
CTA’s reporting requirements apply only to a “reporting company,” which term the CTA defines generally to include any corporation, any limited liability company, and any other entity that is created by the filing of a document with a secretary of state or similar office under the laws of a state or an Indian tribe. However, the CTA expressly exempts many (but certainly not all) entities that would otherwise fall under the definition of a “reporting company.” There are currently 23 specific exemptions. In addition, business associations (such as sole proprietorships and general partnerships) and trusts that are not formed pursuant to a state or tribal filing are also not deemed to be “reporting companies.”
BOI Reports are due for reporting companies that are created or registered to do business on or after Jan. 1, 2024, within 90 calendar days after receiving actual or public notice of their company's creation or registration. Reporting companies created or registered to do business before Jan. 1, 2024 will have until Jan. 1, 2025 to file their initial BOI Reports. Reporting companies created or registered on or after Jan. 1, 2025, will have 30 calendar days after receiving actual or public notice of their company's creation or registration.
Additionally, companies will need to file an updated or corrected BOI Report, as the case may be, within 30 days of any change to, or a company becoming aware of or having reason to know of any inaccuracy in, the company’s most recently filed BOI Report.
At NCET's Feb. 28 Biz Bite Luncheon, David Lewandowski with Fennemore Law will discuss and bring attention to various components of these new requirements, helping you better ensure that your company stays compliant.
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David Lewandowski is a corporate attorney with the law firm Fennemore. David brings an entrepreneurial spirit to a variety of corporate matters, including debt and equity financing issues for emerging businesses, transactional and capital financing counsel, complex buying and selling strategies, as well as mergers and acquisitions tactics. He works with publicly-traded companies and privately held entities on issues ranging from corporate governance, contract matters, and intellectual property.