New Beneficial Ownership Reporting Obligations in the U.S.
On January 1, 2021, Congress passed the Corporate Transparency Act (“CTA”). The CTA will become effective on January 1, 2022. The CTA will require certain U.S. “reporting companies”[1] (including LLCs) to disclose to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), information on their (i) “beneficial owners” and (ii) individuals involved in forming or registering the companies.[2]
Under the CTA, a “beneficial owner” is defined as an individual who, directly or indirectly through any contract, arrangement or otherwise, exercises substantial control over an entity or owns or controls at least 25% of an entity’s ownership interests.
Each reporting company formed prior to the CTA’s effective date will have two years to make its initial disclosure, while reporting companies formed after the effective date will be required to disclose at the time of formation. Additionally, upon a change of any information required to be reported to FinCEN under the CTA, an entity has a duty to disclose the change within one year. The information submitted will be maintained in a secure database accessible only by U.S. law enforcement officials for national security, law enforcement, and intelligence purposes. FinCEN however, is authorized to divulge the information to U.S. and non-U.S. courts and federal law enforcement agencies.
If you have any questions about the information above, please contact either:
Miriam Hyman
Dir. Dial: 212-448-6220
Andrew Odell
Dir. Dial: 212-448-6223
Rodrigo Sadi
Dir. Dial: 212-448-6268
[1] A “reporting company” is an entity such as a corporation, LLC, or other similar entity that is created by (i) filing a document with a U.S. state or (ii) is formed under the law of a foreign country and registered to do business in the U.S. by the filing of a document with a U.S. state, and that does not otherwise already provide information to government agencies.
[2] A “reporting company” will need to provide name, date of birth, current residential or business address, and unique identification number (either from a passport, personal ID card, or driver’s license) of its beneficial owners.