Radical New Federal Company Ownership Reporting Requirement

By Jed Weiner

Under the Corporate Transparency Act, the federal government issued a new rule in September 2022 that will require all corporations, limited liability companies or partnerships operating in the United States to report to the United States Treasury Financial Crimes Enforcement Network (FinCEN) the identities of individuals who directly or indirectly own at least 25% of company equity or who have substantial control over the company (“Beneficial Ownership Information”).

FinCEN may report this information to law enforcement organizations, certain federal agencies and financial institutions with court approval.

Beneficial owners and senior executives may be held personally liable for failure to report Beneficial Ownership Information.

Certain U.S. businesses are exempt from this reporting requirement, including:

• Banks;

• Large operating entities that filed a tax return showing revenue in excess of US$5 million per year, have over 20 full-time employees and have a physical operating presence in the United States; and

• Certain publicly-traded companies.

Companies in existence before January 1, 2024 must file a report no later than January 1, 2025.

Companies that are formed or registered on or after January 1, 2024 must file a report within 30 days of the date on which the formation or registration becomes effective under applicable law.

Reporting companies also must provide updated reports to FinCEN in the event there are changes concerning the reporting company or its beneficial owners, or to correct inaccurately filed information.

For more information on the Corporate Transparency Act, contact grIP Founder Jed Weiner at jweiner@gipventure.com.