TABS previously posted articles about the Corporate Transparency Act (CTA) – the most recent of which was published 27 October 2022 following the release of the Final Rulemaking by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). You may be noticing more and more publications and webinars being advertised in connection with these reporting requirements in an effort to prepare everyone for the reporting requirements that will soon take effect.

Although reporting requirements go into effect on 1 January 2024, companies that already exist prior to that date will have the entirety of 2024 to file their initial reports (they are due on or before 31 December 2024). Any company that is created on or after 1 January 2024 will have 30 days to file its initial report. Once the initial report has been filed, both existing and new reporting companies will have to file updates within 30 days of a change in their beneficial ownership information. These changes will create an additional burden on your company’s compliance.

It is important to remember a Beneficial Owner does not only include those with an ownership interest in the company but includes those who have substantial control over the company. FinCEN has defined substantial control in a manner to identify key individuals within the company and includes those who: (1) are senior officers such as the President, CEO, COO, CFO, and General Counsel (2) have authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body), (3) directs, determines or has substantial influence over important matters of the reporting company, including, for example, the reorganization, dissolution or merger of the reporting company, the selection or termination of business lines or ventures of the reporting company and the amendment of any governance documents of the reporting company, or (4) has any other form of substantial control over the reporting company, as persons with ‘substantial control’.

We suggest that our clients begin to understand who within their organizations will be considered Beneficial Owners and reach out to us early in 2024 so that we may begin the registration process on their behalf. The tendency should be to error toward over-reporting in connection with these requirements.

If you wish to make any changes to the officers and directors of your company prior to reporting, please reach out to us.

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