Private U.S. companies—including U.S. subsidiaries of UK and other European companies—currently are not required to report basic information about the individuals who, directly or indirectly, own or control them.

This all changes on January 1, 2024, when the new Beneficial Ownership Information (BOI) reporting requirements under the U.S. Corporate Transparency Act (CTA) take effect. For the first time, many U.S. companies will be required to affirmatively disclose beneficial ownership information to the U.S. federal government—specifically, to the Financial Crimes Enforcement Network (FinCEN), the anti-money laundering arm of the U.S. Treasury Department. FinCEN expects that these new BOI reporting requirements will impact approximately 32.6 million existing companies in 2024, and more than five million new companies in each of the following nine years.

To avoid potential civil and criminal penalties resulting from noncompliance, every business entity formed or registered in the U.S. should determine:

1. Whether it is required to file a report under the new BOI requirements, and if so,
2. When the report must be filed, and
3. What information must be reported.

1) Who Must Report?

FinCEN’s new BOI reporting regulations impose filing requirements on domestic and foreign “Reporting Companies.” “Domestic Reporting Companies” are corporations, limited liability companies, and other entities created by filing a document with a secretary of state or similar office under state or tribal law that do not fall under one of 23 enumerated exemptions. “Foreign Reporting Companies” are corporations, limited liability companies, and other entities formed under the laws of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or other similar office under state law or tribal law, also unless exempt. As a practical matter, most U.S. subsidiaries of UK and other European parent companies will be considered “Domestic Reporting Companies” and thus required to report BOI. Their foreign parent companies registered to do business in the U.S. may be considered “Foreign Reporting Companies” and thus required to file as well.

As mentioned above, there are 23 enumerated exemptions that exclude certain entities from the definition of Reporting Company. Many of these exemptions apply to entities in regulated industries, such as banks, credit unions, depository institution holding companies, broker-dealers, investment advisers, venture capital fund advisers, investment companies, pooled investment vehicles, and money services businesses. One key exemption is for “Large Operating Companies,” which are entities that:

1. Employ more than 20 full-time employees in the U.S.;
2. Reported more than $5,000,000 in gross receipts or sales to the U.S. Internal Revenue Service (IRS) in the previous year (excluding gross receipts or sales from sources outside the U.S.); and
3. Have an operating presence at a physical office within the U.S.

2) When Must a Report Be Filed?

Reporting Companies created or registered before January 1, 2024 have until January 1, 2025 to file their initial BOI report. Reporting Companies created or registered in 2024 will have 90 calendar days after creation or registration, as applicable, to file their initial BOI report. Reporting Companies created or registered on or after January 1, 2025 will have 30 calendar days after creation or registration, as applicable, to file their initial BOI report.

3) What Information Must Be Reported?

Each Reporting Company is required to disclose in its initial BOI report the following information about itself:

1. Its full legal name;
2. Any trade name or d/b/a name;
3. The current street address of its principal place of business in the U.S., where applicable, and in all other cases the current street address of its primary U.S. location;
4. The state, tribal, or foreign jurisdiction of formation;
5. For Foreign Reporting Companies, the state or tribal jurisdiction where the company is registered; and
6. Its IRS Taxpayer Identification Number (TIN).

Reporting Companies must also include information in their initial BOI report 1) for each “Beneficial Owner”, and 2) for newly formed companies, no more than two “Company Applicants.” A “Beneficial Owner” is, subject to certain exceptions, any individual who, directly or indirectly, either:

1. Exercises “substantial control” over the Reporting Company; and/or
2. Owns or controls at least 25 percent of the ownership interests of the Reporting Company.

A “Company Applicant” is:

1. The individual who directly files the document that creates or registers the Reporting Company; and
2. If more than one person is involved in filing the document that creates or registers the Reporting Company, the individual who is primarily responsible for directing or controlling that filing.

Company Applicant information is not required for Reporting Companies created or registered before January 1, 2024.

The information required to be provided for each Beneficial Owner or Company Applicant is:

1. Full legal name;
2. Date of birth;
3. Current residential address (Company Applicants may use their business address if they create or register entities in their regular course of business);
4. A unique identifying number, and the issuing jurisdiction, from a nonexpired government issued identification document; and
5. An image of that identification document showing its unique identifying number.

4) Additional Information

Each Reporting Company has an ongoing responsibility to file an updated BOI report whenever there is any change in the required information previously submitted to FinCEN concerning the Reporting Company itself or any of its Beneficial Owners. Reporting Companies will have 30 days from the date of the change to make this updated filing. Additionally, Reporting Companies must file a “corrected report” within 30 days of becoming aware that any previously filed report contains inaccurate information.

FinCEN has stated that the ultimate responsibility for compliance with these new BOI reporting requirements, including the ongoing obligation to update and correct reports, lies with the Reporting Company. Therefore, it is important to contact your attorneys to discuss the applicability of these new BOI requirements to your company and how best to comply with these regulations.

Additional Resources:

• Final Regulations on Beneficial Ownership Will Require "Tens of Millions" of Legal Entities to File Reports
• New Rules Will Require Beneficial Ownership Reporting to Federal Regulators by U.S. and Foreign Corporations, LLCs, and Other Legal Entities
• Beneficial Ownership Information (BOI) Reporting Requirements (Final Rule)
• Small Entity Compliance Guide - BOI

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