“Company applicants” — the term may sound vague, but the identities of “company applicants” of reporting companies are just as important under the new federal Corporate Transparency Act (the “CTA”) as the identities of the beneficial owners of those companies.

What You Need to Know:

• The era of corporation as untethered from its creators, owners, operators, and influencers is over.
• Best practices for tracking your company applicants. 
• Guidance for lawyers who form and counsel startups, funds, trusts, and other entities which may be subject to reporting disclosures and updates.

For all reporting companies created or registered on or after January 1, 2024, information concerning the company applicant(s) of the reporting company must be reported to the Financial Crimes Enforcement Network (“FinCEN”) along with information concerning beneficial owners. As a result, both clients and counsel should be aware of who is, and who is not, a “company applicant.” 

In brief, a “company applicant” is: (a) the person who directly files the document that creates or registers the reporting company; and (b) if more than one person is involved with the filing of the document, the person who is primarily responsible for directing or controlling the filing. For most law firms, there will be two company applicants – the paralegal or staff member who files the document and the attorney who is primarily responsible for directing or controlling the filing. 

The regulations under the CTA specify that there can be no more than two company applicants. The regulations also do not define the phrase “primarily responsible for directing or controlling the filing.” So, for example, when a paralegal or staff member files a company’s organizational document but more than one attorney is involved with the filing, counsel will have to think carefully about which of those attorneys is “primarily responsible for directing or controlling the filing” and thus must be named as the second company applicant.

What is critical for a company applicant is that he or she must provide the reporting company with the following: (a) his or her full legal name; (b) his or her date of birth; (c) his or her complete current address, which does not have to be in the U.S., but must be their residential street address (except for company applicants who form or register a company in the course of their business where their business street address should be reported) and; (d) the unique identifying number and issuing jurisdiction (including an image of the document) from one of the following non-expired documents: (i) U.S. passport; (ii) state driver’s license; (iii) identification document issued by a state, local government, or tribe; or (iv) if an individual does not have any of the previous documents, foreign passport. 

This is a tall order, and many staff members, or even paralegals and attorneys, who are involved in filing entity organizational documents may not be willing to share personal information such as this with the client. Who knows where that information will end up after having been transmitted to the client or whether it will be kept secure by the client?

The regulations provide that a permissible alternative to providing this personal information to the client would be for a person who is deemed to be a company applicant to obtain what is known as a “FinCEN identifier” and to provide that to the client instead. 

A “FinCEN identifier” is a unique identifying number issued immediately by FinCEN once the company applicant applies electronically and provides his or her same identifying items, as above, to FinCEN. A person’s FinCEN identifier, once obtained, can then be used with respect to all of the person’s subsequent reporting obligations. 

If there is any change to the company applicant’s personal information on the FinCEN identifier application or if the company applicant becomes aware of an inaccuracy, the company applicant must update the information with FinCEN no later than 30 days after the date on which the change occurred or when he or she became aware of the inaccuracy or had reason to know of it. However, a reporting company is not required to file an updated beneficial ownership information report for any changes to previously reported personal information about a company applicant.

To date, FinCEN has not provided a mechanism for individuals to apply for or obtain FinCEN identifiers.