New US Government-Regulated Reporting Obligation for Some Companies

By January 1, 2025, all entities that were formed before January 1, 2024, that are considered a “reporting company” under the Corporate Transparency Act (CTA), must file a beneficial ownership report (BOI Report) with the Financial Crimes Enforcement Network of the US Department of the Treasury. Failure to file a required BOI Report by January 1, 2025, can result in civil and criminal penalties.

CTA Reporting Companies

A “reporting company” includes (1) domestic reporting companies – which includes any corporation, LLC, limited partnership, or similar entity created by filing a document with any U.S. state, territory, or Indian tribe, and (2) foreign reporting companies that are formed outside of the U.S. and register to do business with a U.S. state, territory, or Indian tribe. The key characteristic of a “reporting company” is that the entity is formed (for domestic entities) or registered to do business (for foreign entities) by filing a document with the Secretary of State (or similar office).

Exemptions

There are 23 separate types of entities exempt from the CTA. The majority of these exempt entities are already subject to reporting requirements through other laws and therefore the application of the CTA would be duplicative. Examples of entities exempt from the CTA include governmental entities, publicly traded companies, banks, credit unions, SEC-registered broker-dealers, investment advisers, investment companies, certain pooled investment vehicles, and certain wholly owned subsidiaries of these exempt entities. 

There is also an exemption for large operating companies, which are generally defined as companies that (1) have more than 20 full-time employees in the U.S., (2) have an operating presence at a physical office in the U.S., and (3) have filed a federal income tax or information return in the U.S. showing more than $5 million in gross receipts or sales.

Contact your lawyer at Dentons should you have any questions about the application of the CTA to your entity, its owners, or affiliates and the steps you should take to ensure compliance with the new reporting requirements.

Additional CTA Resources:

• New Reporting Regime for Businesses Under the Corporate Transparency Act
• Beneficial Ownership Reporting and the Corporate Transparency Act