Beneficial Ownership Filing Requirements Are Now Only Applicable to US-Registered Foreign Companies (i.e., Registered in a US Jurisdiction to Do Business in the US).
The US government said we’d have a decision by March 21—so naturally, the Interim Final Rule (“IFR”) landed on Sunday, March 23. Now that it’s here, FinCEN’s ruling on Beneficial Ownership Information (“BOI”) reporting under the Corporate Transparency Act (“CTA”) brings a major shift in compliance requirements. US-formed companies and US beneficial owners are officially off the hook, meaning the rules now apply only to foreign companies registered to do business in a US jurisdiction (e.g., a state or tribal nation). These Foreign Reporting Companies must report only their non-US beneficial owners, while US ownership remains exempt. With tight deadlines, 23 regulatory exemptions, and serious penalties for noncompliance, companies need to act fast to ensure they meet the new requirements.
SUMMARY:
- US-formed companies and US beneficial owners are now exempt from the reporting requirements of the Corporate Transparency Act.
- Foreign companies registered in a US jurisdiction (e.g., a state or tribal nation) and not otherwise exempt must register by specific dates (mentioned below). However, these foreign companies are not required to register any US beneficial ownership, and US beneficial owners are not required to report their equity in foreign companies.
- There are 23 regulatory exemptions to the filing requirements. Correct interpretation is crucial to avoid inadvertent violations.
WHO: only non-exempt foreign companies registered to do business in a US jurisdiction (“Foreign Reporting Companies”).
WHAT: Foreign Reporting Companies must report all non-US beneficial ownership on a “BOI Report.” US ownership is exempt from mandatory reporting requirements.
WHEN:
- Reporting companies registered to do business in the United States before the date of publication of the IFR must file BOI Reports no later than 30 days from that date.
- Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI Report after receiving notice that their registration is effective.
HOW: 2 recommended ways:
WHY:
Civil penalties include a fine of up to US$591 per day, inflation adjusted, for each day of non-compliance. Criminal penalties include a fine of up to US$10,000 and up to two years in prison. There is also a fine for not timely updating (i.e., within 30 days) when material changes occur.
While technically an Interim Final Rule, there is currently no evidence that a Final Rule, to be finalized this year, will be materially different.
For additional information, here’s a link to the March 21st Press Release.
Of course, we can help clarify any of this morass. If you need help, contact us today!
