We previously reported on the requirements that many companies will need to address under the federal Corporate Transparency Act. Our earlier report indicated that “there are many unresolved issues under the CTA and the FinCEN rules” and that “hopefully, these issues will be addressed in future rulemaking, FAQs, or other interpretations, but so far that has not happened.”
In the last few days, FinCEN seems to have noted that people are asking questions about the CTA and expressing concerns about the lack of guidance FinCEN has made available on the implementation of its rules. Specifically, FinCEN has posted a Small Company Compliance Guide and FAQs that begin to address some of the open items and uncertainties in FinCEN’s rules. One of the uncertainties that has been addressed is whether individual directors are deemed “beneficial owners” for purposes of the CTA. The Guide seems to vacillate on the answer, but eventually gets around to stating as follows:
“Individual F is on the company’s board of directors on the reporting company’s behalf, thereby exercising substantial control over it. Individual F does not own or control any stock in the reporting company. Individual F is therefore a beneficial owner by exercising substantial control over the reporting company, but not through holding ownership interests in it.”
In addition, and likely of greater interest and importance, is that FinCEN has proposed to extend from 30 to 90 days the period during which reporting companies must submit their initial reports under the CTA. The extension would apply only to entities formed on and after January 1, 2024 and would remain in effect only through year-end 2024. It seems unlikely that this proposed rule will generate much, if any, opposition, given that FinCEN has not published any of the forms that companies will need to complete in order to comply with its rules and the CTA generally.
Gunster has formed a working group to address the challenges posed by the CTA, including the following attorneys: Craig Behrenfeld, Alexandra Gabel, Bob Lamm, and Matt Scheer. Please direct any questions or observations to the working group at Corporat[email protected].
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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