Dear Client,

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As noted in our previous client update, we would like to kindly remind you about the approaching deadline for filing beneficial ownership information reports (BOIR) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Effective on January 1, 2024, FinCEN mandates a wide range of companies to file BOIR to implement the bipartisan Corporate Transparency Act.

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​What is a reporting company?

​Reporting companies include (a) domestic corporations, LLCs, or any other entity created by filing a document with a secretary of state or similar state or tribal office, and (b) non-U.S. corporations, LLCs and other similar entities that are registered to do business in the United States, subject to certain exemptions.

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What is the deadline to file BOIR?

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​What information does the company need to report on BOIR?

​A reporting company is required to report: (a) its beneficial owner’s legal name, date of birth, residential address, driver license or passport number and a copy of the ID, and (b) the reporting company’s legal name, principal place of business, formation jurisdiction and tax number.

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Who is a beneficial owner of the company?

​The beneficial owner of a reporting company is any individual who, directly or indirectly, either (a) exercises substantial control over such reporting company or (b) owns or controls at least 25 percent of the ownership interests of such reporting company. An individual exercises substantial control over a reporting company if the individual meets any of four general criteria: (i) the individual is a senior officer; (ii) the individual has authority to appoint or remove certain officers or a majority of directors of the reporting company; (iii) the individual is an important decision-maker; or (iv) the individual has any other form of substantial control over the reporting company.

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Are there any exemptions from filing the BOIR?

​There are a total of 23 categories of entities exempted from reporting, including, but are not limited to, (i) investment company or investment adviser registered with the SEC; (ii) venture capital fund adviser; (iii) insurance company; (iv) large operating company that employs more than 20 full time employees in the United States, has an operating presence at a physical office within the United States, and filed a federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales, excluding gross receipts or sales from sources outside the United States; (v) broker or dealer in securities; and (vi) pooled investment vehicle. A “pooled investment vehicle” means (a) any investment company under Section 3(a) of the Investment Company Act (ICA); or (b) any company that would be an investment company under the ICA but for the exclusion provided under Section 3(c)(1) or 3(c)(7) of the ICA and is identified by its legal name by the applicable investment adviser in its Form ADV (or will be so identified in its next update).

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What are the consequences of not filing the BOIR in the required timeframe?

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It is important to note that the willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOIR may be held accountable for that failure. We encourage you to report beneficial ownership information as soon as possible if you are subject to the reporting requirements. Should you have any questions or concerns, please do not hesitate to contact us.

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Thank you for your attention to this important matter.

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Your MagStone Law Team