What is Beneficial Ownership Information Reporting?

 In 2021, Congress enacted the Corporate Transparency Act. This law creates a beneficial ownership information reporting requirement, as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

 

A reportable beneficial owner is a natural person who either directly or indirectly: (1) exercises “substantial control” (e.g., senior officers, executives, etc.) over the reporting company, or (2) owns or controls at least 25% of the “ownership interest” in a reporting company. 

A reporting company is a corporation, limited liability company (LLC), or other company created by the filing of a document with a secretary of state or any similar office in the United States.

For each reportable beneficial owner, reporting companies will need to submit the following information:

  • Name
  • Date of Birth
  • Residential Address
  • Identifying Number from a Government or State-issued identification document (passport, US driver’s license, etc.)
  • An image scan/photo of the identification document used

Failure to file can result in penalties of up to $500 for each day the violation continues (up to a maximum of $10,000). Violators may be subject to criminal penalties of up to 2 years imprisonment.

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