New Federal Disclosure Requirements for Corporations and Limited Liability Company

What’s New: Starting January 1, 2024, pursuant to the new Federal Corporate Transparency Act (“CTA”) all persons filing for a new non-exempt corporation or limited liability company (“LLC”) in any State (including the District of Columbia or any U.S. Territory) or in any foreign country must also register their “beneficial owners” and “company applicants” with the U.S. Department of the Treasury’s division of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). First reports must be filed within 90 days of the company’s organization. Sichenzia Ross Ference Carmel (“SRFC”) is advising clients to file concurrently upon organization. Any reporting company that was created before January 1, 2024, must file a report no later than January 1, 2025. Please contact your SRFC attorney to schedule your filing this year.

Who is Exempt?: Certain companies regulated by the Securities and Exchange Commission or the
Federal banking agencies are exempt. Check with your SRFC attorney to find out of your company
is exempt from the registration requirement.

What if We Don’t File?: 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 BOI report may be held accountable for that
failure.

Who is a “Beneficial Owner”?: A beneficial owner is any individual who, directly or indirectly:
• Exercises substantial control over a reporting company; OR
• Owns or controls at least 25 percent of the ownership interests of a reporting company.
Each of the bold faced terms have complex definitions under the regulations. For example,
“substantial control” may include persons “who have substantial influence over important
decisions made by the reporting company…”
“Ownership interests” include equity, profit interests, convertible instruments, and options and the
“catch all” provision.

There are exemptions to the beneficial owner definitions, including minor children, custodians,
employees, inheritors and creditors. To determine who in the company must file as a Beneficial
Owner, please confer with your SRFC attorney.

Who is the “Company Applicant”?: If the company is organized after January 1, 2024, the
individual who is primarily responsible for directing or controlling the filing must file as the
Company Applicant. SRFC believes that to be the incorporator of the corporation, the organizer of
the LLC or member of senior management of the Company who has asked SRFC to assist in the
organization of the company. (There is no Company Applicant for entities formed before January
1, 2024).

What Details Are In The Filing?: Reporting companies must provide:
– Full legal name
– Trade name if any
– U.S. address
– Jurisdiction of formation
– IRS Taxpayer ID number

The Beneficial Owner and the Company Applicant must provide:
– Full legal name
– Date of birth
– Current address
– Image of either passport or driver’s license

How To File: Your filing will be coordinated with your SRFC attorney who will assist with the
preparation of the organization and FinCEN documents in conjunction with a third-party filing
service that will be the “direct applicant” under the CTA. The filing service will charge a separate
fee for filing directly with FinCEN. You can avoid that fee if you wish to file yourself directly on
the FinCEN website.

Updates/Changes Must Be Filed: If there is any change to the required information about the
reporting company, its Beneficial Owners or the Company Applicant in a previously filed report,
the company must file an updated BOI report no later than 30 days after the date on which the
change occurred. If an inaccuracy is identified in a BOI report, the company must correct it no
later than 30 days after the date your company became aware of the inaccuracy or had reason to
know of it.

Your Information Is NOT Publicly Available: These reports are not available to the public (even
through the Freedom of Information Act), but will be accessible by law enforcement at the federal,
state and local levels. Financial institutions may also have access upon their customer’s consent.

Questions? If you have any questions about this new filing requirement, please contact your SRFC
attorney.

This memorandum is provided by Sichenzia Ross Ference Carmel LLP for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.