On March 21, 2025, consistent with the U.S. Department of the Treasury’s March 2 announcement, and as reported in our previous CTA Alert, the Financial Crimes Enforcement Network (“FinCEN”) issued an interim final rule (the “Rule”) that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (“BOI”) to FinCEN under the Corporate Transparency Act (“CTA”). The Rule significantly narrows the scope of BOI filing requirements to certain foreign entities only. The Rule effected three key changes:
1. U.S. Companies Exempt from Reporting Requirements.
The Rule redefines the term “reporting company” to exclude any corporation, limited liability company, or other entity that is created by the filing of a document with a secretary of state or any similar office under the law of a state (i.e., a “domestic reporting company”). Accordingly, such excluded entities are no longer within the scope of the BOI reporting requirements under the CTA, and therefore no longer have to file an initial BOI report, or update or correct previously filed BOI reports.
2. Foreign Reporting Companies generally subject to Reporting Requirements.
As redefined by the Rule, a “reporting company” that is subject to BOI reporting requirements, unless otherwise exempt, now means any corporation, limited liability company, or other entity that is formed under the law of a foreign country and that is registered to do business in the U.S. by the filing of a document with a secretary of state or equivalent office under the law of a state.
The Rule extends the deadline for foreign reporting companies to file initial BOI reports, or to update or correct previously filed BOI reports, to 30 days from the date the Rule is published in the Federal Register (which is scheduled to be published on March 26, 2025) or 30 days after their registration to do business in the U.S., whichever comes later.
3. U.S. Persons Exempt from Reporting Requirements.
Finally, the Rule exempts foreign reporting companies from having to report BOI of any U.S. persons who are beneficial owners of such reporting company. The Rule also expressly provides that foreign reporting companies that only have beneficial owners that are U.S. persons will be exempt from the requirement to report any beneficial owners.
Takeaway
By adopting the Rule, FinCEN has provided relief to all U.S. companies and U.S. persons from having to report BOI under the CTA, as U.S companies are no longer required to file initial BOI reports, or update or correct previously filed BOI reports.
Although the Rule becomes effective upon formal publication in the Federal Register, FinCEN has stated that it is applying all exemptions and deadline extensions in the Rule as of March 21, 2025, in advance of formal publication in the Federal Register. Further, FinCEN indicated that it will not enforce any beneficial ownership reporting penalties or fines against U.S. persons or U.S. companies or their beneficial owners.
With FinCEN planning to issue a final rule later this year, and given the unpredictable nature surrounding the CTA as of late, you should continue to monitor this situation for further developments.
If you have questions or would like more information on the content of this communication, please contact any member of our Corporate Practice Area.
