Tallahassee Law Firm

Corporate Transparency Act 2024

Pursuant to the newly adopted Corporate Transparency Act (the “Act”)—the purpose of
which is to prevent money laundering—most companies (those which fall under the definition of
a “reporting company” pursuant to the Act) will be required to report certain information to the
U.S. government about who owns and controls the company. The Act goes into effect on January
1, 2024, although companies created prior to January 1, 2024, will not be required to comply
with these reporting requirements until December 31, 2024. Companies created after
January 1, 2024 but before January 1, 2025, will have ninety (90) calendar days following
their formation to comply with the reporting requirements. Companies created after January
1, 2025, will have thirty (30) calendar days following their formation to comply with the reporting

The Act provides that a “reporting company” is any company that is formed by the filing
of a document, such as an LLC, corporation, or limited partnership. Under the Act, reporting
companies must file a report disclosing certain information for each “beneficial owner” of the
company, including: (1) their full legal name, (2) their date of birth, (3) their current residential
address, (4) a unique identification number (such as the number on a non-expired driver’s license
or passport), and (5) an image of the document containing the identification number (for example,
an image of your driver’s license or passport). Please note: certain types of business entities are
exempt from these reporting requirements. Please consult with legal counsel to determine if your
business entity qualifies for an exemption.

The Act further defines the term “Beneficial Ownership” to mean either: (i) one who has
ownership or control of at least 25% of the ownership interest of the company; or (ii) one who
exercises substantial control over the company. Accordingly, beneficial owners would include
officers of the company, the board of directors, shareholders or members with voting rights, or
anyone else directing or having substantial influence over important decisions of the company.

Upon the filing of a reporting company’s first beneficial ownership report, any changes to
the beneficial owners or their required disclosure information must be reported within 30 days of
the change. For example, if a director of a reporting company changes their residential address,
the company has 30 days to report that change to the U.S. government or be subject to penalties,
which can be quite severe. Similarly, if a director’s term has ended and a new director is appointed,
that change must be reported within 30 days. In order to alleviate the administrative burden of
these reporting requirements and the potential liability for a company’s failure to properly adhere
to them, we are recommending to our clients whose companies are currently in existence hold off
on filing their first report until later in 2024, when more guidance is promulgated.

We are currently investigating the exact parameters of who is subject to the Act and which
individuals will constitute beneficial owners, and will keep you informed should any additional
guidance be published.

Should you have questions regarding your business entity’s compliance with the Act,
please reach out to our office to schedule a consultation.

Dunlap & Shipman Legal Team

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