Mandatory Filing of Beneficial Ownership Information Report (BOIR) by Reporting companies under the new legislation of Corporate Transparency Act (CTA)

With the new year, on January 1, 2024, the gavel struck, ushering in the next era in American corporate governance by implementing the Corporate Transparency Act (CTA). This legislation coupled with the new FinCEN rules emerge from the Anti-Money Laundering Act of 2020. They aim to act as a bulwark against the shadows of financial malpractices. With its far-reaching implications, the Corporate Transparency Act Reporting mandates a transformative shift in the disclosure landscape, affecting established juggernauts and budding enterprises.

The intricate web of Corporate Transparency Reporting Requirements for small businesses presents challenges and opportunities. The imperative to file a Beneficial Ownership Information Report (BOI report) with precision and timeliness looms large, demanding meticulous attention to detail and proactive adherence to applicable deadlines. Let us illuminate the path forward to help you grasp the nuances of the new compliance and navigate the regulatory changes confidently.

Who Needs to File a BOI Report in line with the Corporate Transparency Act Reporting Requirements?

Corporate Transparency Act (CTA) mandates a wide array of business entities to submit Beneficial Ownership Information (BOI) reports to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The scope of entities, known as reporting entities, covers corporations, limited liability companies (LLCs), and other similar entities. Notably, even single-member LLCs fall within the purview of this requirement. However, certain trusts typically established for estate planning or tax-exempt purposes are exempt from this obligation. It’s important to note that the CTA extends its reach beyond domestic entities, encompassing foreign entities registered under a law of another country to conduct business in any U.S. state or Tribal jurisdiction.

  • Exceptions:

FinCEN Beneficial Ownership regulations impose reporting obligations on various entities to disclose beneficial ownership information. However, there are 23 exemptions outlined in the Beneficial Ownership Information Reporting Rule (BOIR) that aim to exempt entities already subject to separate U.S. regulatory obligations to report ownership information to the U.S. government. Understanding these exemptions is crucial for determining if any apply to your entity. Here are the 23 exemptions:

  1. Securities reporting issuer
  2. Governmental authority
  3. Bank
  4. Credit union
  5. Depository Institute holding company
  6. Money services business
  7. Broker or dealer in securities
  8. Securities exchange or clearing agency
  9. Other Exchange Act registered entity
  10. Public utility
  11. Investment company or investment adviser
  12. Venture capital fund adviser
  13. Insurance company
  14. State-licensed insurance producer
  15. Commodity Exchange Act registered entity
  16. Accounting firm
  17. Financial market utility
  18. Pooled investment vehicle
  19. Tax-exempt entity
  20. Entity assisting a tax-exempt entity
  21. Large operating company
  22. Subsidiary of certain exempt entities
  23. Inactive entity

What does the Term Beneficial Owner Signify?

The term “beneficial owner” holds substantial weight within the context of reporting companies under the new Corporate Transparency Act. In essence, a beneficial owner of a reporting company is any individual who, either directly or indirectly, holds substantial control over the entity or owns and controls at least 25% of its ownership interests. Let’s delve deeper into what constitutes substantial control and ownership interests.

Substantial control refers to the authority wielded by an individual within a reporting company. This can manifest in various forms, such as serving as a senior officer, possessing the power to appoint or remove senior officers or a majority of the board of directors, or exerting significant influence over crucial decisions impacting the company’s trajectory. These decisions encompass pivotal aspects like business nature, reorganization, major expenditures, investments, debt incurrence, and amendments to governance documents. Essentially, substantial control entails having a palpable impact on the company’s strategic direction and operational landscape.

Ownership interests, on the other hand, encapsulate the mechanisms through which individuals establish ownership within a reporting company. This encompasses a broad spectrum of instruments and arrangements, including equity, capital and profit interests, convertible instruments, and various options or privileges like puts, calls, and straddles. Importantly, ownership interests can be held directly or indirectly through contracts, arrangements, trusts, or intermediary entities. This implies that even if ownership is not held outright, individuals may still exert control or influence through indirect means.

Determining whether an individual qualifies as a beneficial owner hinges on their total ownership interests in the reporting company relative to its overall capital and profit interests, voting power, or value. This calculation clarifies the extent of an individual’s ownership stake and their consequential influence within the entity.

What does a Company Applicant denote?

In line with the definition given by the CTA, a “company applicant” represents the individual who, from January 1, 2024, onwards, initiates the formalization of a domestic reporting company or charts the course for a foreign reporting company to commence operations within the United States. Within this regulatory framework, if multiple individuals participate in the filing process, the designation of “company applicant” falls upon the individual primarily responsible for orchestrating or overseeing the filing procedure.

In essence, a reporting company, bound by the tenets of the CTA, can enlist a maximum of two company applicants. Firstly, there’s the individual directly involved in submitting the foundational formation or registration documentation. Secondly, if applicable, there’s the individual entrusted with the direction or oversight of the filing process.

What has to be Reported in the Beneficial Ownership Information Report As per the Corporate Transparency Act?

Reporting obligations under the new FinCEN beneficial ownership regulations aim to shed light on the ownership structures of businesses operating within or engaging with the U.S. market. The legislation seeks to enhance transparency and accountability by gathering comprehensive information about beneficial owners, thereby mitigating the risks associated with illicit financial activities. This heightened transparency serves as a crucial tool in safeguarding national security interests and promoting integrity within the financial system.

Let’s delve into the specifics of what details need to be submitted in a Beneficial Ownership Report

  • Reporting Company Information:

  1. Full Legal Name: The reporting company must provide its complete legal name and any alternative names used in business operations, such as trade names or “doing business as” names.
  2. Business Address: It is essential to disclose the reporting company’s current U.S. business street address or primary location.
  3. Jurisdiction of Formation or Registration: The reporting company must specify the jurisdiction where it was formed or registered.
  4. Taxpayer Identification Number (TIN): The reporting company must furnish its TIN issued by the U.S. or, for foreign reporting companies without a U.S. TIN, a tax identification number issued by a foreign jurisdiction along with the name of that jurisdiction.
  • Beneficial Owner and Company Applicant Information:

  1. Full Legal Name: For each beneficial owner and company applicant, their complete legal name must be provided.
  2. Date of Birth: The reporting company must disclose the date of birth of each beneficial owner and company applicant.
  3. Residential or Business Address: Beneficial owners should provide their current residential address, while company applicants may furnish their business street address if forming or registering an entity during business activities.
  4. Unique Identifying Number: Each beneficial owner and company applicant must provide a unique identifying number from a valid U.S. passport, U.S. identification document, U.S. driver’s license, or a valid foreign passport.
  5. Document Verification: A scanned copy of the document from which the number was obtained must be submitted along with the unique identifying number.
  • FinCEN Identifier Option:

Under the CTA, beneficial owners and company applicants can obtain a FinCEN identifier. This unique identifying number, assigned by the Financial Crimes Enforcement Network, can be used in place of personal information when filing the BOI report. Reporting Companies, Beneficial Owners, and Company Applicants can acquire a distinctive FinCEN identifier via the official FinCEN website.

Due Dates for Initial BOI Reports:

The timing for filing initial BOI reports with FinCEN varies based on the establishment date of the reporting company:

  • Existing Companies: Entities created or registered before January 1, 2024, have until January 1, 2025, to submit their initial BOI reports.
  • Newly Formed Companies: Those established between January 1, 2024, and December 31, 2024, must file within 90 calendar days from their creation or registration date.
  • Companies Formed After January 1, 2025: Entities formed on or after January 1, 2025, are required to file within 30 calendar days of their creation or registration.

Adhering to these deadlines is imperative for reporting companies to ensure compliance with the CTA’s regulatory framework.

Additional BOI Report Filing Compliance Deadline

Beyond the initial submission of the Beneficial Ownership Information (BOI) report, a reporting entity must provide updates within 30 days of any alterations to its corporate or beneficial ownership details, if any. Moreover, if any inaccuracies are discovered or should reasonably be known regarding the information previously reported, a corrected BOI report must be filed within the same timeframe. However, it’s important to note that updates or corrections related to changes in company applicants are not mandatory.

Suppose a reporting entity ceases to meet the criteria defining a reporting company due to exemption eligibility. In that case, it must promptly inform FinCEN by submitting an updated report within 30 calendar days of obtaining exempt status under the Corporate Transparency Act.

Corporate Transparency Act Penalties

Violating the Corporate Transparency Act by intentionally providing false or fraudulent information, or by willfully neglecting to report complete or updated beneficial ownership details to FinCEN, carries severe consequences. Although the reporting company bears the primary responsibility for ensuring compliance, any individual or entity causing the reporting company’s failure to meet its obligations under the CTA can be held accountable.

Civil penalties for CTA violations can reach up to $500 for each day the violation persists or remains unresolved. Additionally, individuals who commit criminal violations of the CTA may face fines of up to $10,000, imprisonment for a maximum of two years, or both. These penalties underscore the importance of accurate and timely reporting under the CTA, emphasizing the seriousness of regulatory authorities addressing non-compliance in matters of beneficial ownership transparency. One must note that the CTA also provides an option known as a “safe harbor,” enabling protection from penalties in cases of inaccurate information within a Beneficial Ownership Information (BOI) Report. This safe harbor applies when any inaccuracies are rectified within 90 calendar days following the original BOI Report’s filing deadline.


Embracing the new Corporate Transparency Act regulations demands precision and vigilance. Ensure conformity with all mandates to unlock transparency, fortify national security, and safeguard against penalties, enabling your business to thrive with integrity.

With USAIndiaCFO, small businesses can rest assured knowing they have expert legal and financial support to adeptly manage the complexities of the CTA FinCEN regulations. Our seasoned professionals provide tailored guidance, ensuring compliance and peace of mind for businesses of all scales. Reach out to our team today!