On September 30, 2022, new ruling now requires certain corporations, limited liability companies, and other similar entities (“reporting companies”) to report certain identifying information about the beneficial owners who own or control such entities and the company applicants who form or register them.

Effective Date:

JANUARY 1, 2024

Whether an individual is listed on the corporation or LLC or not, all BENEFICIAL OWNERS must report under this new legislation.

Who is considered a beneficial owner?

A beneficial owner is an individual who either directly or indirectly:

(1) exercises substantial control over the reporting company, or
(2) owns or controls at least 25% of the reporting company’s ownership interests

What is substantial control?

An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:

(1) The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function). This is regardless of whether they are list with the Secretary of State.

(2) The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.

(3) The individual is an important decision-maker for the reporting company.

(4) The individual has any other form of substantial control over the reporting company.

Penalties for Violation

As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.

The Financial Integrity Group | | 877-233-9014 |