News & Blog

by Maura Greg

Due to the Corporate Transparency Act, which became effective January 1, most companies will need to file beneficial ownership reports with the Financial Crimes Enforcement Network (FinCEN). Existing companies have until January 1, 2025, and companies created in 2024 will have ninety (90) days after creation to file these reports.  The attorneys at Robinson Gray are able to help you navigate this process.

Who Must Report?

Effective January 1, 2024, most companies that are registered or required to register with the South Carolina Secretary of State (or any other Secretary of State) will need to report beneficial ownership information to FinCEN.  Companies required to file these reports are called “reporting companies” under the Act. Generally, a beneficial owner is an individual who exercises substantial control over the reporting company or owns or controls 25% or more of the reporting company.  An individual can exercise substantial control if he or she is a senior officer, has the authority to appoint or remove officers or directors, is an important decision-maker, or has any other form of substantial control. FinCEN expects reporting companies to identify all individuals who exercise substantial control.

What Must Companies Report?

The beneficial ownership information to be reported is: (1) full legal name; (2) date of birth; (3) current residential street address; (4) a unique identifying number from a legal identification document (such as a passport or driver’s license); and (5) an image of a legal identification, for each beneficial owner.  Alternatively, starting January 1, 2024, individuals may request a FinCEN identifier and provide the FinCEN identifier instead of the beneficial ownership information (both individuals and companies may apply for a FinCEN identifier). The reported information may be shared with other government agencies.

The filings will also contain information about the reporting company such as its name, including any trade names, the address of its principal place of business, the state of its formation, and its taxpayer identification number.

What Companies are Exempt?

Some entities are exempt from the reporting requirements, including:

1. Government agencies
2. Banks
3. Publicly traded companies
4. Public utilities
5. Tax-exempt entities
6. Large entities that
   • Employ more than 20 employees on a full-time basis;
   • Grossed more than $5,000,000 (as reported on the previous year’s tax return); and
   • Have a physical operating presence within the US

An entity does not need to report that it is exempt. However, in the event a reporting company becomes exempt, the company should file an updated report claiming it is now exempt.

Deadlines to Report

Reporting companies created before January 1, 2024 will have until January 1, 2025 to file the initial beneficial ownership information report.  Reporting companies created after January 1, 2024 will have 90 days after creation to file the initial beneficial ownership information report.  Reporting companies created or registered after January 1, 2025, will have 30 days from creation to file the beneficial ownership information report. For the purposes of this post, “created” or “creation” means the date of filing or registration with the South Carolina Secretary of State’s Office.

Once the initial report is filed, within 30 days of a change, the reporting company must also provide an updated filing if any of the reported information changes.

Penalties for Not Reporting

There are both civil and criminal penalties for failing to report. Civil penalties are up to $500 per day for each day the violation continues, and criminal penalties include imprisonment for up to two years and/or a fine of up to $10,000.

Other Information

Additionally, for reporting companies created or registered with the South Carolina Secretary of State on or after January 1, 2024, the company applicant must also be reported.  The company applicant is either the person who directly files the document that creates or registers the company, or who is primarily responsible for directing or controlling the filing.

This post has been prepared by Robinson Gray Stepp & Laffitte, LLC for informational purposes only and does not constitute legal advice.

If you need assistance filing your BOI or would like to further discuss reporting requirements, please contact us.