What/Who is a Company Applicant?

  • Individual who is the direct filer or who directs or controls the filings action when forming an entity.
    • Direct Filer: individual who directly filed the document.
    • Directs or controls the filing action: individual who was primarily responsible for directing or controlling the filing of the creation or first registration document.
  • All Reporting Companies formed:
    • After 1/1/2024, 1 Company Applicant to be reported on their BOI Report (up to 2 may be listed)
    • Prior to 1/1/2024, will not need to report their company applicant on BOI report.

What/Who is a Beneficial Owner:

  • A Beneficial Owner is any individual (1) who directly or indirectly exercises “Substantial Control” over the reporting company, or (2) who directly or indirectly owns or controls 25 percent or more of the “Ownership Interest” of the report company.
    • Substantial Control:
      • An individual will have substantial control of a reporting company if they direct, determine, or exercise substantial influence over important decisions the reporting company makes.
    • Any Senior Officer is deemed to have substantial control over a reporting company.
      • Senior Officer: any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer, regardless of official title, who performs a similar function.
    • Other rights and responsibilities may also constitute as substantial control.
  • Ownership Interest:
    • Refers to arrangements that establish ownership rights in the reporting company, including simple shares of stock, equity, or voting rights as well as more complex instruments.

 

There are five exceptions from the term “Beneficial Owner”:

  1. A minor child, if the child’s parent’s or guardian’s information is otherwise is reported properly;
  2. An individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;
  3. An individual acting as an employee whose control is derived solely because of employment status;
  4. An individual whose only interest in the entity is through a right of inheritance; and
  5. A creditor of the entity, unless the creditor meets the requirements of a beneficial owner.

What is a Beneficial Ownership Information (BOI) Report and when is it due?

  • The BOI Report is a new reporting requirement required by FinCEN where Domestic and Foreign (non-U.S.) reporting companies provide information about the company, its beneficial owners, and its company applicants for entities formed after January 1st, 2024.
  • The main information that will need to be provided on the BOI Report is:
    • Reporting Company:
      • Full Legal Name and any Trade Names (Doing Business As).
      • Current U.S. Address (the principal place of business or for a Foreign Reporting Company their primary location in the U.S. where the company conducts business)
      • Jurisdiction of Formation
      • Tax Identification Number (Such as an EIN or TIN #)
    • Beneficial Owners:
      • Full Legal Name
      • Date of Birth
      • Current Residential Address
      • Copy of Photo Identification and Unique ID # and Jurisdiction of Issuance

OR

  • They may provide their FinCEN Identifier Number if previously obtained through FinCEN.
  • Company Applicant Information
    • Same information will need to be provided as for Beneficial Owners (with the exception for company applicants forming the company in the course of their business who may report their business street address).
  • Upon Forming or Registering a Reporting Company with a Secretary of State or similar office after January 1st, 2024, the company will have 30 Calendar Days to file their BOI report via online using FinCEN’s filing system after receiving actual or public notice that its creation or registration is effective (which ever one occurs first). For Reporting Companies registered prior to January 1st, 2024, they will need to file their BOI report with FinCEN by January 1st, 2025.

How often do Reporting Companies need to file a BOI Report?

  • Outside of the initial reporting requirement, FinCEN will require Reporting Companies to file an Updated BOI Report whenever there is a change to the information previously reported to FinCEN regarding the company or its beneficial owners. Once a change has occurred, the Reporting Company will have 30 Calendar Days to file an Updated Report with FinCEN.

What is a FinCEN Identifier Number?

  • A FinCEN Identifier is a unique identifying number that individuals or reporting companies may request from FinCEN by providing the necessary reporting information to FinCEN.
    • For Individuals, they may request a FinCEN Identifier by submitting a FinCEN Identifier Application by providing their Name, Date of Birth, Address (Business Address for Company Applicants), and Unique Identification (with Photo). Once submitted, the individual will immediately receive their FinCEN Identifier which may be provided on BOI Reports in lieu of providing their Personal Identifier Information (PII).
    • For Reporting Companies, they may request a FinCEN Identifier when they file their BOI Report by checking the corresponding box on the reporting form.
  • Updating your FinCEN Identifier Information:
    • When the information an individual or reporting company reported to FinCEN to obtain a FinCEN Identifier changes, they must update the reported information within 30 Calendar Days after the change has occurred.

Penalties for Failure To File:

  • $500 per day civil penalty
  • $10,000 fine or 2 years imprisonment
  • 90-day Safe Harbor