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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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The Corporate Transparency Act (the CTA), which became effective on January 1, 2024, requires non-exempt legal entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN). The CTA’s intent is to generate a database of information to assist law enforcement with detecting and combatting illegal business transacted through shell entities.

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For non-exempt entities formed before January 1, 2024, beneficial ownership reporting is due on January 1, 2025.<a href="#_edn1" id="_ednref1">[i]</a> For non-exempt entities formed between January 1, 2024 and December 31, 2024, beneficial ownership reporting is due within 90 days of formation.<a href="#_edn2" id="_ednref2">[ii]</a> For entities formed on January 1, 2025 or later, beneficial ownership reporting is due within 30 days of formation.<a href="#_edn3" id="_ednref3">[iii]</a>

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The CTA provides for 23 exemptions, the following of which may be relevant to private investment funds and related companies:

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Considering the limitations of the above exemptions, there will still be instances in which entities within the private funds space will be subject to beneficial ownership reporting, such as state-registered investment advisers, exempt reporting advisers (who are not venture capital fund advisers), and the private funds which they advise. Any related entities, such as a general partner, may also be subject to beneficial reporting. In the event no exemption applies, to avoid significant penalties<a id="_ednref9" href="#_edn9">[ix]</a>, the entity must register with FinCEN and provide the name, address and a copy of a driver’s license or passport for each beneficial owner as well as basic corporate information about the entity.<a id="_ednref10" href="#_edn10">[x]</a>

Beneficial owners are individuals who exercise substantial control of a non-exempt company or who own at least 25% of the ownership interests of such company.<a id="_ednref11" href="#_edn11">[xi]</a> “Substantial control” means any senior officer or an individual who directs, determines or has substantial influence over important decisions made by a non-exempt company.<a id="_ednref12" href="#_edn12">[xii]</a>

https://admin.thompsonhine.com/wp-content/uploads/2024/07/Thompson-Hine-Newsletter-Business-Law-Update-July-2024.pdf

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<a id="_edn1" href="#_ednref1">[i]</a> 31 CFR § 1010.380(a)(1)(iii).

<a href="#_ednref2" id="_edn2">[ii]</a> 31 CFR § 1010.380(a)(1)(i)(A).

<a href="#_ednref3" id="_edn3">[iii]</a> 31 CFR <a>§ </a>1010.380(a)(1)(i)(B).

<a id="_edn4" href="#_ednref4">[iv]</a> 31 CFR § 1010.380(a)(2)(x).

<a href="#_ednref5" id="_edn5">[v]</a> 31 CFR § 1010.380(a)(2)(x).

<a href="#_ednref6" id="_edn6">[vi]</a> 31 CFR § 1010.380(a)(2)(xviii).

<a href="#_ednref7" id="_edn7">[vii]</a> 31 CFR § 1010.380(a)(2)(xxi).

<a id="_edn8" href="#_ednref8">[viii]</a> 31 CFR § 1010.380(a)(2)(xxii).

<a href="#_ednref9" id="_edn9">[ix]</a> Penalties include $591 per day fines and possible jail time. 31 CFR § 1010.380(g).

<a href="#_ednref10" id="_edn10">[x]</a> 31 CFR § 1010.380(b)(1).

<a id="_edn11" href="#_ednref11">[xi]</a> 31 CFR § 1010.380(d).

<a id="_edn12" href="#_ednref12">[xii]</a> 31 CFR § 1010.380(d)(1).

<em>This article may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgement of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.</em>

<em>This document may be considered attorney advertising in some jurisdictions.</em>

Corporate Transparency Act Considerations for Private Investment Funds

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