Update: U.S. judge lifts injunction suspending Corporate Transparency Act and beneficial ownership reporting rules
A significant compliance requirement for Canadian companies with subsidiaries in the United States is the obligation to disclose information about the individuals that own or control those companies through Beneficial Ownership Information (BOI) reporting rules. The U.S. Corporate Transparency Act (CTA) also mandates that, in certain cases, the beneficial owners of a foreign-owned company with U.S. operations must be disclosed to the Financial Crimes Enforcement Network (FinCEN).
Earlier this month, the U.S. District Court for the Eastern District of Texas issued an injunction that temporarily suspended the CTA and Beneficial Ownership Information Reporting Rule. This also temporarily suspended the FinCEN reporting requirement. In recent days, the Fifth Circuit Court of Appeals stayed that previous injunction, thereby reinstating the requirement to disclose beneficial ownership information to FinCEN.
Companies founded prior to 2024 must now submit BOI reports before January 13th, 2025.
The reinstatement of the reporting requirement is significant for Canadian companies, particularly in situations where the primary shareholder of the company is a discretionary trust. In those cases, beneficial ownership reporting becomes far more complex as various controlling parties of the trust or beneficiaries must be identified.
Armando Iannuzzi, Co-Managing Partner
For more information on reporting requirements for Canadian businesses with U.S. operations, contact a member of the KRP LLP team today.
