Private Equity 360 with Frazier & Deeter

I had a great time speaking with Bob Woosley with the Frazier & Deeter accounting firm on his Private Equity 360 podcast. 

Bob has been a friend for many years and we had the chance to work together when he founded iLumen, Inc., the CPA profession’s leading business intelligence and analytics platform. 

Bob was generous enough to accept my invitation to join the advisory board of The FinCEN Report Company, where he has provided valuable insights as the Company has prepared its CTA filing solution for reporting companies under the Corporate Transparency Act. 

On the Private Equity 360 podcast we talked about the challenges facing private equity under the Corporate Transparency Act.  

Under the Final Rule announced by FinCEN on September 29, 2022, every reporting company subject to this new law must file a beneficial ownership report.  The report must include five specific items of personally identifiable information for each "beneficial owner" of the company.

The Final Rule defines "beneficial owner" in a way that requires the reporting company to look through corporate investors and to determine the ultimate beneficial ownership of corporate investors at the individual (natural person) level.  In practice this will require reporting companies to obtain beneficial ownership information and corporate governance documents from private equity investors.  Depending on the facts, that inquire might extend up through several lawyers of corporate/LLC ownership and could include the names and personal information of individual investors.

This new regime will come as a shock to private equity investors who are accustomed to remaining anonymous.

The Corporate Transparency Act takes effect January 1, 2024.  Reporting companies that exist on that date will have one year to file a first disclosure report.  Entities created after that date will need to file a first disclosure report within 30 days after the date of their formation.