CTA for Small Businesses -- Foreign Owned Companies

With the dawn of the era of the Corporate Transparency Act, many US and foreign businesses are coming to grips with the new requirement to identify their “beneficial owners” to federal regulators in a “Beneficial Owner Information report.”  The explicit purpose of the law is to comb through the “family tree” of any non-exempt reporting company to identify the human individuals who ultimately own and control the entity.  The law applies equally to companies formed in the US and foreign companies registered/qualified in the US via a filing with a secretary of state. For many foreign-owned companies, this is proving a difficult proposition.

Why It Matters

Many foreign companies do business in the US by either organizing a US-based subsidiary corporation or LLC or by registering an existing subsidiary to do business in the US. Generally speaking, those subsidiary entities must go through the analysis to determine whether they are “reporting companies” under the CTA. If the subsidiary companies are not exempt from the CTA, they will have to file a BOI report in the US. This may mean that the subsidiary in question must disclose the identities and personal information of non-US nationals from higher up the chain of ownership.  

There is no CTA exemption for foreign-owned companies or foreign beneficial owners. Any overseas enterprise with US operations is therefore advised to begin review of the BOI requirements and the 23 CTA exemptions to see whether the law requires a filing from its subsidiaries conducting business in the US.  

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