Much attention has been paid, and deservedly so, to the Corporate Transparency Act’s (CTA) requirement to file an initial beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) between January 1, 2024 and January 1, 2025. Less attention has been given to what may be a more onerous requirement of the CTA – the updating requirement.
When do BOI updates have to be filed?
The rule implementing the CTA’s reporting requirement requires that an updated BOI report be filed within 30 calendar days of any change in the information reported about the company or its beneficial owners. FinCEN has estimated that there will be approximately 14.5 million updated reports filed each year.
What kind of changes trigger the BOI updating requirement?
Businesses may need to file BOI updates regularly as business changes can be frequent. For example, it is not uncommon for companies to change their legal name, move their principal place of business, register a new assumed name, or redomesticate – all transactions which may trigger the need to file an updated BOI report.
A change in who their beneficial owners are also triggers the updating requirement. This is something to keep in mind not only upon a sale or transfer of ownership interests, but also if the company changes its president, CEO, or other senior officers, or if there is a change in the individuals who make important decisions for the company – all of whom may be considered beneficial owners as defined by the reporting rule.
Changes to beneficial owner’s personal information will require a BOI update
Changes to the personal information required to be reported for each of the beneficial owners will also trigger the updating requirement. For example, an update may be required if any of the beneficial owners change their home address, change their legal name (such as a result of a marriage or divorce) or moves to a different state and gets a new driver’s license with a different number.
Note that any beneficial owner who obtains a FinCEN Identifier and whose FinCEN Identifier is reported on the BOI report instead of each piece of personal information will be responsible for updating their FinCEN Identifier application upon a change in their personal information.
Remember that CTA compliance is more than just the initial report
What’s important for any reporting company (e.g., an entity required to file a BOI report) to remember is that compliance with the CTA does not end with the filing of the initial BOI report. Updates must be filed within 30 calendar days of any change in the information reported about the company or its beneficial owners. And this obligation continues as long as the company remains a reporting company. Penalties can be imposed for noncompliance with the updating requirement. So make sure you have a procedure in place to keep track of your reported information and are aware of when updates must be filed. If you are not sure if an update is triggered by an event involving the company or a beneficial owner, seek legal advice.
Learn more about Corporate Transparency Act
Take our quiz to determine Beneficial Ownership Information filing status. For more information, visit our Beneficial Ownership Information Report solutions page.
