In our previous post on the Corporate Transparency Act (the “CTA”) we discussed who is a “reporting company” that is subject to Beneficial Ownership Information Reporting (“BOIR”) under the CTA, the penalties for failure to report, and the reporting deadlines. In this post we will discuss who is a “beneficial owner” and a “company applicant.”

Who is a “beneficial owner?”
A “beneficial owner” is an individual who (i) owns or controls at least 25% of the ownership interests of a “reporting company,“ or (ii) who exercises “substantial control” over a reporting company. Ownership interests include but are not limited to equity, stock, voting rights, a capital or profits interest, convertible instruments, options, or any other instrument or mechanism used to establish ownership. An individual has “substantial control” over an “reporting company” if they meet any of the following criteria: (1) they are a senior officer (think C-suite), (2) they have the authority to appoint or remove certain officers or a majority of directors, (3) they are an important decision maker, or (4) they have another form of “substantial control” over the “reporting entity.”

Who is a “company applicant?”
As discussed in our previous post on the CTA, only companies that became “reporting companies” on or after January 1, 2024, must report their “company applicant.” There are two categories of “company applicants.” The first is a “direct filer,” the individual who directly filed the document with the secretary of state, or similar office, that resulted in the company being a “reporting company.” The second is an individual who directs or controls the filing even though they did not physically or electronically file the document with the secretary of state or similar office.

Our next post will discuss what information must be included with a “BOIR” report, and when changes in “beneficial ownership” must be reported.

If you or anyone you know has questions about the “CTA,” or would like assistance in filing a “BOIR,” please contact me at (845) 426-6156 or by email at hugh@strausjacobson.com.

Our firm, Straus Jacobson & Associates, provides expert tax and legal advice to our individual and business clients in Rockland and the rest of the New York tri-state area.