New Beneficial Ownership Laws for Corporate Entities (2024)
There are new Beneficial Ownership Laws that go into affect January 1, 2024 for corporate entities. Under the final rule, a beneficial owner includes anyone who, directly or indirectly, either exercises substantial control over a reporting company, or owns or controls at least 25% of the ownership interests of a reporting company. The rule further outlines a range of activities that could constitute substantial control of a reporting company.
FinCEN noted that companies required to report beneficial ownership information under the rule will include (subject to the applicability of specific exemptions) LLPs, LLCs, Corporations, Business Trusts, and most limited partnerships “because such entities are generally created by a filing with a Secretary of State or similar office.” This means that any LLC, LLP or Corporation (C & S) entities will have to report any ownership transfers into a trust.
Certain trusts, such as the Bulletproof Trust, “are excluded from the definitions to the extent that they are not created by the filing of a document with a secretary of state or similar office. FinCEN recognizes that in many states the creation of most trusts typically does not involve the filing of such a formation document.” The nature of the trust still protects it. Only an entity created by an act of the state or government must report these changes.