Corporate Transparency Act: Company Applicants

In the third in the series  about the Corporate Transparency Act (CTA), the focus is on company applicants. In addition to submitting “beneficial ownership information” (BOI)  for beneficial owners, reporting companies  must also submit BOI for individuals known as “company applicants.”

What Is a Company Applicant?

A company applicant is an individual who either:

• Directly filed the document creating the domestic reporting company or first registered the foreign entity to do business in the United States, or
• Is primarily responsible for directing and/or controlling the filing of such document (if more than one individual is involved in the creation or filing of the document).

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) only intends for a reporting company to list two individuals at most as company applicants. In FinCEN’s Final Reporting Rule, it provided the following example to specifically illustrate identifying company applicants if a law firm is involved in the filing of any formation documents: If a supervising attorney oversees the preparation and filing of a reporting document and a paralegal or associate files the document with the state filing office, the reporting company must list both the supervising attorney and the paralegal/associate as company applicants.

While any reporting company formed or registered to do business in the United States on or after January 1, 2024, must report BOI for its company applicants, any reporting companies formed or registered to do business in the United States before January 1, 2024, do not need to report information regarding company applicants in their initial BOI report. Additionally, in any subsequent BOI report correcting or amending reported information, reporting companies do not need to report any change to the required information regarding company applicants, unless such information was not correct when initially reported.

Further Guidance Around “Company Applicants”

FinCEN’s Final Reporting Rule clarified several situations regarding company applicant reporting requirements.

Employees in the filing office. Those processing formation or registration documents (e.g., secretary of state) are not the filers of these documents and are thus not considered company applicants.

Business formation services. Another gray area concerns the use of business formation services. Such services may provide software or written guidance for forming entities. The employees of these services are not company applicants by virtue of providing the software or guidance. However, to the extent these employees are personally involved in the filing of a formation or registration document for a reporting company, they may meet the definition of “company applicant” under the CTA.

Law firm staff. As discussed, the Final Reporting Rule gives an example of a law firm staff. If a supervising attorney oversees the preparation and filing of a reporting document and a paralegal or associate files the document with the state filing office, the reporting company must list both the supervising attorney and the paralegal/associate as company applicants.

Self-filing. According to FinCEN, if an individual creating a company does not enlist the assistance of a business formation service, law firm, or similar service, only this individual should be listed as a company applicant on the reporting company’s BOI report. However, in the event the individual enlists the help of a family member, agent, or other individual to directly file a formation or registration document (and such other person meets the “company applicant” definition), both individuals must be listed as company applicants.

Quick Guide to Identifying Company Applicants

In analyzing whether your reporting company has company applicants that need to be listed, ask the following questions:

Get details about the CTA, including information about reporting companies, beneficial ownership, and other reporting requirements at Nyemaster’s Corporate Transparency Act Information Hub.

Learn more about the CTA with each article in the series:

• What Entities Are Required to Report?
• Who Is a Beneficial Owner?
• What Information Needs to be Reported?
• When Are Filing Dates and What Are the Penalties?

Contact your Nyemaster attorney to get specific legal advice about your business obligations under the CTA.