In our 7 November 2024 insight entitled ‘Interests in USA Companies - Corporate Transparency Act’ we commented on reporting obligations on companies registered or doing business in the US.
There has been an important development. The US District Court for the Eastern District of Texas has granted a preliminary injunction against the enforcement of the CTA. The Court held that the injunction should apply nationwide.
For so long as the injunction stands, it appears that companies will not have to file Beneficial Ownership Information reports (BOI report) by the 1 January 2025 deadline or at all. We would be surprised if the Financial Crimes Enforcement Network (FinCEN) does not appeal the ruling in its entirety or at least seek a ruling that the injunction be restricted only to the parties to the proceedings, including the National Federation of Independent Business.
The preliminary injunction places companies in a difficult position in that they have to decide whether to continue collating information and preparing to file their BOI reports before 1 January 2025 in case the preliminary injunction is successfully appealed or its reach is limited or whether they put that work on hold pending further developments. No easy answers.
For further information please contact Brett Cowell in our Corporate & Commercial Team.
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