Breaking news on US company beneficial ownership reporting – federal court pauses enforcement of the US Corporate Transparency Act

On 3 December 2024, a Texas federal district court issued a preliminary injunction temporarily halting nationwide enforcement of the US Corporate Transparency Act (CTA) and the US Department of the Treasury’s Financial Crimes Enforcement Network’s (FinCEN) regulations on beneficial ownership reporting requirements (BOI Reporting Requirements). As a reminder, FinCEN’s BOI Reporting Requirements became effective on 1 January 2024 and require reporting companies to file reports with FinCEN that include information about the reporting company, its beneficial owners and its company applicants (BOI Report). Please see our previous blog for detail on these reporting requirements, as well as the deadlines for submitting BOI Reports: Beneficial Ownership Reporting under the Corporate Transparency Act is Here.

The US government filed a notice of appeal of the court’s decision on 6 December 2024, and the ultimate fate of the CTA remains to be determined. However, pending further developments, reporting companies are not required to file their initial BOI Reports by the 1 January 2025 deadline, and reporting companies that have already filed initial BOI Reports are not currently required to file updated reports reflecting changes to previously reported information. While the court’s ruling did not explicitly address other deadlines under the CTA, because the court halted enforcement of the CTA and its regulations, we expect all filing deadlines are currently suspended, including for reporting companies formed after 1 January 2024.

FinCEN has updated its website to include the following: In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

Reporting companies should note that if the preliminary injunction is lifted, they may once again be required to file and/or update BOI Reports. We believe it is likely the US government will seek a stay of the district court’s decision to allow enforcement of the CTA pending the appeal.

Given the uncertainty as to whether the injunction will be lifted or stayed and as to the ultimate outcome of the case, reporting companies should either continue to make voluntary filings of their BOI Reports or, at a minimum, continue to gather all necessary information and be prepared to file their BOI Reports by the stated deadlines. We will continue to monitor events and provide updates.