Note that the CTA is interested only in the disclosure of individuals. Therefore, entities themselves may not be listed as Beneficial Owners, and there may need to be a “look-through” of intervening entities in order to determine a Reporting Company’s direct and indirect Beneficial Owners.

Individuals may be deemed to exert substantial control over a Reporting Company regardless of whether they hold any level of ownership in the entity. An individual exercises substantial control over a Reporting Company if the individual:

• Serves as a senior officer – this includes any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function. Title is not dispositive of the analysis;

• Has authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body);

• Directs, determines, or has substantial influence over important decisions. Important decisions include, but are not limited to:

  • The nature, scope, and attributes of the business of the Reporting Company, including the sale, lease, mortgage, or other transfer of any principal assets

  • The reorganization, dissolution, or merger of the Reporting Company

  • Major expenditures or investments, equity issuances, incurrence of any significant debt, or approval of operating budgets of the Reporting Company

  • The selection or termination of business lines or ventures, or geographic focus, of the Reporting Company

  • Compensation schemes and incentive programs for senior officers

  • The entry into or termination, or the fulfillment or nonfulfillment, of significant contracts

  • Amendments of any substantial governance documents of the Reporting Company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures; or

• Has any other form of substantial control.

Note the catch-all in the last bullet above. FinCEN has been careful not to box itself into a definition of the term “substantial control,” and instead determining which individuals exert substantial control over any particular entity will remain a facts and circumstances test. We advise that you consult your legal counsel if you are unsure whether someone does or does not exert substantial control over one of your Reporting Companies.

There is no limit on the number of individuals that may exert substantial control over a Reporting Company and thus are required to be disclosed in the Reporting Company’s BOI Report.

For the purposes of determining a Reporting Company’s 25%+ owners, “ownership interests” include:

• Any equity, stock, or similar instrument;

• Preorganization certificates or subscriptions;

• Transferable shares of or voting trust certificates or certificates of deposit for an equity security, interest in a joint venture, or certificates of interest in a business trust;

• Capital or profit interests;

• Instruments convertible into the foregoing;

• Warrants or rights, and options or privileges to acquire or sell a share or interest in a Reporting Company;

• Any put, call, straddle, or other option or privilege of buying any ownership interest in a Reporting Company, except to the extent that such option or privilege is created and held by a third party without the knowledge or involvement of the Reporting Company; and

• Any other instrument, contract, arrangement, understanding, relationship, or mechanism used to establish ownership.

An individual may also directly or indirectly own or control an ownership interest of a Reporting Company through any contract, arrangement, understanding, relationship, or otherwise, including:

• Joint ownership of an undivided interest;

• Through another individual acting as a nominee, intermediary, custodian, or agent on behalf of such individual; or

• Through ownership or control of one or more intermediary entities.

With respect to interests held in a trust or similar arrangement, an individual may directly or indirectly own or control an ownership interest:

• As a trustee or other person with authority to dispose of the trust’s assets;

• As a beneficiary who is the sole permissible recipient of trust income and principal or has the right to demand the distribution or withdrawal of substantially all of the trust’s assets; or

• As a grantor or settlor having the right to revoke the trust or withdraw the assets of the trust.

See our blog post titled “Determining Beneficial Ownership Under the CTA – Calculating Ownership Percentages” for an in depth discussion regarding the calculation of ownership interests for purposes of determining those Beneficial Owners that are deemed to own 25%+ of a Reporting Company.

Regardless of whether the above criteria are satisfied, the CTA exempts certain individuals from the definition of “Beneficial Owner”:

• Minor children, provided that the information of a parent/guardian is reported instead;

• Any individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;

• Except for senior officers, any employee of the Reporting Company, acting solely as an employee and whose substantial control derives solely from their status as an employee;

• An individual whose sole interest in a Reporting Company is a future interest through a right of inheritance; or

• A creditor of the Reporting Company whose interest is created solely through rights or interests for the payment of a predetermined sum of money, such as a debt incurred by the Reporting Company, or a loan covenant or other similar right associated with such right to receive payment that is intended to secure the right to receive payment or enhance the likelihood of repayment.A “Beneficial Owner” is an individual who, directly or indirectly, either (1) exercises substantial control over the Reporting Company, or (2) owns or controls 25% or more of the ownership interests of the Reporting Company.

  Note that the CTA is interested only in the disclosure of individuals. Therefore, entities themselves may not be listed as Beneficial Owners, and there may need to be a “look-through” of intervening entities in order to determine a Reporting Company’s direct and indirect Beneficial Owners.

  Individuals may be deemed to exert substantial control over a Reporting Company regardless of whether they hold any level of ownership in the entity. An individual exercises substantial control over a Reporting Company if the individual:

  • Serves as a senior officer – this includes any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function. Title is not dispositive of the analysis;

  • Has authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body);

  • Directs, determines, or has substantial influence over important decisions. Important decisions include, but are not limited to:

    • The nature, scope, and attributes of the business of the Reporting Company, including the sale, lease, mortgage, or other transfer of any principal assets

    • The reorganization, dissolution, or merger of the Reporting Company

    • Major expenditures or investments, equity issuances, incurrence of any significant debt, or approval of operating budgets of the Reporting Company

    • The selection or termination of business lines or ventures, or geographic focus, of the Reporting Company

    • Compensation schemes and incentive programs for senior officers

    • The entry into or termination, or the fulfillment or nonfulfillment, of significant contracts

    • Amendments of any substantial governance documents of the Reporting Company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures; or

  • Has any other form of substantial control.

Note the catch-all in the last bullet above. FinCEN has been careful not to box itself into a definition of the term “substantial control,” and instead determining which individuals exert substantial control over any particular entity will remain a facts and circumstances test. We advise that you consult your legal counsel if you are unsure whether someone does or does not exert substantial control over one of your Reporting Companies.

There is no limit on the number of individuals that may exert substantial control over a Reporting Company and thus are required to be disclosed in the Reporting Company’s BOI Report.

For the purposes of determining a Reporting Company’s 25%+ owners, “ownership interests” include:

• Any equity, stock, or similar instrument;

• Preorganization certificates or subscriptions;

• Transferable shares of or voting trust certificates or certificates of deposit for an equity security, interest in a joint venture, or certificates of interest in a business trust;

• Capital or profit interests;

• Instruments convertible into the foregoing;

• Warrants or rights, and options or privileges to acquire or sell a share or interest in a Reporting Company;

• Any put, call, straddle, or other option or privilege of buying any ownership interest in a Reporting Company, except to the extent that such option or privilege is created and held by a third party without the knowledge or involvement of the Reporting Company; and

• Any other instrument, contract, arrangement, understanding, relationship, or mechanism used to establish ownership.

An individual may also directly or indirectly own or control an ownership interest of a Reporting Company through any contract, arrangement, understanding, relationship, or otherwise, including:

• Joint ownership of an undivided interest;

• Through another individual acting as a nominee, intermediary, custodian, or agent on behalf of such individual; or

• Through ownership or control of one or more intermediary entities.

With respect to interests held in a trust or similar arrangement, an individual may directly or indirectly own or control an ownership interest:

• As a trustee or other person with authority to dispose of the trust’s assets;

• As a beneficiary who is the sole permissible recipient of trust income and principal or has the right to demand the distribution or withdrawal of substantially all of the trust’s assets; or

• As a grantor or settlor having the right to revoke the trust or withdraw the assets of the trust.

See our blog post titled “Determining Beneficial Ownership Under the CTA – Calculating Ownership Percentages” for an in depth discussion regarding the calculation of ownership interests for purposes of determining those Beneficial Owners that are deemed to own 25%+ of a Reporting Company.

Regardless of whether the above criteria are satisfied, the CTA exempts certain individuals from the definition of “Beneficial Owner”:

• Minor children, provided that the information of a parent/guardian is reported instead;

• Any individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;

• Except for senior officers, any employee of the Reporting Company, acting solely as an employee and whose substantial control derives solely from their status as an employee;

• An individual whose sole interest in a Reporting Company is a future interest through a right of inheritance; or

• A creditor of the Reporting Company whose interest is created solely through rights or interests for the payment of a predetermined sum of money, such as a debt incurred by the Reporting Company, or a loan covenant or other similar right associated with such right to receive payment that is intended to secure the right to receive payment or enhance the likelihood of repayment.