Corporate Transparency Act: Who is a Company Applicant?

The Corporate Transparency Act (CTA) is a law that requires most companies doing business in the U.S. to file a beneficial ownership report (BOI).

The CTA applies to any corporation, LLC or other entity that is formed by the filing of a document with a secretary of state. The CTA also applies to non-U.S. companies that register to do business in the U.S. by filing a document with a secretary of state.

Reporting companies formed (or first registered to do business in the U.S.) on or after January 1, 2024 will need to identify their “company applicant” and provide information about their company applicant in their BOI report. Many business owners will need to understand, “who is the company applicant?”

Who is the Company Applicant?

The term “company applicant” is defined by FinCEN’s regulations.

Although the term is singular, the definition indicates that there must always be at least one company applicant and that, in many circumstances, the “company applicant” may be as many as two people.

According to FinCEN, “company applicant” is defined as::

(1) For a domestic reporting company, the individual who directly files the document that creates the domestic reporting company;

(2) For a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company; and

(3) Whether for a domestic or a foreign reporting company, the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.

Under this formula, if “more than one person is involved in the filing of the document” then there must be two individuals, consisting of (1) the “individual who directly files the document,” and (2) the “individual who is primarily responsible for directing or controlling such filing.”

Examples:

FinCEN has given us several examples of who to apply the definition of “company applicant.”

Scenario 1: Consider an attorney who completes a company creation document using information provided by a client, and then sends the document to a corporate service provider for filing with a secretary of state. In this example:

• The attorney is the company applicant who is primarily responsible for directing or controlling the filing because they prepared the creation document and directed the corporate service provider to file it.
• The individual at the corporate service provider is the company applicant who directly filed the document with the secretary of state.

Scenario 2: If the attorney instructs a paralegal to complete the preparation of the creation document, rather than doing so themself, before directing the corporate service provider to file the document, the outcome remains the same: the attorney and the individual at the corporate service provider who files the document are company applicants. The paralegal is not a company applicant because the attorney played a greater role than the paralegal in making substantive decisions about the filing of the document.

Scenario 3: If the client who initiated the company creation directly asks the corporate service provider to file the document to create the company, then the client is primarily responsible for directing or controlling the filing, and the client should be reported as a company applicant, along with the individual at the corporate service provider who files the document.

If you formed your company through Harvard Business Services on or after January 1, 2024, the individual from our office who “directly filed” the document that formed your company will be identified by their FinCEN ID number. You will be able to use this FinCEN ID to identify this company applicant when you file your initial BOI report.

The FinCEN ID number can be found in your approved company packet (typically page 3). You can also obtain the FinCEN ID for your first company applicant through your Harvard Business Services portal for the company.

Which Companies Need to Report their Company Applicant?

Only reporting companies formed on or after January 1, 2024 will need to identify their company applicant. Reporting companies before 2024 will never need to identify their company applicant.

If your company was formed outside the U.S., but first registers to do business in the U.S. on or after January 1, 2024, your company applicant will be the individual who directly first filed the document that registered your company with a secretary of state. If more than one individual was involved, the company applicant will also include the individual primarily responsible for directing or controlling the filing of the document.

If your company was formed outside the U.S. and registered to do business in the U.S. before January 1, 2024, you will not need to disclose your company applicant on your initial BOI report.

Where Can You Go for Help with your initial BOI Report?

If your company is not exempt from the Corporate Transparency Act, it will need to file a BOI report with FinCEN – the U.S. Financial Crimes Enforcement Network. Many companies are using commercial filing services, like FinCEN Report, to help them keep their confidential information secure and to file their BOI reports online.

If your company was formed on or after January 1, 2024, you will need to file your initial BOI report within 90 calendar days after the date of its formation. If your company was formed before 2024, you will need to file your initial BOI report no later than January 1, 2025.