We want to make you aware that yesterday, a Texas federal district court issued a nationwide preliminary injunction temporarily blocking the effectiveness of the Corporate Transparency Act (CTA) and its implementing regulations, which require certain companies (including certain non-U.S. companies registered to conduct business in the United States) to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
For any companies created prior to January 1, 2024, the initial reporting deadline is January 1, 2025; companies that were created during 2024 have a 90-day window in which to file the required information. Note, however, that the injunction ultimately may not result in a halt of CTA filing obligations – it is possible, perhaps even likely, that the DOJ could seek to have the stay lifted on an expedited basis. Thus, we believe it may be prudent for companies subject to the end-of-year filing deadline to continue to prepare their CTA filings.
In its opinion, the Texas court held that the requirements of the CTA went beyond the scope of Congress’s authority to regulate corporate operations.
As you may recall, an Alabama federal court previously declared the CTA unconstitutional in March; that decision, however, was limited in its applicability to the parties of the particular lawsuit and other persons subject to the Alabama court’s jurisdiction. (In that case, the DOJ filed an appeal with the Eleventh Circuit that remains pending.)
We are following this situation closely and will keep you apprised of any further developments.
If you have any questions, please feel free to contact your regular contacts at the firm.
An update to this alert memorandum was issued on December 9, 2024: DOJ Appeals CTA Injunction; FinCEN Suspends Filing Requirement