By Linda R. Brower, Senior Counsel, Commercial Transactions

In Part 1 of this Article, we addressed FinCEN guidance on whether and when a reporting company formed or registered prior to December 31, 2023, and still in existence on or after January 1, 2024, was required to make initial and update reports about the company and its beneficial owners. In Part 2, we discuss the filing requirements for reporting companies formed or registered on and after January 1, 2024, and whether FinCEN guidance issued on September 10, 2024, clarified a grey area about requiring an update report for “any change” but not requiring one for a change due to “termination and dissolution.” Again, for 2024 and Post-2024 reporting companies, as it did for Pre-2024 reporting companies, FinCEN differentiated between the filing requirements for initial and updated reports.

What became clear in September 2024 about the filing requirements for 2024 and Post-2024 reporting companies.

FinCEN issued new FAQ guidance on September 10. In the guidance, FinCEN seems to have clarified most dangling issues. With respect to filing initial reports, we already knew from the Act that a reporting company formed or registered at any time in 2024 has a 90-day reporting deadline (from the date of notice of formation or registration) and that reporting companies formed or registered on or after January 1, 2025, have a 30-day reporting deadline. But, for the first time, on September 10, FinCEN clarified that if a reporting company ceases to exist as a legal entity within the 30- or 90-day deadline (whichever applies) it, nevertheless, must still file an initial report by its reporting deadline. FinCEN FAQ C.14 issued September 10, 2024.

With respect to update reports, we already knew from FinCEN’s “Note” that reporting companies are excused from having to file update reports for a company’s “termination or dissolution.” Prior to September 10, FinCEN had not clarified whether the “termination or dissolution” status was the same or different from what FinCEN described as a company “ceasing to exist” in its July 2024 FAQ. In the September set of FAQs, we learned that FinCEN considers them equivalent. FinCEN FAQ C.13 issued September 10, 2024.

In FAQ C. 14, issued on September 10, 2024, FinCEN meaningfully, but only implicitly, elevated its prior standard of “termination and dissolution” to what it now refers to as a company “ceasing to exist” and gave examples. In September 2024, FinCEN clarified that the ultimate “change” — one resulting in the reporting company “ceasing to exist” — is not a reason to file an update report.

In the weeks since the September 10 guidance was issued, legal commentators and practitioners appear to have already accepted without question that there is no update required to report that a company has “ceased to exist” and that the standard is identical to a company’s termination or dissolution.

We believe, with only a kernel of lingering doubt however, that FinCEN clarified in the September FAQs that there remains a requirement to report “lesser” changes to previously-reported required information, such as interim changes in a reporting company’s beneficial ownership immediately, prior to dissolution or termination, as sometimes happens in finalizing liquidation events such as a merger, acquisition or business bankruptcy. Do such interim “changes,” short of a company achieving the “ceasing to exist” standard, still trigger the requirement to file an update report no later than 30 days after the date the change occurred?

BMK will continue to monitor FinCEN guidance updates and amendments to the Act for additional clarification of this, still possibly, unsettled issue. Until then, we believe that interim changes that do not rise to the level of a reporting company “ceasing to exist” should still be reported within the update deadlines. From a policy position, this result makes sense. Prior to termination or dissolution, FinCEN wants to know the beneficial ownership of a reporting company, even if it is immediately prior to the last moment of its “life.” However, FinCEN does not want its database cluttered with what would be meaningless notices about a reporting company’s actual demise.

If you have any questions regarding how this new FinCEN guidance affects your reporting compliance obligations, please contact the author or another member of the Corporate Group at Brown, Moskowitz & Kallen, P.C.