Abstract
The details and requirements of business entity formation traditionally have been solely the province of state law. Most states, such as Virginia, maintain corporate annual report filing requirements that involve the public disclosure of corporate officers and directors. However, these requirements focus on active managers of the entities, not information about beneficial ownership. The recently enacted Corporate Transparency Act ("CTA") will fundamentally change entity disclosure on the national level.
The CTA was part of the fiscal year 2021 National Defense Authorization Act and seeks to aid national security and crime fighting through a national registry of beneficial owners of business entities in the United States. However, as this article describes, the CTA may impose burdens on clients and their counsel, while leaving significant gaps that could frustrate its purpose.
The U.S. Treasury Department was ordered to promulgate regulations implementing the CTA by Jan. 1, 2022. Treasury published proposed regulations in December 2021, and it now seems that implementation will take longer than Congress demanded. However, once effective, every new business entity created by a state filing must be accompanied by a contemporaneous transmission into a new federal database of certain beneficial owners as well as of the "applicant" who forms the entity, which may be an attorney. Existing entities will have longer to comply but eventually will be subject to similar disclosure.
Document Type
Article
Publication Date
Spring 2022
Publication Information
49 VBA Journal 24-27 (2022)
Repository Citation
Wheaton, James J. and Reynozo, Gustavo De la Cruz, "I Have to Tell Them What? The New Corporate Transparency Act and Forming Business Entities in Virginia" (2022). Faculty Publications. 2141.
https://scholarship.law.wm.edu/facpubs/2141