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The beneficial ownership reporting requirements of the Corporate Transparency Act went into effect on January 1, 2024. As we’ve previously blogged, regulations under the Act require every foreign or domestic legal entity that qualifies as a “reporting company” to file reports with FinCEN that identify the entity’s beneficial owners. Entities formed after January 1, 2024, will also have to identify the individuals who have filed to form or register the entity in question.

Those individuals involved in the filing process are referred to under the regulations as “company applicants” and they include up to two people: the person who directly files the document that creates or registers the company and, if more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing. FinCEN recently issued a set of FAQs providing guidance on who qualifies as a company applicant. The 1st FAQ on this topic says the following:

For the purposes of determining who is a company applicant, it is not relevant who signs the creation or registration document, for example, as an incorporator. To determine who is primarily responsible for directing or controlling the filing of the document, consider who is responsible for making the decisions about the filing of the document, such as how the filing is managed, what content the document includes, and when and where the filing occurs.

I’m guessing that many folks didn’t expect the interpretation to cast this wide a net – and yes, FinCEN makes it clear that it’s looking to rope the lawyers involved in the process as company applicants, as this example from the FAQ illustrates:

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.

Okay, I’m guessing this result comes as an unpleasant surprise to a lot of lawyers who probably didn’t expect to find themselves in this position. But you ain’t seen nothin’ yet! The 2nd FAQ addresses what happens if you use a third-party delivery service to file your company creation docs with a secretary of state – and makes it clear that the paralegal you’ve handed the filing process off to is now also a company applicant:

For example, an attorney at a law firm may be involved in the preparation of incorporation documents. The attorney directs a paralegal to file the documents. The paralegal may then request a third-party delivery service to deliver the incorporation documents to the secretary of state’s office. The paralegal is the company applicant who directly files the documents, even though the third-party delivery service delivered the documents on the paralegal’s behalf. The attorney at the law firm who was involved in the preparation of the incorporation documents and who directed the paralegal to file the documents will also be a company applicant because the attorney was primarily responsible for directing or controlling the filing of the documents.

Now, roping in the paralegal seems excessive to me, but the next nugget of interpretive guidance marks the spot where FinCEN interpretive position morphs into a full-blown bureaucratic fever dream. Here’s what happens if you use one of your law firm’s messengers to file a company creation document with a secretary of state:

For example, a mailroom employee at a law firm may physically deliver the document that creates a reporting company at the direction of an attorney at the law firm who is primarily responsible for decisions related to the filing. Both individuals are company applicants.

Yup, you read that right. That kid who wanders around the office with the mail cart or picks up the lunch order for your corporate department meeting has to be identified in a FinCEN filing. This may seem, well, kind of insane, but I’m sure FinCEN firmly believes that if that kid isn’t named as a company applicant, the terrorists win.

– John Jenkins