What is Beneficial Ownership Information?

What is Beneficial Ownership Information (BOI)?

ComplyGuy is your partner in navigating the complexities of Beneficial Ownership Information (BOI) filings under the Corporate Transparency Act. We’re committed to providing crystal-clear view of BOI, ensuring that your business adheres to all related compliance requirements with ease.

Understanding BOI

Beneficial ownership information refers to identifying the individuals who ultimately own or control a legal entity, such as a company, trust, or partnership. These individuals are often referred to as “beneficial owners” or “ultimate beneficial owners.” While legal ownership might be held by entities or nominees, beneficial ownership reflects the real people behind those entities or nominees.

What Defines a Beneficial Owner?

A beneficial owner is an individual who, either directly or indirectly:

Exercises Substantial Control: Substantial control means an individual may have zero ownership of the entity, however, they have the ability to make important decisions for the reporting company. This alone makes them a beneficial owner under FinCEN’s regulation. This includes being an officer, manager, having the authority to appoint board members, sell or lease major assets, engage in important contracts for the entity, or other forms of important decision making.
Owns or Controls a Minimum of 25% Ownership Interests: Any individual with 25% of more of the ownership interests is a beneficial owner. This includes membership in an LLC, shares in a corporation, convertible notes and investment instruments, warrants, or any other form of ownership that either conveys ownership or can be converted into ownership. This is by individual, so if an individual owners 10% directly and an additional 30% through an LLC that invested in a reporting company, they would be over the 25% threshold and need to be included as a beneficial owner.

What is Substantial Control?

An individual is deemed to exercise substantial control if they fall into any of the following categories:

Senior Officer Status: The individual holds a senior officer position, such as the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other role performing a similar function.
Authority in Appointing or Removing Officers or Directors: The individual possesses the authority to appoint or remove specific officers or a majority of directors (or a similar body) within the reporting company.
Key Decision-Making Role: The individual plays a pivotal role in making significant decisions for the reporting company. This includes making decisions concerning (1) business operations, (2) financial matters, or (3) the organizational structure of the businesss.
Other Forms of Substantial Control: The individual exercises substantial control over the reporting company through any other means. You must include ALL individuals with substantial control over the reporting entity.

BOI Includes The Following

Beneficial ownership information typically includes details such as:

Name: The full legal name of the individual who ultimately owns or controls the entity.
Trade Name: Includes DBAs and fictitious names.
Address: The residential or business address of the beneficial owner.
Jurisdiction of formation or registration: Where the entity was formed.
Identification Documents: Copies of official identification documents, such as passports or driver's licenses, to verify the identity of the beneficial owner.

Importance of BOI

Beneficial ownership information is crucial for various reasons:

Transparency: It helps increase transparency in corporate structures, preventing the misuse of legal entities for illicit purposes such as money laundering, tax evasion, or terrorist financing.
Risk Mitigation: Knowing the ultimate owners or controllers of entities enables better risk assessment and mitigation for businesses, financial institutions, and regulatory authorities.
Compliance: Many jurisdictions require companies to disclose beneficial ownership information as part of their regulatory compliance obligations to combat financial crime and ensure corporate transparency.
Enforcement: Law enforcement agencies rely on beneficial ownership information to investigate and prosecute financial crimes, including fraud, corruption, and money laundering.

Our Take

"Efforts to enhance beneficial ownership transparency have led to the adoption of regulatory measures worldwide, such as disclosure requirements, centralized registries, and international cooperation agreements to facilitate the exchange of information between jurisdictions. Your grandpa may have kept gold bars under his mattress away from the prying eyes of the government, but the future of money is increasingly measured, cataloged, and surveilled."

- ComplyGuy

Ready to File? Let's Roll.

The process is simple. First, we’ll determine if you are required to file. After that, we’ll present the available filing options.