Category: Corporate & Business law
Corporate Transparency Act Part III; Exemptions & Reporting Requirements. DOES YOUR COMPANY HAVE TO REPORT?
June 28, 2023 | Carole Clark Isakson
This article is one in a continuing series of articles on the soon to be effective Corporate Transparency Act. Many entities will need to comply with reporting obligations under the Act or face significant penalties. Read all of these articles on the firm website. The Corporate Transparency Act (CTA), signed into law in January 2021, requires certain companies to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The purpose of this legislation is to increase transparency in the corporate sector and help combat illegal activities such as money laundering, terrorism financing, and tax evasion. The CTA requires that certain entities, known as “reporting companies,” provide information to FinCEN. Reporting companies are defined as any corporation, limited liability company, or other similar entity that is created by filing a document with a secretary of state or similar office under the laws of a state or Indian tribe, or a similar entity formed under the laws of a foreign country and registered to do business in the United States. The information that must be included has been covered in prior blogs and will be addressed in greater detail in future blogs. Our focus here is on WHO must report – not every…
Read MoreNew Law in Minnesota Voids Most Covenants Not to Compete
June 5, 2023 | Scott M. LepakThe Minnesota legislature is poised to pass a law that generally prohibits employers from entering into new covenants not to compete in Minnesota except in narrow instances. It is expected that the governor will sign the bill when it is presented to him. If signed, it will become effective the day following the governor’s signature and will apply to contracts and agreements entered into on or after that date. Pursuant to this bill, a covenant not to compete is defined as an agreement between an employee and employer that restricts the employee, after termination of employment, from performing work: for another employer for a specified period of time; in a specified geographical area; or for another employer in a capacity that is similar to the employee’s work for the employer that is a party to the agreement. These limitations are important given that the courts in Minnesota have generally refused to enforce covenants not to compete where there is not a specified time limit (i.e. it applies forever) or geographic limit (it applies across the entire planet). This new law will broadly apply to employers who are individual(s), partnership, association, corporation, business, trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to…
Read MoreCorporate Transparency Act Part 2 Beneficial Owner – Exercising Substantial Control
April 14, 2023 | Georgia Kellogg
The Corporate Transparency Act (the “CTA”) was enacted by Congress on January 1, 2021 as part of the federal government’s initiative to crack down on illicit activities. Effective January 1, 2024, most new and existing entities registered to do business in the United States will be mandated to file a report with the Financial Crimes Enforcement Network (“FinCEN”) disclosing information about the entity’s beneficial owners. The CTA defines a beneficial owner as any individual who, directly or indirectly, either exercises “substantial control” over the company or owns or controls at least 25% or more of the company’s ownership interests. An individual may directly or indirectly own or control the ownership interest of the company through various means, including joint ownership with one or more persons, through another individual acting as an intermediary, custodian, or agent, as a trustee, beneficiary, or grantor of a trust or similar arrangement, or by means of ownership or control of one or more intermediary entities that separately or collectively own or control the ownership interest of the company subject to reporting. “Substantial control” is exercised over the company if the individual 1) serves as a senior officer of the company; 2) has authority over the appointment or removal of any senior officer or a majority of the board…
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