Are you a trustee required to report on Beneficial Ownership under the Corporate Transparency Act? There has been some confusion with some thinking only those with at least 25% ownership must be listed when filing the BOI report. However, the BOI requirement is not just for those with at least 25% equity in a company. If you have substantial control, even without any ownership, you must report.
There are a lot of questions about Beneficial Ownership Reporting, and I have made this video series to help guide you. My first video discussed how to know if your business is a reporting company. The second video described how to identify the individuals to report as beneficial owners. The third topic explained you can report someone else in place of minor children. Today’s discussion will explain the responsibility of trustees to report.
The Beneficial Ownership Information (BOI) Reporting guidelines were created to ensure transparency and accountability within corporate structures. A key aspect of these rules is the identification of individuals who exercise substantial control over a reporting company.
In the context of trusts, trustees can often meet the criteria for substantial control, making them beneficial owners who must be reported. This video will delve into the specifics of how your position as a trustee can be considered beneficial ownership and the implications for BOI reporting for you.
According to the BOI guidelines, an individual exercises substantial control if they:
- Serve as a senior officer of the company.
- Have the authority to appoint or remove senior officers or a majority of the board of directors.
- Direct or have substantial influence over important decisions made by the company.
- Have any other form of substantial control over the company.
In the case of trusts, trustees might meet these criteria in several ways:
Management Authority: Trustees manage the assets of the trust, which may include significant holdings or interests in a reporting company. If they have the authority to make decisions related to these assets, they exercise substantial control.
Decision-Making Power: If trustees have the authority to make significant business or financial decisions for the trust, they are considered to have substantial control over the assets, and thus the reporting company.
Let’s look at examples of control in more detail.
Example 1: Substantial Control through Management
A trust owns a reporting company. The trustee has the authority to manage and make all decisions regarding the trust’s assets, including the shares in the reporting company.
The trustee is considered a beneficial owner because they exercise substantial control over the reporting company through their management of the trust’s assets.
Example 2: Control over Ownership Interests
A trust owns 35% of a reporting company’s shares, and the trustee has the authority to buy or sell these shares.
The trustee is a beneficial owner due to their control over the ownership interests in the reporting company.
To identify trustees as beneficial owners, do the following:
Identify the Trust’s Management: Determine who the trustees are and their roles in managing the trust’s assets.
Evaluate Control: Assess whether the trustees have substantial control over the reporting company’s assets through the trust.
Report Information: If you or others meet the criteria of beneficial owners, the information must be reported to FinCEN, including full legal name, date of birth, address, and unique identifying number from an acceptable identification document.
They understand you as beneficial owners are essential for compliance with BOI reporting requirements. By accurately identifying and reporting anyone who exercises substantial control over a reporting company, including trustees, companies can ensure transparency and meet regulatory obligations. If these guidelines apply to you, be sure to submit the Beneficial Ownership Report on time. Failure to do so will result in penalties of $591.00 per day!
If you prefer to have professional assistance with the filing, we can help! Reach out to us at 310-534-5577 or [email protected]. We’ll gather all the required documentation and submit it for you to keep you in compliance!
