Which companies are exempt from the reporting requirements of the Corporate Transparency Act?

The Corporate Transparency Act (CTA), which comes into effect on January 1, 2024, mandates that “reporting companies” must file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN). “Reporting companies” are domestic businesses that were created by filing with the Secretary of State, or foreign businesses registered with the Secretary of State to do business in the U.S. 

The CTA requires businesses to provide ownership and shareholder information in a bid to improve transparency and prevent fraud, so all relevant companies must comply. However, there are 23 types of businesses exempt from complying with the CTA reporting requirements and which therefore do not need to file a BOI report with FinCEN. In this guide, we’ve detailed the 23 types of companies exempt from these reporting requirements, so you can determine whether you need to prepare to file or not. 

Securities reporting issuer 

A securities reporting issuer is a reporting company or public company that is subject to Section 13 or 15(d) of the US Securities Exchange Act (1934), requiring companies to file periodic reports with the US Securities and Exchange Commission. A company registered under Section 12(g) of the Exchange Act is also considered a securities reporting issuer. 

Governmental authority 

A governmental authority refers to any company that has agency on behalf of the U.S., a State, a political subdivision, or an Indian tribe. 

Bank 

Any bank or trust company registered in and doing business under U.S. law. The term bank also covers certain investment companies. Definitions of which investment companies are considered banks can be found in the Investment Company Act of 1940 and the Investment Advisers Act of 1940. 

Credit union 

Credit unions are Federal and State credit unions as set out in the Federal Credit Union Act 1934. These unions are generally not-for-profit, meaning they are tax-exempt. 

Depository institution holding company 

Depository institution-holding companies refer to bank-holding companies and savings and loan-holding companies. These companies own interests in banks but do not provide banking services. 

Money services business  

Money transmitting and money services businesses registered with FinCEN. There are various types of money services businesses including: 

  • Currency dealers and exchanges 

  • Check cashers 

  • Issuers of traveler’s checks, money orders, or stored value 

Broker or dealer in securities 

Any type of broker or dealer as defined by the Securities Exchange Act (1934). Brokers buy and send securities for others’ accounts and dealers buy and sell securities for their own accounts. 

Securities exchange or clearing agency 

Any exchange or clearing agency as defined by the Securities Exchange Act (1934). This refers to businesses that act as “middlemen” in making transactions for securities certificates. 

Other Exchange Act registered entity 

Other Exchange Act registered entities refer to any entity other than ‘Securities reporting issuer’, ‘Broker or dealer in securities’, and ‘Securities exchange or clearing agency.’ These entities must be registered with the U.S. Securities and Exchange Commission under the US Securities Exchange Act (1934). 

Investment company or investment adviser 

An investment company or adviser as defined by the Investment Company Act (1940) or Investment Advisers Act (1940) and registered with the U.S. Securities Exchange and Commission under one of these acts. 

Venture capital fund adviser 

A venture capital fund adviser is defined in the Investment Advisers Act (1940) and has filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV with the U.S. Securities Exchange and Commission. 

Insurance company 

An insurance company as defined by the Investment Company Act of 1940. 

State-licensed insurance producer 

A State-licensed insurance producer is licensed by the State and therefore supervised by the insurance commissioner of said state. This type of entity must also operate from a physical U.S. office location.  

Commodity Exchange Act registered entity 

This type of entity is defined by the Commodity Exchange Act and can take various forms including the following: 

  • A registered entity 

  • A futures commission merchant 

  • Introducing broker 

  • Swap dealer 

  • Commodity trading adviser 

  • Retail foreign exchange dealer 

Accounting firm 

Public accounting firms registered under the Sarbanes-Oxley Act (2002). 

Public utility 

A utility company providing one of the following services: 

  • Electricity 

  • Water 

  • Sewage 

  • Gas 

  • Telecommunications 

Financial market utility 

Financial market utilities as defined by the Financial Stability Oversight Council under the Payment, Clearing, and Settlement Supervision Act (2010). 

Pooled investment vehicle 

A pooled investment vehicle is an entity with multiple investors, with an adviser making investments on behalf of said investors.  

Tax-exempt entity 

There are various types of entities that are tax-exempt. Most commonly these are religious, charitable, scientific, or educational organizations. These entities must meet requirements under the Internal Revenue Code Section 501(c)(3). 

Entity assisting a tax-exempt entity 

This type of entity must be primarily funded and run by a U.S.-based citizen or resident and exist to provide financial help to tax-exempt entities.  

Large operating company 

A large operating company must have: 

  • Over 20 full-time employees in the U.S.  

  • Physical operations at a U.S. location  

  • In the previous year, filed federal income tax or an information return in the U.S. 

Subsidiary of certain exempt entities 

A subsidiary of any exempt entity mentioned in this list (except money services businesses, pooled investment vehicles, and entities assisting tax-exempt entities.) 

Inactive entity 

An entity must fulfill the following criteria to be considered inactive, and therefore exempt from the CTA: 

  • Not engaged in business 

  • Existed on or before January 1, 2020 

  • Not owned by a foreign person 

  • Has not changed ownership in the past 12 months 

  • Has not sent or received more than $1,000 in the past 12-month period 

  • Does not hold any type of assets 

Is my company exempt from the reporting requirements of the Corporate Transparency Act? 

If you’re still unsure whether your company needs to file a BOI report when the CTA comes into effect in the new year, our questionnaire may provide some additional guidance. However, this questionnaire does not substitute legal advice, and we strongly recommend you consult a legal professional if you have any doubts regarding CTA exemptions. 

Pat Cichocki