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Corporate Transparency Act: A Focus on Substantial Control and Ownership Interests


By David Freedman and Jordan Small

As the Corporate Transparency Act (CTA) takes effect on January 1, 2024, it is vital for businesses and those who assist them to understand the different requirements and how the terms substantial control and ownership interests are defined under these new regulations. 

An important step for companies to comply with the law is to identify all individuals with substantial control over the Reporting Company. If an individual exercises substantial control over a Reporting Company, they will have to be included in the Reporting Company’s mandatory disclosures under the new law. There is no limit to the number of reported individuals who exercise substantial control that may be included on each report. 

An individual exercises substantial control over a Reporting Company if the individual meets any of four general criteria: 

(1) the individual is a senior officer; 

(2) the individual has authority to appoint or remove any senior officer or a majority of directors or similar body; 

(3) the individual is an important decision-maker (has substantial influence over important decisions); or 

(4) the individual has any other form of substantial control. 

Click here to learn the details about these criteria through our Substantial Control Infographic.

Another critical definition to understand to determine which individuals must be included in disclosures under the new law is how the CTA defines ownership interests in a Reporting Company. Reporting Companies are required to identify all individuals who own or control at least 25 percent of the company’s ownership interests, directly or indirectly. 

Any of the following may be an ownership interest: equity, stock, or voting rights; a capital or profit interest; convertible instruments; options or other privileges to buy or sell any of the foregoing; and any other instrument, contract, arrangement, understanding, relationship, or other mechanism used to establish ownership.

Click here to learn the details about these criteria through our Ownership Interests Infographic.

Please visit Maddin Hauser’s dedicated CTA page for more information and updates about the Corporate Transparency Act. If you have questions about the CTA reporting deadlines or would like to discuss how Maddin Hauser can help your company with compliance, please contact David Freedman, Jordan Small, or your Maddin Hauser attorney.