Looking at CTA Filing Triggers? Don’t Forget the Impact of State Law!

In the course of advising clients on Corporate Transparency Act issues, interesting questions have arisen regarding certain beneficial ownership information report (BOIR) triggers. The answers to some of these questions ultimately lie in state law.

Does an entity name change or addition of a DBA in 2024 change the deadline for filing of a BOIR or an updated BOIR by a reporting company created before January 1, 2024?

A reporting company can change its name or add a new assumed name or “doing business as” designation (DBA) by obtaining any necessary approvals under state law, amending its governing documents, and making a filing with its state or jurisdiction of formation. Both the legal name of the reporting company and all of its DBAs are required to be included as part of the reporting company’s BOIR. Once filed, a BOIR must be updated by the reporting company within 30 days of any change in the required information included about the reporting company itself or its beneficial owners (but not company applicants).

A U.S. reporting company “created” on or after January 1, 2024, has 90 days from its creation by a filing with a secretary of state or similar office under the laws of a state or "Native American" tribe to file its initial BOIR. [1] However, a reporting company created (or first registered to do business if a foreign reporting company) before January 1, 2024, is not required to file its BOIR until January 1, 2025. Therefore, if a reporting company created before 2024 changes its name (or adopts a new DBA) during 2024 before it has filed its first BOIR, then there is no previously submitted BOIR to update at the time of the name change or adoption of the DBA. The mere change of the reporting company’s name, or the addition of a DBA, by itself does not trigger a filing requirement for a pre-January 1, 2024, entity because the name change is not the “creation” of the reporting company, which is what determines the BOIR filing trigger. In this situation, the name change or addition of the DBA would be reflected in the reporting company’s initial filing, which must be made on or before January 1, 2025.

Does “reinstatement” of a charter or corporate authority in 2024 (for an entity originally created before January 1, 2024) that had been administratively revoked or suspended for failure to file annual reports or pay taxes trigger an immediate BOIR obligation?

The answer will depend on how applicable state corporate or other entity law views “reinstatement” and whether state law would consider reinstatement to be the “creation” of a new entity, which is what determines the BOIR filing trigger.   

In Delaware, for example, Section 106 of the Delaware General Corporation Law (DGCL) provides that a corporation’s existence begins when the certificate of incorporation is filed with the Secretary of State and ends with its dissolution or other termination of existence under the DGCL. Section 312 of the DGCL provides that any corporation whose certificate of incorporation has become forfeited or void under the DGCL may under certain circumstances procure a revival of its certificate of incorporation. In addition, Section 312 of the DGCL specifies that upon filing the certificate of revival, “the corporation shall be revived with the same force and effect as if its certificate of incorporation had not been forfeited or void pursuant to this title.” As a result, revival of an existing – but dormant – charter in Delaware is not the creation of a new company but rather a continuation of the existing entity.

Other state corporate, limited liability company and other entity laws are generally in accord. In Illinois, for example, the result would be the same (“Upon the filing of the application for reinstatement, the corporate existence for all purposes shall be deemed to have continued without interruption from the date of the issuance of the certificate of dissolution, and the corporation shall stand revived with such powers, duties and obligations as if it had not been dissolved” (805 ILCS 5/12.45)).

Similarly, in California, under Section 2205 of the California Corporations Code (CCC), a suspended corporation may be relieved of its suspension if it catches up on its delinquent filings with the California Secretary of State and the California Franchise Tax Board, files a Certificate of Revivor as required and settles any amounts due for franchise and income taxes, fees and penalties (unless and until it has voluntarily or involuntarily administratively dissolved under CCC Section 2205.5).

If a revival or reinstatement of a suspended reporting company under applicable state law is not considered the “creation” of a new entity under state law, but rather the continuation of an entity that for a time had some of its corporate powers and authority suspended, then the revival or reinstatement of the reporting company would not be considered the creation of a new entity for purposes of the BOIR filing deadline. Therefore, for an entity created before January 1, 2024, such a revival or reinstatement would not accelerate the January 1, 2025, initial filing deadline.

These two questions and their answers demonstrate the interplay between the Corporate Transparency Act and state laws governing the formation and operation of entities. Your CTA compliance strategy should include a check-in with the state law that governs the relevant reporting company.