Delaware Implements New Beneficial Ownership Information Report Rule

Who needs to follow the BOI reporting rule?

The BOI reporting rule applies to entities categorized as “reporting companies.”

Reporting companies encompass both domestic and foreign entities, which can be defined as follows:

• Domestic company refers to a corporation or limited liability company (LLC) established by filing documents with a US state’s secretary, with the State of Delaware being one such state
• Foreign company refers to an entity formed under the laws of a foreign country and registered to conduct business within US states (including Delaware) or Tribal jurisdiction by filing documents with a Secretary within these jurisdictions.

There are twenty-three categories of entities that are exempt from the BOI reporting requirement. Some examples are banks, credit unions, organizations registered as tax-exempt with the IRS, public utilities, and certain larger corporations.

Failing to meet the obligation outlined in the BOI Report can lead to serious consequences, including civil penalties of $500 for each day of continuous violation, potential criminal penalties of up to 2 years of imprisonment, and a maximum fine of $10,000.

Additionally, senior officers and any other individuals, including beneficial owners, can be held responsible for their failure to comply with these requirements.

What information to submit under the BOI reporting rule?

Under the BOI reporting rule, reporting companies are required to submit specific information about beneficial owners (BOs), company applicants, and the reporting company itself.

Here’s a breakdown of the information that must be submitted:

Beneficial Owners (BOs) information

All reporting companies, regardless of their establishment date, are required to provide the following details for each beneficial owner:

• Full legal name;
• Date of Birth (DOB);
• Current address;
• ID number (e.g., driver’s license or passport number).

Company applicants’ information

The requirement to submit information about company applicants applies only to reporting companies created or registered on or after January 1, 2024.

Company applicants, who must be individuals (entities cannot be applicants), involved in directly filing the company’s registration document or primarily responsible for directing or controlling the filing, should provide:

• Full legal name;
• Date of Birth (DOB);
• Current address; and
• ID number (e.g., driver’s license or passport number).

Reporting company’s information

This requirement applies to all reporting companies, regardless of their establishment date, and entails:

• Full legal name: The complete legal name of the reporting company.
• Trade name (if applicable): Any trade or business name used by the reporting company.
• Current US address: The current physical address of the reporting company within the United States.
• Taxpayer Identification Number (TIN) or Employer Identification Number (EIN): The unique identification number assigned to the reporting company for tax purposes.
• State, Tribal, or Foreign jurisdiction of formation (only relevant for foreign companies): This applies specifically to foreign companies and requires disclosure of the jurisdiction under whose laws the company was formed, be it a US state, Tribal jurisdiction, or a foreign country.

Deadline to file initial BOI report

For reporting companies registered/incorporated before January 1, 2024: The deadline for filing the initial BOI report is January 1, 2025.

For reporting companies registered on or after January 1, 2024, and before January 1, 2025: The deadline is within 90 days from the receipt of a Notice confirming the company’s creation/registration.

For reporting companies registered/incorporated on or after January 1, 2025: The deadline is within 30 days after receiving a Notice of the company’s creation/registration.

Additionally, any changes to the submitted BOI reports must be reported within 30 days after the date on which the change occurred.

How to file the BOI report?

Currently, the BOI Report form is not yet available for submission. Once the BOI Report form becomes available, it will be accessible on FinCEN’s BOI webpage. Alongside the form, you will find comprehensive instructions and guidance on how to complete it.

Reporting can only be done electronically, and there will be no charge for using the FinCEN secure filing system. However, please note that this system will not be operational until January 1, 2024.

For more in-depth information and guidance, we recommend consulting official sources such as the Small Entity Compliance Guide (Guide) and Frequently Asked Questions: Beneficial Ownership Information Reporting, which are provided by FinCEN.

Alternatively, you can access comprehensive information about BOI reporting requirements, along with an introductory brochure and video, by visiting the website fincen.gov/boi.

Conclusion

In conclusion, the introduction of the Beneficial Ownership Information Report (BOI Report) obligation in Delaware marks a significant step toward enhanced transparency and compliance within the business landscape.

It is crucial for all businesses to promptly understand the reporting requirement and make the necessary preparations to fulfill this new obligation.

Should you have any inquiries or questions concerning this matter, please feel free to reach out to us at service@bbcincorp.com.

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