What’s New: This week, the Department of the Treasury announced that it will suspend enforcement of the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act. This development is welcomed after NVCA’s long engagement with policymakers in addressing the unintended consequences on the venture and startup ecosystem; this is also another indicator of the deregulatory posture from President Trump and Treasury Secretary Scott Bessent, especially as it relates to U.S. companies.
According to the press release, “not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
How does this impact domestic reporting companies? Current regulation defines a “domestic reporting company” is any entity that is a corporation, limited liability company, or any other entity created by the filing of a document with a secretary of state or any similar office under the law of a U.S. state or Indian tribe. Those that have already filed reports do not need to do anything. Domestic reporting companies that have not filed will not face fines or penalties for failure to file.
Does this suspension apply to foreign reporting companies? The suspension of the enforcement does not extend to “foreign reporting companies,” which are defined as entities formed under the law of a foreign country and registered to do business in any U.S. state or tribal jurisdiction. Treasury also stated it “will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” Foreign reporting companies that have already filed reports do not need to do anything. Those that do not file reports will continue to face fines or penalties for failure to file or update BOI reports.