Key Triggers for Updating BOIR Reports
- Changes in Control or Ownership Significant changes to the ownership ratio, role or control might need an update to the BOIR report to ensure compliance.
- Reporting information that is incorrect or out of date Inaccuracies or out-of-date information, like wrong addresses or names should be rectified promptly.
- Removal or addition of Beneficial Owners Adding or taking away a beneficial owner can be the primary trigger for updating BOIR reports.
The Beneficial Ownership Information (BOIR) Reporting Rule, which took effect on January 1st, 2024 is essential to improve transparency of corporate operations and prevent misuse of anonymized entities. This law requires that covered entities submit specific information regarding their beneficial owners as well as applicants. But, filing only the initial report won’t suffice. As companies grow, keeping up-to-date information is an essential compliance requirement. We’ve listed five indicators of the need to review and revise your BOIR Report, to ensure that it is in line with federal regulations.
Changes in Ownership or Control
The beneficial ownership information report should show the person who has substantial control (defined as holding at minimum 25 percent) or who has a significant part in making decisions for the business. Any changes in ownership–whether due to the sale of assets, investments or restructuring, must be documented.
Example: If the shareholder sells 30 per cent or more of the stake they own to investors, and reduces their stake to less than 25 per cent, an update becomes obligatory since the investor has reportable control.
Incorrect or Outdated Information
Initial submissions can contain mistakes, like incorrect spelling of names or inaccurate addresses. Inaccurate information can compromise compliance but also could result in penalties.
Example: A company that reports initially includes the wrong middle name as a beneficial owner. When it becomes aware of the error, they are required to amend the account within 30 days from the time it becomes aware of the mistake.
Addition or Removal of Beneficial Owners
In the event of mergers, acquisitions or any other changes in business such as the addition or removal of a beneficial owner is the primary cause for the update of this report.
Example: A business merges with another company and a new member of the board acquires a controlling stake. The report should be revised to include this person.
Changes in Company Status
The transition from an exempt status to a non-exempt status, or reverse the process can require updates to the reporting. Businesses should closely monitor their compliance to ensure that they’re in good shape.
Example: A nonprofit that was previously exempt from reporting becomes an entity that is for profit. This transition requires a BOIR report.
Identification Document Updates
Identification of the beneficial owner like address or passport number should be up-to-date within the database. If an owner listed on the report has changed their address, this results in an update of the report.
Example: A beneficial owner moves abroad that requires a change to their location on their BOIR Report.
Staying in compliance with the BOI Reporting Rule extends beyond the initial filing. It is a matter of the constant monitoring and updating of crucial ownership and control information. When they are aware of these warning signs companies can reduce risk and meet their obligations under the law. For more information or to solve specific situations consult with BOIR.org is recommended.
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The information provided on this site is intended for information only and does not constitute legal advice. For specific compliance or legal issues, consult a licensed attorney or an expert.