Tanay Segu’s Post

A federal court of Alabama has ruled that the #Corporate Transparency Act is UNCONSTITUTIONAL, as Congress overstepped its authority outlined in the Constitution. In National Small Business United v. Janet Yellen, the U.S. District Court for the 11th Circuit (Alabama) held that Congress was legislating activities related to entity formation, which are constitutionally reserved for the states. Furthermore, the court concluded that Congress was mandating Americans to furnish personal and sensitive information for inclusion in a criminal investigations database, even in cases where there was no overt indication of impropriety. While awaiting potential apeals or further legal challenges, it's crucial to highlight that that FINCERT clarified that "[w]hile this litigation is ongoing, #FinCEN will continue to implement the Corporate Transparency Act as required by Congress." It won't be enforced against the plaintiffs but [o]ther than the particular individuals and entities subject to the court’s injunction, as specified below, reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations." https://lnkd.in/ddBuXbvj

CTA Reporting Update -- If you're following the new Corporate Transparency Act or working on your initial CTA ownership/management reporting due to the federal government this year, then you may have heard that on March 1, 2024 a federal court declared the CTA unconstitutional. Please note, that ruling is only effective as to the named plaintiffs in that particular case. Everyone else must still comply with the CTA. There are some errant statements floating around on this topic, so please do not be misled. Other cases have also been filed, and rulings may be appealed, so there may be new developments in this area. https://lnkd.in/e6AvMrtU

CTA Tip of the Day #21 Is determining the beneficial owners of a reporting company under the Corporate Transparency Act the practice of law? This is an important question, because it controls whether CPAs, business consultants, and other professionals can help with this task, or if this advice can only be provided by lawyers. In New Jersey at least, there is now clarity. On July 9, 2024 the Committee on the Unauthorized Practice of Law concluded, “filing beneficial owner information reports is the practice of law, as it entails applying the terms of a dense statute to a set of potentially complicated facts.” Not all is lost however. The committee went on to take a very practical approach. “Given that most filings are likely to be straightforward, the Committee finds that a licensed CPA can engage in this conduct provided the CPA notifies the client that it may be advisable to consult with a lawyer. The Committee relies on the professionalism of CPAs to ensure that such licensees will recognize when a filing is more complex and it is in the client’s interest for a lawyer to be retained in the matter.” Personally I fully approve of this conclusion. The vast majority of situations are simple, and CTA reporting in those cases is more about compliance than analysis. In contrast, when there is a trust, multiple forms of equity, multiple ownership tiers, deferred compensation, etc. it can become a very difficult analysis that is better performed by an experienced attorney. You can find the full NJ opinion here: https://lnkd.in/gJ63JNKd

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Today was a sunny day in NYC. Mid 60 degree mid March, can't complain. It's also a sunny day in the world of small business ownership. Just when we think things can't get better, it does. 2 years ago, Congress decided it's high time to add more regulations on small business owners, with a 500 dollar penalty per day for non compliance. Effective this year. The law requires every entity to disclose their owners and people who have substantial control, with some exceptions. Every accountant I know, spent hours and days they don't have, to understand all the nuances of this new law. And just like that, a federal judge just struck it down and ruled it to be unconstitutional. Of course the government will appeal, but for now, the law is suspended. Isn't it amazing? Below is today in NYC Edit: According to attorneys in the comments we're all still technically subject to the law. 👎

The requirement to file the report on beneficial ownership information (BOI) of corporations and LLCs by the end of this year is on pause after an injunction granted by a federal court. One less piece of red tape that small business owners need to deal with. My take: The current administration may (and probably will) appeal the decision to the Court of Appeals. I think it is likely that the appeal would be abandoned by the incoming administration. Even if the requirement is re-imposed, business owners will almost certainly have a new compliance period to perform the reporting. For now, I am advising any inquiring clients not to worry. Conclusion:

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Constitutionality of the Corporate Transparency Act (CTA) Successfully Challenged   The Corporate Transparency Act (CTA), which requires US small businesses to disclose information on their beneficial owner(s), was successfully challenged in the Northern District of Alabama federal district court. On March 1, 2024, the court entered a final declaratory judgment ruling the CTA’s scope exceeds the Constitutional powers given to Congress. The ruling prohibits the US Treasury Department and FinCEN from enforcing the CTA against the plaintiffs in the case of National Small Business United, d/b/a National Small Business Association, et al. v. Janet Yellen, et al., Case No. 5:22-cv-01448-LCB (N.D. Ala.).    The government has agreed not to enforce the CTA against the plaintiffs in this case, and it will not do so as long as this court order remains in effect.   This ruling is specific to this case and these plaintiffs only. It is unknown how this ruling will apply to other small businesses that will be required to comply with the CTA’s reporting requirements by December 31, 2024.    The expectation is that more plaintiffs will file similar lawsuits citing this ruling. 

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From September 1, 2024 a new procedure for the registration of the change of director of LLC has been in force in Russia. Now the appointment of the director of any firm must be checked and notarized by a notary. He is also present at the general meeting of participants/shareholders as a guarantor of the correctness of all procedures.t Paragraph 1 of Article 40 of Federal Law No. 14-FZ “On Limited Liability Companies” dated 08.02.1998 (hereinafter - the “Law”) is supplemented with a new paragraph according to which the fact of adoption of a decision on election (appointment) of the sole executive body of a company must be notarized. The amendments shall come into force on September 1, 2024. When certifying the fact of decision-making, the notary shall verify the legal capacity of the legal entity, determine the competence of the management body of the legal entity in terms of decision-making, establish the identity of participants, verify the powers of representatives and record the decisions taken. This makes it possible to ensure the legality of the adopted decision and the reliability of information in the Unified State Register of Legal Entities. From September 1, 2024, the possibility of certifying the fact of adoption of a decision of the general meeting of participants (the sole participant) of an LLC on the election (appointment) of the general director by an alternative method, if such was previously provided for in the charter or in a separate decision, will be excluded. The change will not affect companies which are credit organizations, non-credit financial organizations and specialized companies established in accordance with the securities legislation of the Russian Federation. Notaries are also entrusted with the function of submitting documents for the State registration of the relevant amendments to the Unified State Register of Legal Entities. Thus, not later than the next business day after the minutes of the meeting have been submitted to him or after certification of the fact that a decision has been made by the sole participant, the notary will have to submit to the registering authority an application for the introduction of the relevant amendments to the Unified State Register of Legal Entities. We recommend that managers and lawyers dealing with corporate matters in companies start planning schedules of corporate procedures in advance to prepare for meetings with an agenda item on the election of directors, if the company's articles of association or resolution previously provided for an alternative method of certifying the fact of decision-making.