On December 23, 2024, in Texas Top Cop Shop v. Garland et al., the Fifth Circuit Court of Appeals ordered a stay (pending appeal) of the nationwide preliminary injunction against enforcement of the Corporate Transparency Act (the “CTA”) issued on December 3, 2024 by the U.S. District Court for the Eastern District of Texas. The appeals court found that the government is likely to succeed on the merits regarding the constitutionality of the CTA, that the injunction inflicts irreparable harm to the government, and that the public interest in combating financial crime and protecting national security outweighs the harm to the businesses challenging the CTA, which the appeals court found to be minimal.

On December 5, 2024, the Department of Justice appealed the preliminary injunction to the Fifth Circuit Court of Appeals. FinCEN also posted a public notice on its website that “[w]hile this litigation is ongoing, FinCEN will comply with the order… for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

As a result of the preliminary injunction, companies that would otherwise be required to report to FinCEN are excused from doing so until further notice. The CTA applies to over 30 million companies (domestic and foreign) doing business in the United States, while FinCEN estimates that over 26 million companies have not yet filed reports.

On March 6, 2024, the SEC issued its final rules “to enhance and standardize climate-related disclosures by public companies and in public offerings.” This client alert reviews the new disclosure requirements for reporting companies.

It is estimated that over 30 million US companies will be required to comply with the Corporate Transparency Act. This Client Alert considers the implications of the CTA for US companies, with a focus on large companies and groups that may incorrectly assume that they are exempt from the CTA.

The Corporate Transparency Act (the “CTA”) went into effect on January 1, 2024. The CTA seeks to counteract money laundering, fraud and other illegal activity by imposing ownership disclosure requirements on private companies in the United States to an unprecedented extent. This Client Alert considers the implications of the CTA for foreign companies and foreign owners of US companies.