Many, many moons ago, when we first formed our venture, we incorporated in Delaware. (This was way before LLC’s had been ‘invented’.)
Yes, we had a registered agent. And, we were able to keep our personal information off the map. That was critical- at the outset- since several of us were still working with a firm. (No, what they were doing was not going to be in competition with them; they just didn’t want them to know.)
It’s more normal now to have to list the names and addresses of the officers of a corporation. But, if you form an LLC, oftentimes the only director listed is the initial director (like us)- so who owns the entity is not known by the public.
Except, that is going to change pretty soon. Representative Carolyn Maloney, Peter King, and Tom Malinowski sponsored HR 2513. The Corporate Transparency Act. (Note: It has passed the House and is under review in the Senate right now.)
This bill will require most LLC’s- and other firms- to disclose their primary owners. Any firm with 20 employees or fewer and who lack a physical office will be required to disclose the names of their beneficial owners and addresses. And, this will be an annual requirement.
A beneficial owner is one who exercises control over the business entity, possesses at least 25% of the ownership of the venture, or receives benefits from the assets of that entity.
There is a 90 day window to report ownership changes; as well as a 1 year window to report change of addresses and other information. (That information includes birth dates and copies of government identification.)
The only firms exempted would be non-profits, investment advisors, and a few financial services firms. It’s expected that some 30 million filings will be required each year.
Supposedly the data will only be available to law enforcement and financial institutions (the latter with consumer consent). The goal is to preclude corporate criminal behavior such as money laundering. Think of all the residential properties bought by Russian oligarchs, that have forced housing costs to rise. Or, parking stolen money by buying real estate or other businesses, without law enforcement able to pierce the ‘corporate’ veil.
The Senate version of the bill is expected to pass. Yes, this is actually bipartisan in the Senate, too.
And, some states have been getting into the act. Consider New York State which recently enacted a law that requires all purchasers (and sellers) of property to be disclosed. Not just to law enforcement- but to anyone under the state’s Freedom of Information Law.
In New York city alone, some 7000 properties (that’s 12% of condos and 5% of homes) are owned by LLCs (typically oligarchs or Hollywood types all looking to keep their purchases secret). It’s actually a worse condition, since 30% of the condos completed since 2008 are now owned by LLC’s. (New York City has the data on the LLC’s owners- but keeps it quiet. Now, the New York state law will change that practice.)
It’s going to be a brave, new world. No, wait. It’s going to be a very open, new world.
Interesting. Not sure if it’s the same thing, but in SC anyone can look at the tax records and see the purchasers of all properties.
NO, Martha- you can see that an LLC purchased the property. NOT who really did, especially if its a disregarded LLC.
Openness is good. I think we’ll be horrified once we know the truth of what has been going on in secret. Perhaps a certain election was a blessing in disguise but only time will tell.
There are two sides to that openness. But, given the way criminals (including foreigners such as oligarchs) have been using LLC’s to hide their purchases, it’s time to change the rules.