CORPORATE TRANSACTIONS & COMPLIANCE BLOG

Latest News on State Requirements for Entity Transparency

By: John Morrissey, COGENCY GLOBAL INC. on Mon, Aug 24, 2015

Legislators, law enforcement and special interest groups continue to pursue federal legislation requiring business entities to disclose the names of their beneficial owners. While the argument continues at the federal level over whether the information should be collected by the Internal Revenue Service or the states, a limited number of states have instituted provisions to improve law enforcement’s access to company information.

As mentioned in our previous blog post, “The Importance of a Entity TransparencyBusiness Entity’s ‘Communications Contact,’” Delaware, Indiana, Kentucky and Wyoming require business entities to furnish their registered agent with the name, address and phone number of a communications contact. The agents are required to maintain the information. Nevada will soon also be requiring agents to maintain the name and street address of a contact person for each entity they represent.

 

New/Enhanced Requirements in Wyoming and Nevada
Wyoming
has gone a step further and requires domestic business entities to place the names and addresses of the entity’s directors, officers, limited liability company managers, managing partners, trustees or persons serving in a similar capacity on file either with the registered agent or, if the registered agent and the entity agree, the information may be filed with the Secretary of State. The information must be current within sixty days of any change until the entity’s first annual report is accepted for filing with the Secretary of State. Thereafter, updates must be made when the annual report is due and shall be maintained in a format that can reasonably be produced on demand. If the information is to be filed with the Secretary of State, a Notice of Entity Election needs to be filed.

In Nevada, recently passed Senate Bill 39 enhances existing record keeping requirements. In general, an entity (domestic or foreign) must keep designated records at its principal office within the state or with its custodian of records, whose name and street address are available at the entity’s registered office. If the records are kept outside of the state, principals of the entity may demand the records from the entity’s registered agent. Copies of the requested records must be sent to the principals within 10 days of receipt of the notice. As provided in existing statutes, the Secretary of State may also request certain records. There are variations between the specific requirements for each entity type so it is necessary to review the specific entity statute to determine the records that need to be maintained and the rights of parties to inspect the records. The amendments are effective October 1, 2015.      

 

Changes Expected to be Ongoing
The states continue to exhibit interest in clarifying their expectations of agents and increasing transparency of company information to law enforcement. It is reasonable to expect that we will see additional changes in the future at the state level to further that goal.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Company Formation and Filing Considerations