Corporate Transparency Act Compliance Stayed Nationwide

Capital Markets

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the Treasury Department from enforcing the beneficial ownership reporting requirements under the Corporate Transparency Act (the "CTA") and staying the January 1, 2025 compliance deadline. This is based on the court's conclusion that the CTA is likely unconstitutional.

What does this mean for reporting companies?

Per the court's order, reporting companies need not comply with the CTA's January 1, 2025 reporting deadline. However, this is not the end of the road for the CTA. It is not known whether the injunction will be appealed by the government or whether any appeal will be successful.

Reporting companies that have already filed their reports need not do anything. Those that have not filed would be well served to continue preparations for filing, but need not submit filings pending further orders of the court. If companies wish to submit their reports despite the injunction, they may do so. Companies that choose not to file based on the injunction should understand that it could be lifted and the January 1, 2025 deadline reinstated on short notice.

Jonathan A. Greene is co-leader of the Banking & Financial Institutions practice group of Wyrick Robbins, and is also a member of the firm's Capital Markets practice group.

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