Indirect Beneficial Ownership [Complex example]

Great New Co LLC is a reporting company under the Corporate Transparency Act, and we need to find the beneficial owners to add to the Beneficial Ownership Information Report for Great New Co.

We'll start with a more complex example.

So here we have Global Co Inc., which is itself a reporting company, and it has a direct interest in Great New Co of 50%, but it's not an individual that has that beneficial ownership interest.

So we need to ask ourselves, is there an individual that owns Global Co that might have a sufficient interest in Great New Co indirectly?

So not directly, but indirectly.

Reporting Company

And what's important about that is it still needs to be the 25% threshold under the Corporate Transparency Act. So we discover that Indirect Fund A is itself a reporting company.

It owns 100% of Global Co Inc., which means that the indirect interest that Global Co Inc. had also passes to Indirect Fund A. So Indirect Fund A is an indirect owner of 50% of the interest in Great New Co, but it's not an individual, so we're going to continue up the corporate structure.

And here we arrive at a layer where Sofia Rivera is an individual.

She has an indirect interest in Great New Co of 5%.

That's because she has 10% interest in Indirect Fund A. Indirectly, she controls 5%, but that's not sufficient for the 25% threshold under the Corporate Transparency Act, so she is not, strictly speaking, a beneficial owner.

Over Indirect Fund Inc., however, has 90% of the interest in Indirect Fund A, which means that it has an indirect ownership stake of 45% in Great New Co LLC.

Still looking for an individual.

And at the next layer, we find Any Holding Company.

Itself a reporting company.

It owns 100% of over Indirect Fund Inc., which means that it has an indirect ownership structure of 45%.

Individual Beneficial Ownership

Still looking for an individual.

And here we find them.

Jane Smith and Sam Smith own Any Holding Co.

Sam Smith owns 40% directly of Any Holding Co, but the math means that he only has an indirect interest of 18% in Great New Co.

So still a material amount, but not sufficient under the Corporate Transparency Act of 25%.

Jane Smith, however, has a direct ownership interest in Any Holding Co of 60%, which means her indirect stake is 27% in Great New Co.

So in all of this corporate structure, Jane is the beneficial owner that needs to be reported on Great New Co's BOI report.

Welcome to the Corporate Transparency Act.