A NOTE FROM IAN
National Sales & Strategic Business Development Manager
For this issue of the Alert, I wanted to discuss one of our lesser-known but highly regarded business offerings: independent director services. We have been providing this service for nearly two decades, and our clients repeatedly rely on us and recommend us to others thanks to our experienced team and quick appointments.
For those who may not be familiar with the term, independent directors (also known as “springing members”) are often used in situations where a single-member LLC or special purpose entity (SPE) is seeking financing. Lending institutions that want to protect their assets frequently require the use of a qualified independent director before engaging in structured finance, credit, real estate, or securitization transactions.
The key to choosing an independent director is to select a professional and experienced provider that responds promptly to requests, and that has the experience needed to fulfill the role. We have a team with over 63 years of combined corporate governance experience, and we retain legal counsel that we can engage with quickly if necessary.
Moreover, we understand that every business transaction is unique. That’s why we offer customized pricing that is free of hidden fees and based on your specific needs. We also offer discounted rates to repeat customers and those who take advantage of multiple appointments or use our registered agent services.
If you’re interested in learning more about our independent director services, please don’t hesitate to reach out. Our team of senior-level professionals is ready to answer any questions you have and assist you with your transaction needs. Reach our team at parasec@parasec.com.
Industry News
California: Measure to Combat Fraudulent Filings
Starting from March 27, 2024, the California Secretary of State has introduced a new measure to prevent fraudulent online filings. As a result, a few online filings will now require the payment of a $5.00 fee for a certified copy when submitted online. These filings are Resignation of Agent for Service of Process, Publicly Traded Disclosure Statement, and a non-required Statement of Information with a $0 processing fee, which also includes the combined Statement of Information and Statement by Common Interest Development (SI-CID).
Federal: Federal Court Rules CTA Unconstitutional
On March 1, 2024, a federal court in Alabama ruled in National Small Business United (NSBU) v. Yellen that the Corporate Transparency Act (CTA) exceeds Congress’s constitutional power. The court enjoined the Department of the Treasury and the Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA against the plaintiffs. The court’s ruling applies only to the plaintiffs in the case, including Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024).
As such, it is essential to note that the ruling does not prevent FinCEN from enforcing the CTA against others. Therefore, business owners who are not already considered exempt or one of the plaintiffs mentioned above should continue to meet any filing deadlines set under the CTA. Failure to file before the deadline will result in a risk of prosecution if the ruling in NSBU v. Yellen is reversed or modified.
As a reminder, companies formed in 2024 must file an initial beneficial ownership information (BOI) report within 90 calendar days of receiving actual or public notice of your business’ registration or creation. Companies formed before 2024 still have through December 31, 2024, to file an initial BOI report. As these companies have more than 9 full months to submit their initial BOI report, waiting a bit might be beneficial. Parasec is closely monitoring this case and will provide updates on any appeals. However, the appellate process is likely to take months or even years.
To reach our BOI team, please email: BOI@parasec.com
Maryland: Annual Report Due Date Reminder
All businesses that are formed, qualified, or registered to operate in Maryland must submit an annual report by April 15th of each year. If an extension is requested, the new deadline will be June 15th. If the annual report is not filed by the deadline, the business may fall out of “good standing” status and eventually enter “forfeited” status.
The Maryland State Department of Assessments and Taxations recently informed its customers about some changes that have been made to annual report filings. One of the changes is that businesses with less than $20,000 in business personal property are no longer required to report personal property with their annual report. Unfortunately, Parasec is not able to assist with annual report filings in Maryland due to various tax reasons. Businesses can instead use the department’s website to file directly. To do so, go here.
New York: The New York LLC Transparency Act
On March 1, 2024, New York’s Governor Kathy Hochul signed Senate Bill 8059, enacting a modified version of the New York LLC Transparency Act (NYLTA) previously enacted by Senate Bill 995 (in December 2023). One such modification is the law’s effective date, which was pushed out an additional year to January 1, 2026. The NYLTA is similar to the Corporate Transparency Act (CTA) which introduced a federal requirement for reporting beneficial ownership information. However, the NYLTA applies only to existing and newly formed or authorized LLCs doing business in New York, while the CTA applies to various entity types.
Under the NYLTA, affected LLCs must disclose the full legal name, date of birth, current home or business street address, and a unique identifying number from an acceptable document (e.g., driver’s license or passport) of each beneficial owner, unless an exemption applies. The law shares with the CTA the same 23 exemptions from reporting requirements and definitions for the terms “beneficial owner,” “reporting company,” and “exempt company.”
LLCs formed or registered to do business in New York on or before January 1, 2026, will have one year to file either a beneficial ownership disclosure or attestation of exemption. LLCs formed or registered in New York on/after January 1, 2026, must report within 30 days of filing of the articles of organization or application for authority.
Once the initial beneficial ownership disclosure has been filed, all reporting companies shall electronically file an annual statement confirming or updating: (1) their beneficial ownership disclosure information; (2) the street address of its principal executive office; (3) their status as an exempt company, if applicable; and (4) such other information as may be designated by the New York Department of State.
The reported information will be stored in the NYLTA’s database and will only be accessible to law enforcement and government agencies.
To read more on Senate Bill 8059, please go here.
Rhode Island: Annual Report Due Date Reminder
The Rhode Island Secretary of State Department of Business Services has issued a reminder to all corporations, LLCs, partnerships, and non-profits registered in Rhode Island before January 1, 2024, to file their annual report before May 1, 2024, to avoid a late filing penalty. This annual report deadline marks the first for LPs, LLPs, and LLLPs under the Uniform Limited Partnership Act and the revised Uniform Partnership Act, both of which came into effect on January 1, 2023. If you’d like assistance filing your annual report, our compliance specialists can be reached at paracorp@myparacorp.com.
Utah: Changes to Decentralized Autonomous Organization Act
Governor Spencer Cox of Utah has recently signed House Bill 318, which makes changes to the Decentralized Autonomous Organizations (DAO) Act that was originally adopted by the state back in March 2023. The amendments provide that the Division of Corporations and Commercial Code files, rather than issues, a certificate of organization. Additionally, the bill modifies the permitted names of a DAO to align more closely with the names permitted for other entities formed in the state. To learn more about HB 318, please go here.
Wyoming: Decentralized Unincorporated Nonprofit Association Act
Starting on July 1, 2024, Wyoming will provide a legal mechanism for decentralized autonomous organizations (DAOs) that consist of at least 100 members to become unincorporated nonprofit associations. As per the new law, DAOs that are registered as nonprofits may participate in profit-making activities as long as all profits are utilized (or reserved) to further achieve the nonprofit’s purpose. The Wyoming Decentralized Autonomous Organization Supplement Act, which was enacted in 2021 and added DAOs to current limited liability corporation laws, gave DAOs their first legal framework to be established in the state. For more on DAOs in Wyoming, visit the Secretary of State’s FAQ page on the topic. To read Senate Bill 50, which establishes the Decentralized Unincorporated Nonprofit Association Act, go here.
Service Spotlight
BOI Reports
Millions of companies registered to do business in the U.S. are now required to submit a report containing beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). At Parasec, we provide assistance to help you meet this new compliance requirement on time and with confidence.
Our user-friendly BOI filing platform guides you step-by-step to help ensure that we collect all the necessary data required to complete your order and meet filing requirements. Save your progress in our system as you go and return later to resume filling out the form as you collect the required data.
Email our BOI specialists at BOI@parasec.com to get started today!
Client Testimonial
“As a business attorney for 50 years and a customer of Parasec for probably 35 years or so, all I can say is Parasec is the best in the business, always reliable and helpful, and I highly recommend them!”
~ James N., Attorney at Law