NAFEM shares concern over beneficial ownership reporting requirements
More than 70 small business organizations, including NAFEM, have written U.S. Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, as well as leading members of the U.S. Senate Committee on Armed Services, to object to a provision of the pending National Defense Reauthorization Act that would require small businesses to report on the ownership of their companies. NAFEM and others stated that, “The amendment would impose duplicative, burdensome reporting burdens on small businesses. It also raises significant privacy concerns.”
If approved, the Establishing Beneficial Ownership Information Reporting Requirements would require small businesses to provide and update annually the full legal names, dates of birth, addresses and driver’s license or passport numbers of those who:
- Exercise “substantial control” over a corporation or LLC;
- Own 25 percent or more of the equity of a corporation or LLC; or
- Receive “substantial economic benefits” from a corporation or LLC.
NAFEM and the coalition group point out that financial institutions – which are exempt from the proposed rule – already are required to collect beneficial ownership information when customers open accounts. “This legislation would attempt to shift the reporting requirements from large banks – those best equipped to handle reporting requirements – to millions of small businesses – those least equipped to handle reporting requirements.”
A similar bill, the Corporate Treasury Act of 2019, passed the House Oct. 22, 2019