A frequently asked question when discussing the new Corporate Transparency Act (CTA) is whether an entity that is dissolved before December 31, 2024 would still be required to submit an information report on its beneficial owners (BOI). This question is very important.

If a dissolved entity ceases to be a “reporting company” such that it no longer has a duty to file a return, then any reporting company that is no longer active could dissolve before the end of 2024 and no longer have a duty to file a report statement. However, if the CTA requires all existing reporting companies in early 2024 to file (regardless of whether they are dissolved), then dissolution will most likely not end the company’s legal liability.

What is dissolution?

One of the challenges is that each state defines and treats dissolution differently. Even within a single state, there may be multiple types of dissolution proceedings and different proceedings for different types of entities. For this reason it is very important to seek help from a competent attorney to review and be sure to comply with all the requirements of state laws.

There is no final rule for BOI reporting regarding the question of whether or not a dissolved entity is exempt from its BOI reporting obligation. It should be understood that specific real-world scenarios may arise during implementation that require additional clarification.

Regarding companies that dissolve during the year 2024, it must be tacitly recognized that the dissolution of an entity means the end of its corporate existence and the elimination of its obligation to submit a BOI report.

The importance of Competent Legal Advice

Lawyers who have studied these provisions have sometimes reached different conclusions. In conclusion, one could say that an entity that has been dissolved under its state law so that it no longer has legal existence, should be exempt from the obligation to file a BOI report. Because there is no specific regulation in this regard, lawyers of companies that are advising with this obligation must be careful when advising their clients who do not need to submit the BOI report.

We must consider that, if the entity does not exist, it cannot have a senior official authorized to submit a request. Once an entity is completely and permanently dissolved, it has no senior officials. However, entities that have simply filed a “notice of dissolution” or any precursor filing that begins the liquidation process, still have legal existence. Even if this legal existence is limited to the activities required for liquidation and dissolution. Therefore, entities that have some form of legal existence must submit the BOI report in due time.

For this reason, it is important that companies have professional legal advice to prepare their reports.