Corporate & Securities Blog

Last Friday, the United States Supreme Court lifted a nationwide injunction originally issued by the U.S. District Court for the Eastern District of Texas (and later upheld by the Fifth Circuit Court of Appeals) in Texas Top Cop Shop, Inc. v. McHenry. The Top Cop injunction had blocked enforcement of the Corporate Transparency Act (the “CTA”).

In a statement late Friday, the Financial Crimes Enforcement Network (“FinCEN”) said that reporting companies need not rush to resume their filing obligations. FinCEN noted that a separate nationwide injunction—issued by a different federal judge in Texas in January in Smith v. U.S. Department of the Treasury—remains in place. As a result, reporting companies are not currently required to file beneficial ownership information despite the Supreme Court’s ruling.

It is possible that the Smith injunction will ultimately be lifted as well; indeed, the government may make such a request for relief given the Supreme Court’s decision concerning the Top Cop injunction.

In any event, FinCEN has made clear that the CTA’s reporting obligations remain paused and companies will not be subject to liability if they fail to file beneficial ownership information while the Smith injunction remains in place. We note that reporting companies may continue to voluntarily submit CTA filings if they so choose.

We will continue to monitor the status of these ongoing legal challenges to the CTA and provide updates as applicable.