California Seeks to Enact Its Own State Corporate Transparency Act

California Seeks to Enact Its Own State Corporate Transparency Act

California seeks to raise transparency regarding California business ownership by passing Senate Bill 1201, which seeks to impose on all domestic and foreign limited liability companies and corporations doing business in California the obligation to provide information about the beneficial owners of those entities.  “Beneficial owners” are defined as persons (i) holding 25% or more of an entity’s equity interests, or (ii) exercising “substantial control” over the entity, as that term is defined in Section 1010.380 of Title 31 of the Code of Federal Regulations.

Corporations would be required to include the name and complete business or residence address of any such beneficial owner in annual Statements of Information submitted to the California Secretary of State.  Limited Liability Companies would be required to include the name and complete business or residence address of any manager and chief executive officers, and if a manager has not been appointed, then this information would be required for the members of the LLC.

The law would also authorize the California Secretary of State to increase fees for foreign and domestic corporations and LLCs when filing their statements of information.  If enacted, the new law would take effect January 1, 2026.

But, unlike the federal Corporate Transparency Act (CTA), which provides that personal information provided to FinCEN is not publicly available, this California law would result in the names and addresses of beneficial owners being readily discoverable on the Secretary of State website.

Companies doing business, or considering doing business, in California will want to monitor the progress of this Senate Bill.  If it passes into law, companies might consider allocating ownership interests differently, with an eye towards bringing individual ownership levels below 25% and take steps to ensure that an individual is not considered to be exercising “substantial control” over an organization.

Epps & Coulson, LLP is monitoring the progress of the Senate Bill.  We are here to help you plan and grow and protect your business.  Please feel free to contact Dawn at: dawn@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.  Epps & Coulson, LLP attorneys and affiliated counsel admitted to practice in New York, California, Colorado, Connecticut, District of Columbia, Massachusetts, New Jersey, Hawaii, Oregon, Texas, European Union, France, England and Wales and Sweden.

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