What is a Beneficial Owner?
A Beneficial Owner is an individual who either directly or indirectly holds a significant ownership interest in a company or has substantial control over its operations. Beneficial owners are often defined as those who own or control at least 25% of a company’s equity or voting rights, though the specific threshold may vary depending on the applicable regulations.
The purpose of identifying beneficial owners is to ensure transparency, particularly under the Corporate Transparency Act (CTA), to prevent the misuse of anonymous entities in financial crimes such as money laundering or fraud.
Can there be two beneficial owners?
Yes, there can be multiple beneficial owners if more than one person meets the criteria for ownership or control. For example, two or more individuals could each hold 25% or more of the company, or share substantial control over its decisions, making them both beneficial owners. In such cases, all qualifying individuals must be disclosed as part of the company’s Beneficial Ownership Information reporting.