Starting this month, we at VP, will elucidate the components of the BOI -Beneficial Ownership Information (that is to be filed by small entities, to safeguard not only the commercial interest, but also economic safety).
This post is in continuation of the earlier two posts on the BOI- Beneficial Ownership Information.
In our last post we introduced the concept of a Beneficial Owner to be:
an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests.
What is considered Substantial Control:
An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:
A. The individual is a senior officer:
a. Company’s president
b. Chief financial officer (CFO)
c. General counsel
d. Chief executive office (CEO)
e. Chief operating officer (COO)
f. or any other officer who performs a similar function).
B. The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
C. The individual is an important decision-maker for the reporting company.
D. The individual has any other form of substantial control over the reporting company – Important decisions include decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions exercises substantial control over a reporting company.
Examples of direct ways to exercise substantial control over a reporting company are:
• Board representation.
• Ownership or control of a majority of voting power or voting rights.
• Rights associated with financing or interest.
Examples of indirect ways to exercise substantial control over a reporting company are:
Controlling one or more intermediary entities that separately or collectively exercise substantial control over a reporting company.
Through arrangements or financial or business relationships with other individuals or entities acting as nominees.
If you need help figuring out who should be included in this form, contact us at [email protected].
