U.S. M&A Newsletter — January 29, 2025
Supreme Court Weighs in on CTA Enforcement
As we noted in early December, a U.S. Federal District Court in Texas granted a preliminary injunction that enjoins enforcement of the Corporate Transparency Act and its implementing regulations (“CTA”). See Texas Top Cop Shop, Inc. et al v. Garland et al, No. 4:24-cv-00478 (E.D. Tex. Dec. 3, 2024). After some back and forth at the Fifth Circuit of Appeals, the merits panel of the Fifth Circuit upheld the preliminary injunction. Most recently, on January 23, 2025, the Supreme Court announced that it had granted a stay of the district court’s injunction.
In his concurrence, Justice Gorsuch stated that not only did he agree with the Supreme Court’s decision to stay the district court’s universal injunction, but that he would go a step further and “take this case now to resolve definitively the question whether a district court may issue universal injunctive relief.” See McHenry et al v. Texas Top Cop Shop, Inc. et al, (S. C. Jan. 23, 2025). However, the fate of the CTA remains unclear, as there are currently several injunctions, dismissed complaints, and a stay issued in a Utah district court. Further, additional courts continue to review the CTA in separate cases across the country. See e.g., Smith v. U.S. Department of the Treasury, No. 6:24-cv-00336 (E.D. Tex. Sept. 12, 2024).
On January 24, 2025, The Financial Crimes Enforcement Network (“FinCEN”), which is tasked with implementing and enforcing the CTA, issued a statement confirming that reporting companies are not currently required to file beneficial ownership information reports with FinCEN and are not subject to liability if they fail to do so while this order remains in place. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. We continue to advise caution as the implementation and enforcement of the CTA is subject to change. If you create new reporting companies or did not make your filings previously due for reporting companies, we advise being prepared to make filings if such filings become due.
In Other News
Read past issues of our U.S. M&A Newsletter here. We thought you might also find the following articles featuring our Linklaters colleagues useful.
