U.S. M&A Newsletter — January 6, 2025
Fifth Circuit Appeals Court Reinstates Preliminary Injunction for CTA Enforcement
On December 26, 2024, the merits panel of the Fifth Circuit Court of Appeals issued an order vacating the Court’s prior order granting a stay of the preliminary injunction. Shortly after, the Financial Crimes Enforcement Network (“FinCEN”) released a statement that offered guidance for reporting companies with respect to their beneficial ownership information reports (“BOIRs”). Specifically, reporting companies will not be required to file their BOIRs with FinCEN and will not be subject to liability if they fail to do so while the order remains in force. However, reporting companies may choose to voluntarily submit their BOIRs.
This decision represents a significant shift, as just a few days earlier, on December 23, 2024, the motions panel of the Fifth Circuit had granted the government’s motion for a temporary stay of the Texas Federal District Court's order, finding that the government had satisfied the four factors used to determine a motion to stay a preliminary injunction under Nken v. Holder.
As noted previously, under the CTA, reporting companies include companies formed in the U.S. or non-U.S. companies that are registered to do business in the U.S. that do not meet one of 23 exemptions. In 2023, FinCEN issued a regulation that required reporting companies to file their BOIRs. In December, a Texas Federal District Court had issued a preliminary injunction that stayed the deadlines to file BOIRs, which FinCEN had instructed reporting companies to follow. However, the Department of Justice swiftly filed an emergency appeal, and the Fifth Circuit granted their motion for a temporary stay which has now been vacated. The Fifth Circuit is expected to hear arguments regarding implementation of the CTA in March of 2025.
In light of these recent updates and ongoing uncertainties, firms should be prepared by ensuring they have the information needed to produce the BOIRs in case changes occur in the near future. While there is no current obligation to file, recent weeks have shown that this could change quickly. You should remain informed about future developments and seek knowledgeable advice on future implications that may arise. Please reach out if you have any questions.
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.
- Linklaters: Fifth Circuit Vacates Nasdaq’s Board Diversity Requirements
- Linklaters: At a Glance: What to Expect in 2025
- Linklaters: DOI Finalizes Updated Western Solar Plan
