On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit has vacated a prior panel order granting a stay pending appeal of a district court’s preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). As a result, the nationwide preliminary injunction remains in effect, rendering the CTA temporarily unenforceable.

This means that the reporting requirements are on hold for now.

Key Developments:

• Fifth Circuit Panel Decision: The Fifth Circuit’s recent order vacates the stay on the district court’s preliminary injunction, effectively reinstating the injunction against CTA enforcement.

• What’s Next:

• The government may seek an emergency stay from the U.S. Supreme Court or request an en banc review by the full Fifth Circuit to challenge the reinstatement of the injunction.

• Oral arguments on the government’s expedited appeal are scheduled for March 25, 2025. Unless further action is taken by the full Fifth Circuit or the Supreme Court, the injunction is expected to remain in place until at least that date.

Recommendations for Reporting Companies:

While the CTA remains unenforceable, reporting companies should not delay their compliance preparations. We recommend:

1. Collecting Beneficial Ownership Information: Continue gathering the necessary BOI from beneficial owners, including names, addresses, dates of birth, and identifying numbers.

2. Preparation for Filing: Ensure readiness to file BOI with FinCEN promptly if the injunction is lifted or enforcement resumes.

Given the ongoing legal uncertainties, staying proactive will mitigate potential compliance risks in the event of sudden legal developments. We will continue to monitor the situation and provide updates as new information becomes available.

THIS CLIENT ALERT IS A GENERAL UPDATE REGARDING THE CORPORATE TRANSPARENCY ACT (CTA). IT, THEREFORE, IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS, LEGAL ADVICE.

About Zarren Law Group, LLC (ZLG): ZLG is a boutique business transactional law firm primarily consisting of former “big firm” attorneys who are focused on delivering exceptional outcomes by utilizing a results-oriented, value-add approach in solving clients’ complex legal and business-related issues. ZLG primarily concentrates on corporate law, business law, mergers and acquisitions, private placements, public offerings, public company compliance, financings/loan transactions, intellectual property, tax, real estate, and other business transactional matters. For more, visit www.zarrenlawgroup.com.