“For Whom the Bell Tolls”?* Is the Corporate Transparency Act Dead, and if Not, What Is Its Impact on Corporate Governance?

Authors

Kellen Ware

Abstract

The Corporate Transparency Act (“CTA” or “the Act”) was enacted by Congress in 2021 to combat illicit financial activity through mandated beneficial ownership disclosure. While the current administration has opted not to enforce the CTA’s reporting requirements on domestic entities, the law remains in effect, and its future is uncertain amid ongoing constitutional litigation.

This Note argues that the CTA should be repealed, and state legislatures should refrain from mirroring the Act. The CTA creates undue burdens that threaten effective and efficient corporate governance in small businesses and many non-profits. This Note traces the contentious history of the CTA and the burdens on corporate governance, given the uncertain nature, impact, and overbroad scope of the CTA. Furthermore, it discusses why the current administration’s recent executive decision not to enforce the CTA’s reporting requirements on domestic businesses does not sufficiently mitigate the detrimental impacts on small businesses and non-profit corporations. The CTA, and state laws that mirror it, putatively deter bad actors from exploiting corporate structures and increase accountability for owners, directors, and senior directors. But ultimately, the purported benefits are grossly outweighed by federal government overreach, burdensome compliance costs and requirements for companies ill-equipped to meet these burdens, and a possible chilling effect on directors’ and officers’ participation in small businesses and non-profit corporations.

Recommended Citation

Kellen Ware, “For Whom the Bell Tolls”?* Is the Corporate Transparency Act Dead, and if Not, What Is Its Impact on Corporate Governance?, 22 UC Law SF Bus. L.J. 179 (2025).
Available at: https://repository.uclawsf.edu/hastings_business_law_journal/vol22/iss1/7