Corporate Transparency Act, CFIUS, and Other Real Estate Disclosure Requirements

Recording of a 90-minute premium CLE video webinar with Q&A


Conducted on Tuesday, May 4, 2021

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE course will examine recently enacted federal disclosure regimes affecting real estate investment and finance, including new burdens placed on borrowers and lenders under the Corporate Transparency Act (CTA) and FIRRMA. The panel will discuss how lenders can best navigate these disclosure regimes when conducting due diligence on borrowers and their investors, how borrowing entities can be structured to minimize reporting obligations, and how loan documents should be revised to ensure compliance through the life of a loan.

Description

The CTA, enacted as part of the National Defense Authorization Act for 2021, requires "reporting companies" to report anyone who owns or controls a 25 percent or greater beneficial ownership interest to a registry maintained by FinCEN. FIRRMA, enacted in 2018 with final regs released in 2020, expanded CFIUS' jurisdiction to include real estate transactions involving the purchase, lease, or concession of certain real estate by a foreign person. These new regimes create new hurdles for borrowers, lenders, and their counsel when structuring commercial real estate loans.

The CTA requires reporting companies to disclose detailed information on each control party and requires that customer due diligence performed by lenders be conformed to the CTA. Existing entities must file beneficial ownership statements within two years after the effective date of the regulations. Any material ownership changes must be reported within one year after such changes are made. Sponsors and lenders will need to examine ownership structures for potential CTA disclosures before and after entering a loan.

FIRRMA expanded CFIUS' authority to review "covered real estate transactions," which are defined under FIRRMA as transactions that give a foreign person control over "covered real estate." Understanding those definitions is critical to comply with the statute, which includes extensive notification and reporting requirements and gives CFIUS the ability to prohibit covered real estate transactions unless they fall within certain exemptions.

Listen as our authoritative panel discusses the ramifications of the CTA and FIRRMA for borrower ownership structuring and loan provisions related to borrower compliance in real estate finance deals.

READ MORE

Outline

  1. Corporate Transparency Act
    1. Ownership and control thresholds
    2. Types of entities covered: exempt entities
    3. Reporting obligations: FinCEN registry
    4. Lender compliance with CTA
  2. FIRRMA
    1. Covered real estate transactions
    2. Covered real estate
    3. Reporting obligations
    4. CFIUS review and ability to block foreign investment

Benefits

The panel will review these and other important issues:

  • What types of LLC members and shareholders must be disclosed to FinCEN under the CTA?
  • Does the CTA apply to partnerships?
  • How will the CTA change the lender's approach to borrower due diligence and what continuing obligations should be reflected in loan documents?
  • What constitutes "covered real estate"?

Faculty

Ferranti, Kris
Kris Ferranti

Partner
Shearman & Sterling

Mr. Ferranti has extensive experience representing clients in complex commercial real estate transactions, including in...  |  Read More

Beahn, John
John M. Beahn

Partner
Shearman & Sterling

Mr. Beahn has extensive experience representing clients in national security reviews before the Committee on Foreign...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download