Corporate News: A Legal Update

The United States Court of Appeals for the Fifth Circuit vacated an order that granted the U.S. government’s motion to stay a preliminary injunction, which enjoined enforcement of the Corporate Transparency Act and its requirement that companies file their beneficial ownership information reports. As a result, there are no deadlines currently in place for reporting under the act—at least for now.

Reporting companies are once again required to report their beneficial ownership information to the Financial Crimes Enforcement Network after the U.S. Court of Appeals for the Fifth Circuit lifted an injunction.

On December 3, 2024, in the case of Texas Top Cop Shop v. Garland,  the U.S. District Court of Texas issued a nationwide preliminary injunction of the Corporate Transparency Act (CTA), which prevents the enforcement of the CTA at this time.

You are likely now aware of the Financial Crimes Enforcement Network's (FINCEN) new Corporate Transparency Act in effect as of January 1, 2024, that requires domestic entities (and foreign entities qualified to do business in the United States) to file a Beneficial Ownership Information Report (BOI) with FINCEN. In addition, you are also likely aware of your deadlines for filing these reports and FINCEN's potential fines and possible imprisonment for willfully failing to file or update a BOI. 

Parties to business acquisitions use indemnification clauses to provide security for harm that may result following the closing of the transaction. Indemnification obligations require one party to compensate the other for costs that arise relating to the performance (or lack thereof) of the terms the parties agreed to in the transaction documents.

The United States Supreme Court is set to take on a trademark infringement case that may have a lasting impact on the concept of corporate separateness. In Dewberry Group, Inc. v. Dewberry Engineers Inc., the Supreme Court will decide whether the disgorgement of profits of non-party corporate affiliates is appropriate in calculating damages under federal trademark law (i.e., the Lanham Act). 

In the case, Dewberry Engineers brought suit against Dewberry Group, which had previously gone by the name Dewberry Capital, after it underwent a substantial rebranding. This rebranding ...

On April 12, 2024, the United States Supreme Court issued a unanimous ruling in Macquarie Infrastructure Corp. et al v. Moab Partners, L.P., et al. which held that omissions, by themselves, are not subject to private rights of action under Rule 10b-5, but omissions can support an action if they make other statements materially misleading.

The Division of Enforcement (“Division”) for the Securities and Exchange Commission (“SEC”) released the 2024 Examination Priorities Report (“Report”) highlighting the key areas the Division will examine in 2024.

On March 1, 2024 in the case of National Small Business United v. Yellen 5:22-cv-01448-LCB the U.S. District Court for the Northern District of Alabama declared the Corporate Transparency Act unconstitutional stating in part that it “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”

On February 7, 2024 FinCEN issued a Notice of Proposed Rulemaking that would require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts. FinCEN’s proposal targets residential real estate transfers considered high-risk for money laundering.