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WHAT ARE REPORTING COMPANIES
AND BENEFICIAL OWNERS?
Reporting companies and beneficial owners are terms used within the law to identify
the businesses and people that qualify.
Reporting Companies: A reporting company is identified as a corporation, limited
liability company, or any company created by filing a document with a secretary of state
or any similar office. Most community associations file Articles of Incorporation with
their secretary of state's office or similar agency.
Beneficial Owners: Beneficial owners are "any individuals" who, directly or indirectly,
exercise "substantial control" over a reporting company or own or control at least 25
percent of the company. "Substantial control" is defined as someone who:
• Is a senior officer
• Has authority to appoint or remove certain officers or a majority of directors
• Is an "important decision maker"
• Has any other form of substantial control (directly or indirectly) over the
reporting company.
There are a few exemptions, including for associations that are not required to
incorporate or that qualify as tax-exempt under federal IRS Code 501(c). Some people,
like community association managers, are also excluded. To learn if you or your
association is exempt, talk to your association attorney.
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