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Beneficial Ownership Information Clarification

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Question: 
XYZ, LLC was opened with a certification of two individual signers owning 10% and 16% of the company. However XYZ’s company agreement stated that another LLC (ABC, LLC) owned 90% and one individual (one of the signers) owned 10% interest of the company. The ABC, LLC was not indicated on the certification. Based on the XYZ’s company agreement, do we need to request beneficiary ownership information on the ABC owners?
Answer: 

If the certification you refer to is the legal entity customer's representative's certification of the beneficial ownership of XYZ, LLC, it would not necessarily include any reference to ABC, LLC because the certification is used to identify the NATURAL PERSONS who beneficially own, directly or indirectly, 25% or more of the legal entity customer. It's possible that the 16% owner you mention directly owns about 17.8% of ABC, which would make him/her an approximately 16% indirect owner of XYZ.

What you still don't know is whether any of the other owners of ABC LLC have indirect beneficial ownership of 25% or more of XYZ. You should ask. Anyone that directly owns 27.7778...% or more of ABC will be have indirect beneficial ownership of 25% or more of XYZ.

First published on 09/29/2019

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