With January 1, 2024, approaching in little over two months, the Corporate Transparency Act (CTA) is set to take effect bringing sweeping changes to reporting requirements for various entities. As outlined by Dechert LLP, the Act will have a pronounced impact on Corporate CLO issuers and securitization issuers.
Under the impending Act, Corporate CLO issuers are expected to, in the majority of cases, be exempt from the CTA’s reporting requirements. This exemption should apply irrespective of whether the CLO issuers are organized onshore or offshore.
However, a different set of rules seem to be in place for onshore CLO co-issuers. Despite CLO issuers’ exemption, onshore co-issuers are projected to be subject to reporting in accordance with the Act. Thus, co-issuers should prepare and plan for the additional reporting journey ahead.
Securitization issuers, particularly of CMBS, RMBS, and other assets, are also predicted to face changes in reporting. Particularly, issuers that operate as common law trusts or offshore issuers of CRE CLOs are slated for exemption from the CTA’s reporting requirements. The ability of these entities to bypass requirements under the Act offers a considerable adaptations to the securitizations landscape.
These changes coming with the Corporate Transparency Act in 2024 underline the ever-evolving complexities and nuances within the legal landscape across CLO and securitization issuances. Entities involved must navigate these changing tides with agility and robust compliancy efforts.