A federal court in Alabama has determined that a law demanding companies to provide in-depth stakeholder ownership data to the federal government is unconstitutional. Judge Liles Burke of the US District Court for the Northern District of Alabama made the ruling.
The case involved the Corporate Transparency Act and was instigated by the National Small Business Association against the US Treasury Department. According to Burke’s ruling, Congress does not possess the authority to mandate companies to share private stakeholder data with the Treasury’s criminal enforcement division.
Effective from the beginning of this year, companies were obligated to report their “beneficial ownership” to the Treasury Department under the law. The unconstitutionality of the Act, as per Burke’s ruling, brings a remarkable turn to these recent requirements.