ke kumu Fall/Winter 2023

FALL/WINTER

2023

ke ku mu

A P U B L I C A T I O N F O R T H E F R I E N D S , F A M I LY, A N D C L I E N T S O F C A D E S S C H U T T E L L P

LOW INCOME HOUSING TAX CREDIT | CONCEALED CARRY LAWS | CORPORATE TRANSPARENCY ACT

MĀLAMA FOR MAUI Cades Schutte’s Hoʻokupu for 100 was a year-long celebration of service to Hawai‘i by Cades Schutte attorneys and staff. Over 500 hours of community service were performed through beach cleanups, work days at nonprofits, and events such as the Heart Walk, the Walk to End Alzheimer’s, and the Humane Society Pet Walk.

Attorneys further provided pro bono services through Legal Lines and by staffing the Access to Justice room. Over 70 attorneys and staff participated throughout the year, showing our firm’s commitment to our community.

Cades Schutte stands in solidarity with Maui. We have contributed donations and pro bono legal services to the Hawai‘i Community Foundation’s Maui Strong Fund as well as volunteer assistance to those impacted by the fire.

In particular, under the leadership of current Hawaii State Bar Association (HSBA) President and Partner Rhonda L. Griswold and with the help of Associate Jarrett A. Dempsey and the Young Lawyers Division, the HSBA and Legal Aid Society set up a free legal hotline for victims of the Maui and Big Island wildfires to answer questions regarding document replacement, insurance claims process, landlord-tenant matters, and other issues.

Cades Schutte attorneys Ellen R. Ashford, Katherine E. Bruce, Pōhai Nu’uhiwa Campbell, Jarrett A. Dempsey, Rhonda L. Griswold, Michele S. Loudermilk, Darene K. Matsuoka, Caitlin M. Moon, William K. Morrison, W. Davis Prendergast, Gail M. Tamashiro, Andrea K. Ushijima, Daniel C. Vermillion, and Theodore D.C. Young volunteered their time on the hotline.

In addition, attorneys including Rhonda L. Griswold and Summer G. Shelverton traveled to Maui in September to volunteer as part of a Pro Bono Probate Clinic set up by the HSBA Probate & Estate Planning Section. There is still much work to be done and we are committed to working with our ‘ohana on Maui at this time of need.

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Contents 4

Welcome!

‘A‘ohe hana nui ke alu ‘ia, Pōhai Nu’uhiwa Campbell

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Contributors Learn about our authors’ practices and how to contact them

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Low Income Housing Tax Credits Nathan C. Yang and Vito Galati

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Recent Changes to Hawai‘i Firearms and Concealed Carry Laws Paul M. Saito and W. Davis Prendergast

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Cades Schutte Supporting Hawai‘i’s Local Theatres Jeffrey S. Portnoy and Colin O. Miwa

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Getting Ready for The Corporate Transparency Act Ryan M. Hamaguchi

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ke kumu

A P U B L I C A T I O N F O R T H E F R I E N D S , F A M I LY, A N D C L I E N T S O F C A D E S S C H U T T E L L P

FALL/WINTER

2023

Management Committee: Amanda M. Jones Nathan T. Okubo Ryan M. Wilson Cades Schutte Building 1000 Bishop Street, Suite 1200 Honolulu, Hawai‘i 96813 The contents of this newsletter should not be construed as legal advice on any specific fact or circumstance. Its content was prepared by Cades Schutte LLP. It was designed for general information purposes only. Your receipt of such information neither creates an attorneyclient relationship with any Cades Schutte LLP attorney, nor a business relationship with any of its administrators. You should not act or rely on any of the information contained herein without seeking professional legal counsel. Prior results or outcomes referred to in these materials do not in any way suggest or guarantee a similar result in other matters.

© 2023 Cades Schutte LLP. All Rights Reserved.

The comments and opinions expressed in this publication do not necessarily represent those of Cades Schutte LLP or the attorneys or staff of Cades Schutte LLP. A CADES SCHUTTE PUBLICATION | KE KUMU

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WELCOME!

‘A‘OHE HANA NUI KE ALU ‘IA

No task is too big when done together by all

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lthough we are navigating a post-pandemic world, the Maui fires have caused another form of devastation that has hit close to home. Our community as a whole has been working diligently to support those in need, and Cades Schutte has been finding ways to lend its support as well (see inside cover for more information). It is abundantly clear that we must come together as a community to support each other through difficult and challenging times, and Cades Schutte is committed to doing its part. As eloquently stated in the above ‘ōlelo no‘eau, if we work together, we can accomplish anything. In this issue of ke kumu, we explore the recent updates to low income housing tax credit and Hawai‘i gun laws, as well as discuss corporate transparency and highlight Cades Schutte’s support of the arts at Diamond Head Theatre and Manoa Valley Theatre.

On the Cover Guiding you through the rocky terrain of recent legal issues in Hawai‘i.

Mahalo nui loa Patricia J. McHenry was instrumental in the creation of this newsletter, acting as lead proofreader and editor.

Pōhai Nu’uhiwa Campbell assisted with drafting the forward of this issue.

Feedback?

If you have questions, or would like to see an article on a particular area of law, please let us know!

Submit feedback via email to: feedback@cades. com.

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CONTRIBUTORS

A COMMUNITY EFFORT We invite you to take a moment and learn about the team who contributed to this issue.

Ryan M. Hamaguchi Partner

Jeffrey S. Portnoy Partner

Paul M. Saito Partner

Vito Galati Senior Counsel

Patricia J. McHenry Senior Counsel

Ryan applies his diverse experience both as a transactional attorney and as a litigator to assist clients in multiple facets of the law, and help them find creative solutions to achieve their business objectives.

Jeff has 50 years of litigation and alternative dispute resolution experience in areas including insurance, employment, mass tort, product liability, media, securities, and medical and legal professional errors and omissions., and is one of Hawai‘i’s leading First Amendment attorneys. He previously served as Chair of the firm’s Litigation Department.

Paul is actively involved in counseling and educating business owners and human resource managers on employment law issues through the Chamber of Commerce of Hawai‘i, the Society for Human Resource Management certification programs, and the University of Hawai‘i’s Outreach College.

Vito is Senior Counsel in the Tax Department of Cades Schutte. His areas of practice include partnership and real estate tax law, tax compliance, as well as Hawai‘i state tax law.

Structuring the tax aspects of complex business transactions involvingequipmentleasing,real estate, energy, or housing credits are areas of special emphasis for Vito.

Pat is Senior Counsel in the Litigation Department, and is the Chair of the Environmental Law Practice Group. Her practice concentrates on environmental law, lender liability, and commercial litigation.

(808) 521-9211 rhamaguchi@cades.com

(808) 521-9221 jportnoy@cades.com

(808) 544-9225 psaito@cades.com

(808) 521-9347 vgalati@cades.com

(808) 521-9261 pmchenry@cades.com

Colin O. Miwa Senior Counsel

Pōhai Nu‘uhiwa Campbell Associate

W. Davis Prendergast Associate

Nathan C. Yang Associate

Colin has practiced law at Cades Schutte for over 40 years, primarily in the Intellectual Property, Construction Law and Litigation, and Bankruptcy and Creditors’ Rights Practice Groups, concentrating on commercial and general business litigation, lender liability claims, and arbitration of construction delay and defect claims.

Pōhai is an associate in Trusts & Estates Department.

She focuses her practice in the areas of estate planning, probate and trust administration, and trusts and estate disputes.

As an associate in the Finance and Real Estate Department, Davis practices in the areas of real estate development, purchase and sale transactions, commercial leasing, and financing matters. He graduated as class valedictorian from the William S. Richardson School of Law and served on the Editorial Board of the University of Hawai‘i Law Review.

Nate is an associate in the Finance, Corporate, and Real Estate Practice Groups at Cades Schutte. He has successfully guided a diverse range of clients, from individuals to multinational corporations, in navigating Hawai‘i’s unique legal environment, particularly in the area of affordable housing finance and development.

(808) 544-3841 cmiwa@cades.com

(808) 521-9302 pcampbell@cades.com

(808) 521-9354 dprendergast@cades.com

(808) 521-9351 nyang@cades.com

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TAX

LOW INCOME HOUSING TAX CREDITS A Successful Form of Affordable Housing Financing

Nathan C. Yang _________________ nyang@cades.com

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awai‘i’s dire need for affordable housing is apparent to many. Few, however, know of one of the most successful incentives for creating affordable rental housing, the federal Low Income Housing Tax Credit (LIHTC) program, and its state tax credit equivalent. This practice note provides an introduction to the federal and state LIHTC programs and our firm’s involvement in affordable housing in Hawai‘i.

Begun in 1986, the federal LIHTC program has contributed to the construction of over 2,000,000 tax credit units throughout the United States, including over 11,100 units built in Hawai‘i. Today, the LIHTC program is the largest source of funding for the development of affordable housing projects in the country.

The Internal Revenue Service (IRS), under Internal Revenue Code Section 42, administers the LIHTC program, which provides federal tax credits to developers and owners of projects that contain affordable rental housing units. The IRS allocates

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Vito Galati _________________ vgalati@cades.com

the tax credits originated under the LIHTC program to each state’s designated housing agency based on population. In 2023, for example, each state housing agency received the greater of $2.75 per capita or the minimum small population state allocation of $3.185 million in tax credits. The state of Hawai‘i’s 2023 federal tax credit allocation was nearly $4 million, based on a calculation of approximately 1.44 million residents multiplied by $2.75. State housing agencies award the tax credits to developers based on each state’s Qualified Allocation Plan (QAP), which establishes how that state’s housing agency evaluates projects for awards of tax credits and monitors compliance with requirements of the LIHTC program. Developers who are awarded tax credits transfer them to investors to obtain funding to create affordable housing. Investors use those federal tax credits, which are claimed annually over a ten-year period, to reduce their tax liability.

At the state level, the Hawai‘i Housing Finance and Development Corporation (HHFDC) administers the federal and state LIHTC programs. The Hawai‘i

Low Income Housing Tax Credit program, detailed in Hawai‘i Revised Statutes (HRS) section 235-110.8, functions in largely the same manner as the federal LIHTC program and is awarded in accordance with Hawai‘i’s QAP. The amount of Hawai‘i tax credits awarded to a developer is equal to the amount of federal tax credits awarded but the Hawai‘i credit is claimed annually over five years.

Complementing its role in administering the LIHTC programs in Hawai‘i and awarding financing for affordable housing projects, HHFDC is also uniquely positioned to assist with the development of affordable housing. Hawai‘i Revised Statutes Chapter 201H allows HHFDC to, among other things, modify or waive certain development and permitting requirements and fees, as well as facilitate expedited land use and zoning approvals. These expedited approvals and exemptions for affordable housing projects further incentivize developers to build affordable housing.

Proclamation Relating to Affordable Housing (EP), issued on September 15, 2023, to focus on alleviating the state’s housing shortage by streamlining and expediting the development of affordable housing units. While the full effect and reach of the EP remains to be seen, our team of skilled professionals here at Cades Schutte LLP continues to be ready to assist clients with their LIHTC, affordable housing, and other development and financing needs. We have been privileged to work on both the development and lending side of different affordable housing rental projects, though never at the same time, and with nonprofit and for-profit developers. The breadth of our firm’s experience includes expertise on the LIHTC program, HRS chapter 201H, real estate development, construction loans, and other legal aspects of financing and constructing affordable housing projects. We look forward to collaborating with you to expand Hawai‘i’s supply of affordable housing.

The Emergency Proclamation Relating to Housing, signed by Governor Green on July 17, 2023, was recently adjusted by the Second Emergency

Nathan C. Yang (Associate) collaborates with clients to develop creative and cost-effective solutions on complex finance, corporate, real estate, and international legal matters, particularly in the area of affordable housing finance.

Vito Galati (Senior Counsel) is in the Tax Department. His areas of practice include partnership and real estate tax law, tax compliance, as well as Hawai‘i state tax law.

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LABOR & EMPLOYMENT

Recent Changes to Hawai‘i Firearms and Concealed Carry Laws Paul M. Saito _________________ psaito@cades.com

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W. Davis Prendergast _________________ dprendergast@cades.com

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onfusion regarding employees’ and the public’s right to carry firearms is an ongoing concern for both employers, especially those who wish to restrict firearms in their workplaces, and for gun rights advocates who seek to allow them. All employers should monitor recent changes and challenges to Hawai‘i’s concealed carry law.

In its last session, the Hawai‘i State Legislature passed new firearms legislation, to be codified as Hawai‘i Revised Statutes §134-A through G, effective in July 2023, in response to the U.S. Supreme Court’s decision in New York State Rifle & Pistol Association, Inc. v. Bruen, which found states’ policies that allowed a denial of an application to carry a firearm based on subjective criteria to be unconstitutional. The new law, Act 52, is the Legislature’s effort to comply with the Supreme Court’s decision by (1) imposing new objective standards by which Hawai‘i police departments must review and approve firearmsrelated permits and license applications and (2) identifying events, facilities, and locations where carrying a firearm is prohibited.

While Act 52 removes barriers and restrictions for police departments’ approval of permit and license applications, the law prohibits carrying firearms in certain public areas, such as beaches, schools, bars, government buildings, and other “sensitive places” in which carrying or possessing dangerous weapons has traditionally been restricted.

What Does This Mean for Employers?

Act 52 does respect the rights of private individuals, businesses, and employers by allowing them to allow or restrict firearms on their property, provided that the property is not classified as a sensitive place. The law specifically provides that firearms shall not be carried on the private

property of another person without the express authorization of the owner, lessee, operator, or manager of such property.

As a default rule, the new law prohibits carrying firearms on private property, including workplaces, but allows private entities to “opt in” to authorize the carry of firearms on their property. To “opt in” there must be clear signage allowing firearms on the property. Because firearms are presumed to be disallowed on private property in the absence of express authorization, no signage is required to indicate that firearms are prohibited. This means that no further action is required (e.g. putting up a sign stating that guns are not allowed) if an employer wishes to prohibit firearms at their workplace. Therefore, if an employer decides to allow firearms, posting a sign allowing firearms is required.

Gun rights advocates are challenging the new standards and the broad list of sensitive places.

Accordingly, navigating the realm of firearms regulations demands a precise and informed perspective, which remains unsettled. Hawai‘i’s courts are now charged with evaluating the new law to ensure both individual rights and public safety are upheld with the utmost integrity and are consistent with the U.S. Constitution. The information above is provided as a foundational guide and introduction to Hawai‘i’s new firearms laws, which are frequently changing. For more comprehensive information or tailored advice, it is important to seek counsel from a qualified attorney.

Paul M. Saito (Partner) is in the firm’s Litigation Department and represents business owners and managers on employment law issues.

W. Davis Prendergast (Associate) practices in the areas of real estate development, purchase and sale transactions, commercial leasing, and financing matters.

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COMMUNITY

CADES SCHUTTE SUPPORTING HAWAI‘I’S LOCAL THEATRES

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Cades Schutte’s history is deeply rooted in the arts, including strong connections formed by its founders such as Russell Cades, a violin and viola player in the Honolulu Symphony Orchestra and avid art collector. The firm is still proud to be a longtime supporter of the state’s leading arts and cultural institutions.

Diamond Head Theatre and Manoa Valley Theatre, both local theatrical productions based on O‘ahu, are examples of such entities. The heads of the Boards at both entities are currently Cades Schutte attorneys: Jeffrey S. Portnoy at Manoa Valley Theatre and Colin O. Miwa at Diamond Head Theatre. We asked both of them a few questions about each of the theaters and their backgrounds.

Colin O. Miwa, Diamond Head Theatre Chairman How did you become involved with Diamond Head Theatre (DHT)? What motivated you to take on the role of Chairman?

I believe Larry Takumi, one of our retired partners, recruited me to join the DHT Board back in 2014. Larry, like Russell Cades a while back, Martin E. Hsia and John R. Love now, and many other Cades Schutte attorneys, had always been involved with the performing arts in Hawai‘i for many years, and Larry has always been an active supporter of DHT in particular. He reached out to me to join the Board (since I certainly couldn’t perform!), as they were planning to build a new theatre and we thought I might be able to help with the construction contracts.

By the time I was approached for the Chair position, we were pretty deeply involved with construction of the new theatre building, which was about midway to substantial completion. So for the sake of continuity, it seemed appropriate for me to take on the chair’s duties.

How has DHT evolved or grown since its inception? Are there any significant milestones or changes that have occurred recently?

Founded in 1915, DHT is the oldest live theatre company in Hawai‘i, and the third-longest, continuously operated community theatre in the country. Originally a theatrical group called The Footlights performing in what was The previous DHT building before construction

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then the Honolulu Opera House, the group adopted a new name in 1934, Honolulu Community Theatre, and in 1952, took up residence in the Fort Ruger Theatre, the Army Post’s then-movie house. In 1990, HCT changed its name to “Diamond Head Theatre” to better reflect its location.

In support of its mission to serve “Broadway” musical interests and advance educational opportunities in the performing arts, DHT’s calendar of events has grown to include six different shows per season, year-round dance, voice, and acting classes, and a youth performing troupe called the Shooting Stars. Through its productions, DHT entertains more than 40,000 patrons per year and provides performing arts instruction to more than 1,000 young people and adults yearly. As a community-based theatre where productions are made by, with and for the community, DHT operates as a non-profit organization with a large cast of committed staff and volunteers.

In October 2022, the aging theatre structure was closed to make way for an adjacent and contemporary live theatre house, which opened in January of 2023 (despite COVID!) thanks to tremendous support from the community.

Are there any upcoming projects or initiatives that DHT is particularly excited about? What can audiences look forward to?

Audiences can certainly look forward to productions in the newly-opened theatre building, which features a first-ever orchestra pit and fly-loft, grander production sets, plusher seating, enhanced sound and lighting, larger restrooms, an upgraded concession, and an open-air entryway next to a welcoming garden. Planning and construction work will continue with the redevelopment of the Theatrical Arts Building, originally built more than 40 years ago on the DHT campus, to make way for expanded educational facilities, a costume center and updated administrative offices.

Just for fun, what are your favorite theatre productions, both by DHT and outside of it?

That’s a hard question, but in more recent years, DHT’s productions of Billy Elliott, Jesus Christ Superstar, and Matilda stand out for me. Hawai‘i’s Loretta Ables Sayre as an especially chilling Bloody Mary in South Pacific was pretty hard to forget. And those Sunset Serenades from the old loading dock with Artistic Director John Rampage serving as emcee -- in the middle of COVID -- were memorable for what they reflected about the dedication of both performers and the community. We may not have the same star power as the actual Broadway productions of Hamilton or Phantom of the Opera (two other personal favorites) but experiencing DHT’s community-based productions and being involved on the Board has probably been even more enriching for me.

The new DHT building, opened in January 2023

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Jeffrey S. Portnoy, Manoa Valley Theatre Chairman of the Board How did you become involved with Manoa Valley Theatre (MVT)? What motivated you to take on the role of President/ Chairman of the Board?

I was always interested in theater and had been voted class actor in senior year in high school (back in New York). I first joined the organization in the late 70’s, shortly after moving to Hawai‘i to become a lawyer at Cades Schutte. I was President of the Board for 25 years and remain Chairman of the Board.

How has MVT evolved or grown since its inception? Are there any significant milestones or changes that have occurred recently?

MVT was founded in 1969 as Hawai‘i Performing Arts Company (HPAC) by a group of graduate students in the University of Hawai‘i Theatre Department. Their goal was to create Hawai‘i’s first professional resident adult theater organization that would nurture Hawai‘i’s theater artists while concurrently providing live, stage entertainment for community audiences.

At the time, MVT was in a 100-year-old wooden church with holes in the roof and we had a Board of three. 51 years later, we have a million-dollar facility, a Board of 30, and thousands of patrons. We are recognized as the place to go to see first-rate theater for Broadway and off-Broadway plays at our current 150-seat state of the art modern black box theater in a graveyard (something that makes us unique). The theater entertains several thousand people MVT

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MVT’s productions of Cabaret and The Play That Goes Wrong

every year and also has been a launching pad for hundreds of local actors, designers, directors, and technicians to start their careers. Many have gone on to careers in professional theater in Seattle, San Francisco, Los Angeles, and Broadway.

Are there any upcoming projects or initiatives that MVT is particularly excited about? What can audiences look forward to?

Right now, the task for the future is to just keep going. In accordance with MVT’s mission, “to entertain and enrich Hawai‘i’s audiences and artists through the production and promotion of live theatre,” we are always striving to find shows that are fun, challenging, entertaining, and thought-provoking. This holds true as today most plays are presented by MVT in their Hawai‘i debut.

For example, in March of 2024, Manoa Valley Theatre will present “Dear Evan Hansen,” a musical which has received six Tony Awards® and the Grammy® Award and the Olivier Award for Best Musical. This powerful show tackles issues of teen bullying, loneliness, suicide, and the power of social media. MVT is proud to be the first “community theatre” in the country to produce this award-winning show.

Just for fun, what are your favorite theatre productions, both by MVT and outside of it?

I have seen over 200 shows at MVT and it’s hard to pick my favorites. Like children, I love them all (most of the time).

Jeffrey S. Portnoy (Partner) is one of Hawai’i’s leading First Amendment attorneys. He previously served as Chair of the firm’s Litigation Department and has practiced law as a civil litigator at the firm since 1972.

Colin O. Miwa (Senior Counsel) has practiced law for over 40 years, primarily in the Intellectual Property, Construction Law and Litigation, and Bankruptcy and Creditors’ Rights Practice Groups.

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CORPORATE

Getting Ready for The Corporate Transparency Act

Ryan M. Hamaguchi _________________ rhamaguchi@cades.com

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his article seeks to provide a primer of the reporting requirements and penalties of the Corporate Transparency Act which is set to take effect on January 1, 2024.

Background The Corporate Transparency Act (“CTA”) was enacted on January 1, 2021, as part of the National Defense Authorization Act for the Fiscal Year 2021, with the goal of protecting and safeguarding U.S. national security interests against money laundering, the financing of terrorism, and other illegal activities. Because “shell” companies are often used to facilitate illegal activities, the CTA requires non-exempt companies to disclose certain company information, including information about the company’s beneficial owners, to the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”).

On September 29, 2022, FinCEN released its final rule implementing the reporting requirements of the CTA, which will soon take effect.

As discussed below, the CTA applies to both existing companies and companies to be formed. Companies that are in existence before January 1, 2024, will have one year to file their initial reports, while companies formed on or after January 1, 2024, will have 30 days after the creation or registration of the company to file.

not be considered a “reporting company” and will not be required to file a report under the CTA. Many of these exempt entities are already required to disclose their company and beneficial ownership information to another government agency and are regulated by other federal and/or state government agencies. The exemptions include, but are not limited to, banks, Who Is Required to File? credit unions, issuers of publicly registered securities, certain tax-exempt entities, large The CTA requires a “reporting company” to operating companies, and subsidiaries of disclose to FinCEN, certain information about certain exempt entities. (i) the company itself; (ii) its beneficial owners; and (iii) the company applicant.

One common entity excluded from the reporting requirements of the CTA is “large A “reporting company” is defined as a operating companies.” A large operating domestic or foreign corporation, limited company is defined as any entity that (i) liability company, or other similar entity employs more than 20 full-time employees that is created by filing a document with a in the U.S.; (ii) with gross receipts or sales of Secretary of State or other similar office, or more than $5,000.000 from U.S. sources; and a foreign company that is registered to do (iii) has an operating presence at a physical business in any state that does not qualify office within the U.S. It is important to note under one of the exemptions enumerated in that if an exempt entity no longer qualifies the CTA. for that exemption, they must timely begin to report as a reporting company. For Reporting Company Exemptions example, if a large operating company falls below the threshold of maintaining 20 fullThere are currently 23 exemptions listed in time employees, that company would then the CTA, as a result of which an entity will need to report to FinCEN under the CTA. A CADES SCHUTTE PUBLICATION | KE KUMU

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What Information Is a Reporting Company Required to Report?

If a company is deemed to be a reporting company it will be required to report to FinCEN information about (i) the company itself; (ii) its beneficial owners; and (iii) its company applicants (if created or registered on or after January 1, 2024). Except for reported information about the company applicant, the reported information must be timely updated whenever the required company information or beneficial owner information changes.

1. Required Company Information.

• • • •

A reporting company must report the following information about itself: Full legal name, including any “doing business as” or trade names; U.S. street address of its principal place of business (or if a foreign reporting company, from the address in which the company conducts business in the U.S.; Jurisdiction of formation or registration; and Taxpayer Identification Number.

2. Beneficial Owners.

• • • • •

A reporting company must also provide the following information for each Beneficial Owner: Individual’s full name; Individual’s date of birth; Individual’s residential street address; Unique identifying number from an acceptable identification document (e.g. passport, driver’s license); and Image of the identifying document.

3. Company Applicants.

• • • • •

Additionally, for companies created or registered on or after January 1, 2024, a reporting company must also provide the following information for each Company Applicant: Individual’s full name; Individual’s date of birth; Business street address used by Company Applicant; Unique identifying number from an acceptable identification document (e.g. passport, driver’s license); and Image of the identifying document.

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Who are Beneficial Owners?

A beneficial owner of a reporting company is any individual (i) who directly or indirectly exercises “substantial control” over the reporting company; or (ii) who directly or indirectly owns or controls at least 25 percent of the “ownership interests” of the reporting company.

However, a beneficial owner does not include: (i) a minor child; (ii) a person acting as a nominee, intermediary, custodian, or agent on behalf of another individual; (iii) an employee of a reporting company, acting solely as an employee, whose substantial control over or economic benefits from the reporting company are derived solely from that person’s employment status, provided that such person is also not a senior officer; (iv) an individual whose only interest in the reporting company is a future interest through a right of inheritance; or (v) a creditor of a reporting company.

The definition of “substantial control” is quite broad and is enumerated in 31 CFR §1010.380(d)(1). Certain individuals who have been found to have “substantial control” over a reporting company include, but are not limited to: (i) senior officers; (ii) people with authority to appoint or remove any senior officer or a majority of the board of directors; (iii) people who can direct, determine, or have substantial influence over important decisions made by the company (e.g. sale, lease, mortgage, or pledge of a substantial asset, amending corporate governance documents); or (iv) people who have any other form of substantial control over the reporting company.

The term “ownership interest” is also broadly defined to include equity and stock, profit interests, convertible instruments, and other complex ownership arrangements as set forth in 31 CFR §1010.380(d)(2).

Who Are the Company Applicants?

A reporting company may have up to two individuals who qualify as the company applicant: (i) the person who creates, files, or registers the reporting company; and (ii) the person who is primarily responsible for directing or controlling the creation, filing, or registration of the reporting company.

Note: Companies formed or registered before January 1, 2024, do not have to report their company applicants. Only reporting companies formed or registered on or after January 1, 2024, will have to report their company applicants to FinCEN.

For domestic companies formed on or after January 1, 2024, the deadline to file the initial report is 30 calendar days after formation.

For foreign companies registered in the U.S. on or after January 1, 2024, the deadline to file the initial report is 30 calendar days after registration.

a civil penalty fine of $500 per day, and criminal penalties, including imprisonment for up to two years (31 U.S.C. 5336).

Additionally, any individual who knowingly discloses beneficial owner information, without authorization, is subject to a fine of $500 per day, and up to five years Additionally, all reporting companies are imprisonment. required to file updated reports within 30 calendar days after a change in any The contents of this article are for general previously reported information. information purposes only and should not be construed as legal advice. For more Penalties for Failure to Comply with CTA comprehensive information or tailored advice, please seek counsel from a qualified Failure to comply with the CTA may result attorney. Additional resources, which have in severe civil and criminal penalties. The also been used as a reference for this Deadlines to File willful failure to file a complete initial or article, include 31 CFR §1010.380 and the FAQ For companies that were formed before updated report with FinCEN is subject to section of the FinCEN website.

January 1, 2024, the deadline to file the initial report is January 1, 2025.

Ryan M. Hamaguchi (Partner) applies his diverse experience both as a transactional attorney and as a litigator to assist clients in multiple facets of the law, and help them find creative solutions to achieve their business objectives.

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FOOTNOTE

Recent Wins and Developments 2023 Chambers and Partners USA Guide 24 Cades Schutte attorneys and eight practice areas were recognized in the 2023 Chambers and Partners USA Guide. The firm was recognized in the areas of Bankruptcy/Restructuring, Corporate/Commercial, Employee Benefits & Executive Compensation, Environment, Labor & Employment, Litigation: General Commercial, Real Estate, and Tax.

Pacific Business News 40 Under 40 Ryan M. Hamaguchi was selected in Pacific Business News’ 40 Under 40 Class of 2023. The 40 Under 40 Awards recognize young professionals who are making a difference in the workplace and shaping the future of our community.

2023 Chambers and Partners High Net Worth Guide Cades Schutte’s Trusts & Estates team maintained its Band 1 ranking for the category of Private Wealth Law in Hawai‘i. Partner Rhonda L. Griswold also maintained her Band 1 ranking and partners Summer G. Shelverton and Daniel C. Vermillion have been elevated to Band 2.

2024 Best Lawyers® and Best Lawyers: Ones to Watch 58 Cades Schutte attorneys were recognized on the 2024 Best Lawyers® and Best Lawyers: Ones to Watch Lists. In addition, C. Michael Heihre (Eminent Domain and Condemnation Law), Craig I. Nakanishi (Energy Regulatory Law), Nathan T. Okubo (Business Organizations (including LLCs and Partnerships)), and Rhonda L. Griswold (Trusts and Estates) were named as 2024 Best Lawyers® “Lawyer of the Year” in the state of Hawai‘i.

Pacific Business News Most Admired Leaders Jeffrey S. Portnoy was named one of Pacific Business News’ inaugural Most Admired Leaders, which recognizes exceptional executives who have made significant contributions in their companies and their communities.

University of Hawai‘i RISE Project Keri Ann Krzykowski will be serving as a Professional-in-Residence and Chris S. Mashiba will be providing consultations on a pro bono rotating basis at the University of Hawai‘i’s RISE project, which is managed by Pacific Asian Center for Entrepreneurship.

On the Board Jeffrey M. Osterkamp was selected as a Fellow for the Construction Lawyers Society of America, a peer-selected, rigorously vetted group of the nation’s best construction lawyers.

Daniel C. Vermillion has been elected to the UC Law Foundation Board of Trustees. He will serve a term from July 1, 2023 – June 30, 2026.

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Colin O. Miwa is serving as Chairman for Diamond Head Theatre. Paul M. Saito is also on the Board of Directors.

Nathan C. Yang joined the Chamber of Commerce Young Professionals (YP) Program, which fosters an environment for young business professionals in Hawai‘i to elevate their professional skills while enhancing their network.

Giving Report Hawaii Business Magazine recognized Cades Schutte LLP in its Hawai’i’s Most Charitable Companies 2023 list, noting that Cades Schutte attorneys and staff dedicated 1,188 hours to volunteer work and pro bono legal services in 2022.

Welcome

Cades Schutte is proud to welcome its newest team members.

The law firm of Cades Schutte LLP, with its attorneys and staff, has donated $36,630 to the Hawai‘i Community Foundation’s Maui Strong Fund. The nonprofit Cades Foundation also has separately committed to donate $25,000 to the Maui Strong Fund and $10,000 to the American Red Cross of Hawai‘i.

A Cades Schutte LLP team raised over $2,000 for the Alzheimer’s Association and participated in this year’s Walk to End Alzheimer’s for O‘ahu. The funds were raised by attorneys and staff of the firm under the leadership of Wellness Committee Chairs Lisa K. Swartzfager (Team Captain) and Ryan M. Hamaguchi, and the donation was additionally matched by the Cades Foundation.

This May, 16 Cades Schutte attorneys provided 36 hours of pro bono legal information at the Honolulu Access to Justice Room (ATJR) through the Legal Aid Society of Hawaii. The firm has sponsored the ATJR for a month per year for over ten years and continuously receives positive feedback for its participation. Cades Schutte volunteers included Trisha H.S.T. Akagi, Trever K. Asam, Ryan M. Hamaguchi, Michi Momose, Kristin S. Shigemura, Andrea K. Ushijima, Ellen R. Ashford, Jarrett A. Dempsey, Mallory T. Martin, Caitlin M. Moon, Reyn S. P. Ono, Tyler G. Simpson, Michael R. Soon Fah, Nicole K. C. Yamane, and Troy Young.

Partner Trisha H.S.T. Akagi successfully obtained Special Immigrant Juvenile Status (SIJS) for a pro bono child client, working together with the William S. Richardson School of Law Refugee and Immigration Law Clinic (RILC). SIJS is a crucial immigration status designed to protect children who have experienced abuse, abandonment, or neglect from one or both parents. With SIJS, eligible children can apply for lawful permanent residency once an immigrant visa becomes available to them. Partner Lisa K. Swartzfager, who has taken on numerous pro bono SIJS cases for the RILC and was part of the team that led to the passage of a bill that ensured Hawai‘i aligned with the federal SIJS requirements, worked alongside them providing guidance and mentorship.

Mark K. Murakami

Of Counsel, Honolulu mmurakami@cades.com

Dave K.K. Miyamoto Associate, Honolulu dmiyamoto@cades.com

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Cades Schutte Building 1000 Bishop Street, Suite 1200 Honolulu, Hawai‘i 96813

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