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The Transparency Trend How expanding disclosure requirements reshape corporate compliance BY TRENT BAVARO CORPORATE COMPLIANCE has entered a new era of transparency. From state legislatures to federal regulators, there is an increasing demand for businesses to share who they are, what they do, and who benefits. The message is clear: The age of minimal disclosure is nearing an end. Delaware, long celebrated as the gold standard of corporate formation for its flexibility and business-friendly legal framework, has also moved in this direction with recent amendments to its Delaware General Corporation Law. For the first time this year, corporations formed in Delaware must provide a non-generic “nature of the business of the corporation” on their annual report (i.e., annual franchise tax report), due annually on or before March 1. Businesses can select from 18 predetermined options or use up to 60 characters to describe their purpose in their own words. This regulatory change shifts the historically accepted use of “any lawful purpose,” as commonly listed on formation documents, and now requires businesses to articulate the actual nature of their operations with greater precision. This shift is significant, as Delaware processes more than 50,000 new corporate formations each year and has roughly 400,000 active corporations on record with the Delaware Secretary of State. There are more than two million active entities in Delaware across all entity types, primarily dominated by limited liability companies, and it remains to be seen whether similar regulations will surface in Delaware’s Limited Liability Company Act in the future. The new requirement signals that America’s most popular corporate domicile is aligning itself with a broader national and global push for corporate transparency. Delaware is hardly alone. Across the country, both state and federal governments have enacted or expanded disclosure requirements that impose new obligations on businesses and their owners. At the federal level, the Corporate Transparency Act (CTA), which took effect Jan. 1, 2024, and is enforced by the Financial Crimes Enforcement Network, introduced sweeping beneficial ownership reporting requirements for the first time in the United States. Although the CTA has faced a 42
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multitude of legal challenges and was ultimately scaled back by the U.S. Department of the Treasury to exempt domestic, U.S.-formed businesses and U.S. persons from reporting, it represents a fundamental transformation in how corporate ownership is collected and used in the United States. Similarly, the New York LLC Transparency Act, which was modeled after the CTA, took effect Jan. 1, 2026. Originally intended to include all LLCs formed or registered in the state of New York, its current scope requires out-ofcountry domiciled entities that register to do business in New York as an LLC to file an ownership disclosure report, or an attestation of exemption, within 30 days of registering and annually thereafter. Although current enforcement has been narrowed, the regulations are written with a broad scope that could allow regulators to expand disclosure requirements in the future. Underlying these requirements is a common theme: The use of opaque corporate structures is being slowly peeled back to help address money laundering, tax evasion, and other financial crimes. For legitimate businesses, this means that anti-money laundering compliance is no longer solely the concern of financial institutions. Corporations and other entities must now understand and grapple with disclosure requirements. For businesses facing this shifting regulatory environment, the complexity can be overwhelming. Tracking overlapping state and federal requirements — where noncompliance carries real consequences — demands specialized attention. As transparency expectations expand, organizations that fail to keep pace risk increased scrutiny, enforcement exposure, and compliance gaps, making it critical to stay informed. CSC continues to monitor these developments, helping organizations navigate evolving requirements with confidence. n
Trent Bavaro is director of product management, corporate transparency, and annual reports at CSC.
May/June 2026
| DELAWARE BUSINESS
4/28/26 2:34 PM