Family business owners are facing significant regulatory and market changes that impact corporate transparency, human resources strategy and generational planning. This section highlights key developments and highlights what is important now for governance, compliance and succession readiness.
Corporate Transparency Act
- Interim final rule: In the first quarter of 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that significantly limits the Corporate Transparency Act (CTA) beneficial ownership reporting system. Therefore, currently only “foreign reporting companies” – companies organized under non-U.S. laws and registered to do business in a U.S. state or tribal jurisdiction – are required to report to FinCEN. Companies incorporated under the laws of a U.S. state or tribal jurisdiction (formerly “domestic reporting companies”) are not currently subject to CTA reporting. For more background information, see our previous publication here.
- Who needs to report?: FinCEN has also limited who must be reported. Reporting companies are no longer required to report beneficial owners who are US persons. In fact, the CTA now only requires foreign reporting companies to disclose their foreign beneficial owners. Notwithstanding this decline, non-exempt foreign reporting companies that have failed to file initial reports or make timely updates are in default.
- This is a significant departure from the CTA's original design. The political environment remains volatile. FinCEN could reverse course, including by reinstating reporting requirements for domestic reporting entities and/or for U.S. beneficial owners. Companies should be ready to comply promptly when more comprehensive federal reporting returns.
- A comprehensive overview of the CTA with detailed information on reporting companies, beneficial owners, corporate applicants and beneficial ownership information can be found here.
New York LLC Transparency Act
While federal reporting is limited for now, states are trying to fill the gap. New York's LLC Transparency Act (NY LLCTA) remains in effect and closely follows the original framework of the CTA, but differs in important respects. Effective January 1, 2026, New York law requires all limited liability companies (LLCs) (but not corporations or limited partnerships) doing business in the state – both domestic LLCs and those incorporated in other states and qualified to do business in New York – to disclose their beneficial ownership information or file an exemption certificate (similar to the CTA).I
Family business and non-compete clauses
Last year, the Federal Trade Commission (FTC) adopted a final rule that would have broadly banned non-compete agreements in the workplace; The litigation halted enforcement.
- In September 2025, the FTC filed a motion to repeal this rule and will no longer pursue a nationwide ban on non-compete agreements. At the same time, the FTC filed an enforcement complaint challenging a company's employee non-compete agreement, signaling continued case-by-case review of anti-competitive behavior. State courts and legislatures also continue to restrict non-compete agreements.
Planning note: Family businesses should use this reprieve to review restrictive covenant programs – non-competes, non-solicitation agreements, confidentiality and training reimbursement agreements – for compliance with applicable state laws and to strengthen alternative protections (e.g., strong trade secret programs, tailored non-solicitation agreements and retention strategies).
The great wealth transfer
There is an unprecedented transfer of wealth between generations, which has far-reaching implications for family businesses. Clear goals and early planning determine whether transitions preserve heritage and add value.
If continuity is the goal, owners should evaluate the readiness of next-generation leadership, the timing and sequencing of management transitions, decision-making and dispute resolution mechanisms, and economic alignment between active and non-active family members. When considering a partial or full exit, owners should evaluate the timing, target buyer profiles, pre-sale readiness, team composition, and post-sale plans.ii
Important things you should know
- CTA Status / New York LLC Act today: Only foreign reporting entities are required to report and only their foreign beneficial owners are in scope; Domestic companies and US owners are currently excluded, but that could change quickly.
- LLCTA Compliance: Beginning in 2026, LLCs formed and registered in New York will be required to submit beneficial ownership information or an exemption certificate.iii
- Non-compete clause: No nationwide ban, but the FTC and states continue to monitor restrictive practices; Ensure policies comply with state law and prioritize protecting trade secrets.
- Time of succession: Start documenting business goals, leadership plans and economic conditions now to take advantage of a favorable planning window and avoid hasty transitions.
i Katten received a notice on November 10, 2025 from Capitol Services, LLC (a nationwide provider of registered agent, corporate and lien services) regarding recent guidance from the New York Department of State. Pursuant to this Policy, only LLCs incorporated under the laws of another country and authorized to do business in New York are subject to the beneficial ownership information disclosure requirements under the NY LLCTA. Further communications to the Department of State confirmed that the scope of the NY LLCTA will be significantly limited: LLCs incorporated in New York or another U.S. state and authorized to do business in New York are not currently required to disclose beneficial ownership information under the NY LLCTA. Katten is actively working to independently verify this information and will provide an updated advisory when further details become available.
ii Our team, led by Michael L. Sherlock, is developing a dedicated content series for family business owners to evaluate succession, liquidity and governance alternatives. The series is scheduled to start in January. To receive this content via email, click here.
iii See note I