How to buy an accounting practice in Manitoba: licences, ownership rules and what transfers

Manitoba regulates accounting practices through CPA Manitoba, a self-regulating profession, under The Chartered Professional Accountants Act. The tool it uses is the permit. A firm or a professional corporation that wants to provide public accounting services needs a permit, issued by CPA Manitoba’s registration committee, and the Act limits who may provide the most protected services. For a buyer, the first question is whether the practice’s permit will cover you after closing. This guide covers Manitoba’s rules only.

Who may provide reserved public accounting services

Under section 38 of Manitoba’s Act, and subject to its exceptions, no person other than the following may provide a reserved public accounting service to another person: a member authorized to provide public accounting services, a firm whose permit authorizes public accounting services, or a professional corporation whose permit authorizes them. The firm and the corporation must provide the service through one or more authorized members. The exceptions in subsection (3) include bookkeeping, preparing or processing a tax return, and consulting that does not purport to be based on CPA Canada standards. That matters if part of the practice’s revenue is work that does not require a permit.

Firm registration and the permit

CPA Manitoba states that under its bylaw 801(1), members shall not provide public accounting services or other regulated services unless they have registered a firm and been granted a permit by the Registration Committee. If you are buying a practice that operates as a firm, ask whether its permit is held in the firm’s name and whether CPA Manitoba considers a change of ownership to require a new application. Do not assume the seller’s permit simply continues for you. Ask the regulator, in writing, before you sign.

Who may own a professional corporation

Section 26 of the Act directs the registration committee, subject to subsection (5), to issue or renew a permit, with or without conditions, for a corporation that wishes to provide public accounting services if it is satisfied that listed requirements are met. They include that each voting share is legally and beneficially owned by a member or a professional corporation, that each director is a member, that the president is a member, and that each person through whom services are provided is an authorized member or an employee acting under direct supervision of one. Other shares may be held only by the categories section 26 lists, such as a voting shareholder or the shareholder’s spouse or child. A buyer who is not a member cannot hold the voting shares.

Changes in ownership and the 90-day rule

Section 37 of the Act requires a professional corporation to notify CPA Manitoba’s secretary, within the time and in the prescribed form and manner, of any change in its voting shareholders, other shareholders, directors or officers. Section 31 also deals with a departing member. A permit is not to be suspended or cancelled merely because an individual has ceased to be a member for a reason other than death or bankruptcy, unless, among other cases, the individual remains a director or officer more than 14 days after ceasing to be a member, or remains a voting shareholder for more than 90 days after ceasing to be a member, or for any longer period the board allows. If the seller will cease to be a member, ask a lawyer how those periods fit the closing date.

The corporation’s name and its permit’s life

Section 26 also requires that the corporation’s name include the words “Chartered Professional Accountant”, “Chartered Professional Accountants”, or their French equivalents, and be approved by the secretary in accordance with the by-laws. If your plan involves renaming the practice after closing, treat the new name as something CPA Manitoba’s secretary must approve under the by-laws. Manitoba’s Corporations Act ties the name to the permit as well: under section 12(7.1), if the governing body of a profession notifies the Director in writing that a corporation whose name it approved has been denied a permit or a renewal, or has had its permit suspended, revoked or cancelled, the Director shall direct the corporation to change its name. Under section 20 of the Chartered Professional Accountants Act, a permit terminates when the corporation’s name is removed from the register, and under section 31 a cancelled permit must promptly be surrendered to the secretary. Under section 32, instead of suspending or cancelling a permit, the board may, among other things, reprimand the corporation or impose restrictions on the permit, so ask whether any restriction is attached to the permit you are relying on.

For the practice itself, see buying an accounting practice in Canada. Listings are under accounting practices for sale.

What to ask the seller for

• The firm’s or professional corporation’s current permit from CPA Manitoba, with any conditions or restrictions attached to it.
• The corporation’s share register and director and officer list, so you can check each against section 26.
• Records of past notices to CPA Manitoba’s secretary about changes in shareholders, directors or officers.
• A breakdown of the work by type, to see which services need a permit and which fall within the section 38 exceptions.
• The plan for any departing member who still holds voting shares, with dates against the 90-day rule.