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

In New Brunswick, much of the working detail for accounting practices sits in the regulator’s by-laws. CPA New Brunswick says the Chartered Professional Accountants Act of New Brunswick was enacted on September 1, 2014 and, among other things, provides for the regulation of members and firms. The by-laws then say who needs a permit, who may own and direct a professional corporation, and how a firm is named and listed. A buyer should read those by-laws, not just the Act, before pricing anything. This guide follows the version of the by-laws approved on 23 June 2023, and sits beside the national guide to buying an accounting practice in Canada.

The regulator and where its rules live

CPA New Brunswick regulates the profession in the province, and its by-laws are the working rulebook for practices. They refer to several lists: a Register, a PC Register for professional corporations, a Specialist Register and a Firm Roster that holds firms’ names and addresses. Ask which of them the practice and its people are entered on. This guide covers New Brunswick’s by-laws only, so do not assume a rule from another province applies here.

Permits for practice leaders

Under By-Law 16.01, all practice leaders whose names are entered in the Register, PC Register, Specialist Register or Firm Roster are required to obtain a public practice permit. CPA New Brunswick’s own permit application form states that a firm registration is required to provide public practice services. So the practice and the person leading it each have a status to check. Under By-Law 16.08, permit holders must also tell the Registrar of changes to the particulars in their application within thirty days, which matters if a purchase changes who leads the practice. Under By-Law 16.09, the Registrar may cancel or suspend a permit if the holder ceases to meet the requirements or fails to comply with any provision of the Act, the by-laws or the policies.

Who may direct and own a professional corporation

The by-laws set two tests for a professional corporation, called a PC. Under By-Law 18.08, all directors of a PC must be members of CPA New Brunswick. For share ownership, By-Law 18.09 splits the test by who owns the PC. Where it is legally or beneficially owned by certain people, a majority of voting shareholders must be members. Those people are a member, an immediate family member of a member, meaning a spouse, child or parent, a trust all of whose beneficiaries are such persons, and a body corporate all of whose issued shares are legally or beneficially owned by such persons. Where the PC is owned by anyone else, all voting shareholders must be members. Both tests are about the by-law’s wording, so have a lawyer map every shareholder against it.

What a sale can put at risk

A purchase that changes the shareholders or directors of a PC can change which test applies. If a buyer who is not a member is to hold voting shares, check whether the second test, which requires all voting shareholders to be members, would then apply. By-Law 18.10 lets the Registrar cancel or suspend a professional corporation licence if the holder ceases to meet the renewal requirements or fails to comply with the Act, the by-laws or the policies. Ask CPA New Brunswick, in writing, how it would treat the proposed post-closing structure before the closing date, and make that answer a condition of the deal.

Firm names and the Firm Roster

By-Law 20.01 requires CPA New Brunswick to maintain a Firm Roster, and By-Law 20.02 makes the name of a firm subject to the Registrar’s approval. A buyer who plans to keep the seller’s name, add their own or merge two practices therefore needs the Registrar’s approval of the resulting name, not just a corporate registry filing. Raise the name early. It affects signage, client letters and the engagement documents that clients will see after closing.

What to ask the seller for

BDC notes that due diligence gives information on a target’s finances, prospects and legal issues, and for a New Brunswick practice the legal issues are mostly about status with CPA New Brunswick. The tax side of a sale, which the Canada Revenue Agency sets out for sellers, is a separate track from the permits and registers below.

• Each practice leader’s public practice permit, and confirmation of the register or roster on which the practice appears.
• If a PC is involved, its professional corporation licence and a current list of directors and voting shareholders showing which are members.
• Any trust or family holding that sits in the ownership chain, with the documents showing who the beneficiaries are.
• Correspondence with the Registrar about the firm’s name, past conditions on the licence or permit, and any renewal issues.
• The firm’s Firm Roster entry, so names and addresses match the documents you will sign.

Browse accounting practices for sale to see how current listings describe their structures, and ask each seller which by-law test applies to theirs.