C-48.1, r. 16 - Regulation respecting the practice of the chartered professional accountancy profession within a partnership or a joint-stock company

Updated to 1 September 2012

This document has official status.

chapter C-48.1, r. 16

Regulation respecting the practice of the chartered professional accountancy profession within a partnership or a joint-stock company

Chartered Professional Accountants Act

(chapter C-48.1, s. 2).

Professional Code

(chapter C-26, ss. 93, pars. g and h and 94, par. p).

The former alphanumerical designation of this Regulation was: chapter C-48, r. 12.

O.C. 57-2003; S.Q. 2012, c. 11, ss. 34 and 43.

CHAPTER I PURPOSE

1. Members of the Ordre des comptables professionnels agréés du Québec are authorized to practise their profession within a limited liability partnership or joint-stock company holding itself out as a partnership or company of chartered professional accountants or within which one or more members offer assurance services provided the following conditions are met:

(1)  at all times, more than 50% of the voting rights attached to the shares of the partnership or company are held:

(a)  by members of the Order or of a professional order of chartered accountants, certified general accountants or certified management accountants or the equivalent in a Canadian province or territory, who are practising the profession within the partnership or company;

(b)  by legal persons, trusts or any other enterprise, the voting rights or partnership shares of which are held wholly by one or more members of the Order or by persons referred to in subparagraph a who are practising the profession within the partnership or company;

(c)  by a combination of persons contemplated in a and b;

(2)   a majority of the directors of the board of directors of the joint-stock company, a majority of the partners or, where applicable, of the managers appointed by the partners to manage the affairs of the limited liability partnership, are persons referred to in subparagraph a of subparagraph 1 who are practising the profession within the partnership or company;

(3)  the board of directors or a similar internal management board is made up of a majority of persons referred to in subparagraph a of subparagraph 1, who shall, at all times, constitute the majority of the quorum of such boards;

(4)  one or more members of the Order who engage in professional activities within the partnership or company hold a partnership share or company share with voting rights;

(5)  the chair of the board of directors of the joint-stock company, or in the case of a limited liability partnership, the person who performs similar functions, is a partner or shareholder with voting rights and is a person referred to in subparagraph a of subparagraph 1;

(6)  only a person referred to in subparagraph a of subparagraph 1 who is practising the profession within the partnership or company is granted, by voting agreement or proxy, the voting right attached to a company share or partnership share held by another person referred to in subparagraph a of subparagraph 1, or by a legal person, a trust or another enterprise contemplated in subparagraph b of subparagraph 1.

The member of the Order shall ensure that the conditions set out in the first paragraph are included in the articles of constitution of the joint-stock company or in the contract creating the limited liability partnership and that these documents also stipulate that the partnership or company is constituted for the purpose of carrying on professional activities.

O.C. 57-2003, s. 1; S.Q. 2012, c. 11, ss. 34 and 43.

2. In all other circumstances, members of the Order are authorized to practise their profession within a limited liability partnership or joint-stock company provided the following conditions are met:

(1)  at all times, more than 50% of the voting rights attached to the shares of the partnership or company are held:

(a)  by the following persons practising in the partnership or joint-stock company:

i.  members of a professional order governed by the Professional Code (chapter C-26);

ii.  professional accountants who are members of a professional order of accountants or the equivalent in a Canadian province or territory;

iii.  real estate or mortgage brokers holding a licence issued by the Organisme d’autoréglementation du courtage immobilier du Québec under the Real Estate Brokerage Act (chapter C-73.2);

iv.  insurance representatives, claims adjusters and financial planners holding a certificate issued by the Autorité des marchés financiers under the Act respecting the distribution of financial products and services (chapter D-9.2);

v.  dealers, advisers and investment fund managers registered as such in accordance with Title V of the Securities Act (chapter V-1.1);

vi.  actuaries who are members of the Canadian Institute of Actuaries; and

vii.  persons carrying on activities similar to those referred to in subparagraphs iii to v under an Act of another Canadian province or territory setting out rules similar to those that apply to members of the Order;

(b)  by legal persons, trusts or any other enterprise, the voting rights or partnership shares of which are held wholly by one or more persons contemplated in subparagraph a;

(c)  by a combination of persons contemplated in subparagraphs a and b;

(2)  a majority of the directors of the board of directors of the joint-stock company as well as a majority of partners or managers appointed by the partners to manage the affairs of the limited liability partnership are persons contemplated in subparagraph a of subparagraph 1;

(3)  the board of directors or a similar internal management board is made up of a majority of persons contemplated in subparagraph a of subparagraph 1 who shall, at all times, constitute the majority of the quorum of such boards.

The member of the Order shall ensure that the conditions set out in the first paragraph are included in the articles of constitution of the joint-stock company or in the contract creating the limited liability partnership and that these documents also stipulate that the partnership or company is constituted for the purpose of carrying on professional activities.

O.C. 57-2003, s. 2; S.Q. 2012, c. 11, s. 43.

CHAPTER II OTHER CONDITIONS

DIVISION I TERMS AND CONDITIONS

3. A member of the Order may practise his profession within a partnership or company if he:

(1)  has provided written confirmation to the Order from a competent authority attesting that the partnership or company has taken out professional liability coverage in accordance with Division II of this chapter;

(2)  has provided written confirmation to the Order from a competent authority attesting to the existence of the company where the member practises within a joint-stock company;

(3)  where applicable, has provided to the Order a certified true copy of the declaration from the competent authority attesting to the continuance of the general partnership as a limited liability partnership;

(4)  has provided written confirmation to the Order attesting that the partnership or company is duly registered in Québec;

(5)  has provided written confirmation to the Order attesting that the partnership or company maintains an establishment in Québec;

(6)  has provided an irrevocable written authorization to the Order from the partnership or company within which the member practises allowing a person, committee, disciplinary body, or tribunal referred to in section 192 of the Professional Code (chapter C-26), to obtain from any person any document referred to in section 15 or a copy thereof;

(7)  has paid, where applicable, the fees determined by the Order pursuant to paragraph h of section 93 of the Professional Code.

O.C. 57-2003, s. 3.

4. Furthermore, a member shall send the Order a sworn statement, duly completed on the form provided by the Order, which shall include the following information:

(1)  the partnership or company name and the other names used in Québec by every partnership or company within which the member practises the profession as well as the business number issued by the enterprise registrar for such partnership or company;

(2)  the legal form of the partnership or company;

(3)  the address of the head office of the partnership or company and the addresses of its establishments in Québec;

(4)  the professional activities carried on by the member within the partnership or company;

(5)  the name, home and business address of the member and his status within the partnership or company;

(6)  where a member practises his profession within a joint-stock company, the names and home addresses of the directors of such company and, where applicable, the professional order or equivalent to which they belong;

(7)  where a member practises his profession within a limited liability partnership, the names and home addresses of all partners domiciled in Québec and, where applicable, the names and home addresses of the managers appointed to manage the partnership’s affairs, whether or not they be domiciled in Québec, as well as the professional order or equivalent to which these partners or managers belong;

(8)  a written confirmation provided by the member attesting that the holding of company or partnership shares and the rules respecting the management of the partnership or company satisfy the conditions set out in this Regulation;

(9)  the names of the shareholders contemplated in subparagraph 1 of the first paragraph of section 1, specifying the percentage of voting rights held by each shareholder;

(10)  where shareholders referred to in subparagraph b of subparagraph 1 of the first paragraph of section 1 are concerned, a confirmation that the conditions set out in that subparagraph are met.

O.C. 57-2003, s. 4.

5. A member who fails to satisfy the conditions set out in sections 3 and 4, prior to practising the profession within a partnership or company, shall not be authorized to practise his profession within a partnership or company.

O.C. 57-2003, s. 5.

6. Where two or more members practise their profession within a partnership or company, a representative may satisfy the conditions set out in sections 3 and 4 on behalf of the members of such partnership or company. Under this Regulation, the representative is thus mandated by these members to respond to requests made by the syndic, an inspector, an investigator or any other representative of the Order, and to provide, where applicable, the documents that members of the Order are required to submit.

Where a partnership or company contemplated in section 1 is concerned, a representative shall be designated.

The representative shall be a member of the Order who is either a partner or a company director and a shareholder with voting rights.

Except for paragraphs 4 and 5 of section 4, the representative shall ensure that the information provided in the statement is accurate.

O.C. 57-2003, s. 6.

7. A member shall be exempt from satisfying the conditions set out in sections 3 and 4 if another member or a representative of the partnership or company has already fulfilled these conditions.

O.C. 57-2003, s. 7.

8. The documents referred to in paragraphs 1, 2, 4 and 5 of section 3, together with the statement contemplated in section 4, shall be updated annually by the member or the representative not later than 31 March of each year.

O.C. 57-2003, s. 8.

9. A member who no longer satisfies one of the conditions set out in this Regulation or in Chapter VI.3 of the Professional Code (chapter C-26) shall immediately cease to be authorized to practise the profession within a partnership or company.

O.C. 57-2003, s. 9.

10. A member or his representative shall immediately notify the Order of the cancellation of the insurance coverage specified in Division II, of the striking off, dissolution, assignment of property or bankruptcy, or voluntary or forced liquidation of the partnership or company or of any other event that would prevent the partnership or company from carrying on its activities, and of any amendment to the information included in the statement that would contravene the conditions set out in section 1 or 2.

O.C. 57-2003, s. 10.

DIVISION II PROFESSIONAL LIABILITY COVERAGE

11. To be authorized to practise the profession in accordance with this Regulation, a member of the Order practising his profession within a partnership or company shall furnish and maintain, on behalf of the partnership or company, by means of an insurance or suretyship contract or by joining a group insurance plan contract entered into by the Order or by contributing to a professional liability insurance fund established in accordance with section 86.1 of the Professional Code (chapter C-26), coverage for liabilities of the partnership or company arising from fault or negligence on the part of members in the practise of the profession within such partnership or company.

O.C. 57-2003, s. 11.

12. The following minimal conditions for such coverage shall be set out in a specific rider or contract:

(1)  an undertaking by the insurer or surety to pay on behalf of the partnership or company, over and above the amount of the insurance coverage the member must take out in accordance with the Règlement sur l’assurance de la responsabilité professionnelle des membres de l’Ordre des comptables agréés du Québec (chapter C-48.1, r. 2) or the insurance coverage actually taken out by the member if it is higher, up to the amount of the coverage, any amount that the partnership or company may be legally bound to pay to injured third parties on a claim made during the period of coverage and arising from the member’s fault or negligence in the practice of his profession; the insurer’s obligation shall extend to all claims to which the member’s liability insurance coverage does not apply as a result of the member’s fault or negligence in the practice of the profession;

(2)  an undertaking by the insurer or surety to take up the cause of the partnership or company and defend it in any lawsuit launched against it and to pay, in addition to the amounts covered by the liability insurance, all legal costs of lawsuits against the partnership or company, including the investigation and defence costs and interest on the amount of coverage;

(3)  an undertaking that the coverage shall extend to all claims submitted in the 5 years following the period of coverage during which a member of the partnership or company dies, withdraws from the partnership or company or ceases to be a member of the Order, so as to maintain coverage for the partnership or company for the faults or negligence of the member while he practised the profession within the partnership or company;

(4)  the coverage shall be at least $1,000,000 per claim and for the aggregate of claims made against the partnership or company in a 12-month period of coverage;

(5)  where a member is a sole practitioner, as the unique shareholder of a joint-stock company in which no other member is an employee, the coverage shall be at least $500,000 per claim and for the aggregate of claims made against the company in a 12-month period of coverage;

(6)  an undertaking by the insurer or surety to provide the secretary of the Order with a 30-day notice of intent to cancel the insurance or suretyship contract, or to amend one of the conditions set out in this section;

(7)  an undertaking by the insurer or surety to provide the secretary of the Order with a notice that the insurance or suretyship contract has not been renewed; such notice shall be sent within 15 days following the expiration of the contract.

O.C. 57-2003, s. 12.

13. The suretyship shall be granted by a bank, savings and credit union, trust or insurance company which shall be domiciled in Canada and hold and maintain sufficient property in Québec to satisfy the liability coverage required under this division.

The institution referred to above shall undertake to provide the coverage in accordance with the conditions set out in this division, without availing itself of the benefits of division and discussion.

O.C. 57-2003, s. 13.

DIVISION III ADDITIONAL INFORMATION

14. On the date when a general partnership continues as a limited liability partnership or when a joint-stock company is constituted, the member of the Order shall send his clients a notice informing them of the nature and consequences of such change in status, particularly as concerns his professional liability and the liability of the partnership or company.

O.C. 57-2003, s. 14.

15. The documents which the member of the Order has been authorized by the partnership or company to communicate or copy in accordance with paragraph 6 of section 3 are as follows:

(1)  if the member practises within a joint-stock company:

(a)  the up-to-date register of the company’s articles and by-laws;

(b)  the up-to-date share register;

(c)  the up-to-date register of directors;

(d)  any shareholder agreement, voting agreement and related amendments;

(e)  the declaration of registration and any update thereof;

(f)  the names and home addresses of the company’s main officers;

(2)  if the member practises within a limited liability partnership:

(a)  the declaration of registration and any update thereof;

(b)  the partnership agreement and amendments;

(c)  the up-to-date register of partners;

(d)  if applicable, the up-to-date register of managers;

(e)  the names and home addresses of the partnership’s main officers.

O.C. 57-2003, s. 15.

CHAPTER III DESIGNATIONS

16. In addition to the requirement under section 187.13 of the Professional Code (chapter C-26), a member of the Order who practises his profession within a limited liability partnership is authorized to include in or after its name the words “firm of professionals governed by the Professional Code” or the abbreviation “FPGPC”.

A member of the Order who practises his profession within a joint-stock company is also authorized to include such words in or after its name or use such abbreviation.

O.C. 57-2003, s. 16.

CHAPTER IV TRANSITIONAL AND FINAL PROVISION

17. A member of the Order who practises his profession within a joint-stock company incorporated for that purpose before 20 February 2003 shall, not later than in the year following such date, satisfy the conditions set out in this Regulation.

A member of the Order who on 15 May 2012 was a member of the Ordre des comptables en management accrédités du Québec and practised in a joint-stock company incorporated for that purpose before 6 October 2011, which is the date of coming into force of the Regulation respecting the practice of the profession of certified management accountant within a partnership or joint-stock company (chapter C-26, r. 33.1), shall, no later than 6 October 2012, comply with this Regulation.

O.C. 57-2003, s. 17; S.Q. 2012, c. 11, s. 43.

18. (Omitted).

O.C. 57-2003, s. 18.

REFERENCES

O.C. 57-2003, 2003 G.O. 2, 857

S.Q. 2008, c. 9, s. 143

S.Q. 2012, c. 11, ss. 32, 34 and 43