Consolidation of Three Professional Orders of Accountants – Creation of CPAs

On May 16, 2012, the Chartered Professional Accountants Act1 (the “CPAA”) came into force. The act brings together, within a single professional order, chartered accountants (“CA”), certified general accountants (“CGA”) and certified management accountants (“CMA”).

From now on, the latter are now all members of the Ordre des comptables professionnels agréés du Québec. Apart from the repercussions this change will have on their practice, the coming into force of the CPAA will also have an impact on the structural legal framework for the exercise of their profession.

This is because, for such accounting professionals practicing in a partnership, various amendments to the constating documents and legal structure of the firm are likely going to be necessary. Before taking that step however, we suggest that such professionals take advantage of the opportunity afforded by the coming into force of the CPAA to update all their relevant documents and, if they have not already done so, take the necessary steps to comply with the requirements of Quebec’s new Business Corporations Act2, if applicable.

Likely impact on the name of your firm and its branches

Under the CPAA, any person who was a member of the professional orders governing CAs, CGAs or CMAs on May 15, 2012 is henceforth a member of the Ordre des comptables professionnels agréés du Québec.

For the next ten years, each of these professionals is required under the CPAA to use the designation “CPA” in addition to his or her CA, CGA or CMA designation.

Also, an accounting professional authorized to issue an audit report or a review engagement report must add the designation “auditor” immediately after the CPA designation.

Concrete examples of this would thus be: (1) Given name – Surname, CPA Auditor, CA; (2) Given name – Surname, CPA Auditor, CGA; (3) Given name – Surname, CPA Auditor, CMA.

The use of the designation CA, CGA or CMA on its own is henceforth prohibited, and the same applies to the term “public accountant”.

Use of the term “public accountant” and the initials “CA”, “CGA” and “CMA” now prohibited

Use of the terms “chartered accountant”, “certified general accountant”, “certified management accountant” or “public accountant”, “auditor”, “auditeur” or “auditrice”, in their singular and plural forms, as well as their corresponding initials, can’t be used in the name of a firm.

Because of these prohibitions, any firm using a name that includes any of these prohibited terms must make the appropriate changes to the firm’s constating documents, by a date still to be determined.

It is important to note that use of the term “certified professional accountant” or the initials “CPA” in a firm’s name will henceforth only be possible for firms controlled by CPAs who actually practice there.

Otherwise, the firm will have to resign itself to using a name that contains no designation pertaining to the accounting profession.

Two birds with one stone: update the statutes, books and records of your firm to comply with the Business Corporations Act

On February 14, 2011, i.e. more than a year ago, Quebec’s new Business Corporations Act (the “QBCA”) came into force, as indicated in a previous Legal Bulletin. On that date, virtually all Quebec-incorporated companies were automatically continued under the QBCA, without any required filings, amendments or other formalities.

Despite the automatic continuance, the QBCA requires certain adjustments to the constating documents

Despite the automatic continuance, the QBCA does require some adjustments to be made to the corporation’s constating and organizing documents.

While some provisions in the corporate statutes may no longer be necessary, certain new ones may be required, such as those concerning pre-emptive rights.

Thus, under the QBCA, the adoption of “by-laws” is obligatory, and these will replace any existing “general by-laws”. The new by-laws must be adopted by the board of directors and ratified by the shareholders no later than the first annual meeting after February 14, 2011. Every corporation should have proper by-laws in effect by then.

The reissuance of share certificates is another formality necessary to comply with the new regime under the QBCA.

Finally, any existing shareholder agreement should be reviewed and modified so as to harmonize with the new legislation.

If you have not already done so, we recommend that you take advantage of the opportunity afforded by the changes required under the CPAA to ensure that your accounting firm’s books and records and legal structure also comply with the QBCA’s new requirements.

Our business law team can help you transition, update and optimize the legal structure of your firm under both the CPAA and the QBCA.

Our business law team is currently offering a competitive special rate for reviewing your constating and organizing documents, making recommendations and providing an estimate of the work required to meet the requirements of the new legislation.

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