Summary
This Oklahoma Attorney General Opinion addresses whether an out-of-state professional corporation owned in part by an Employee Stock Ownership Plan may qualify to do business in Oklahoma and obtain a public-accounting permit. The opinion concludes that the firm is eligible under the Oklahoma Professional Entity Act and the Oklahoma Accountancy Act when the ESOP trustees are licensed accountants and applicable statutory requirements are satisfied.
Topics
Practice areas
Questions Presented
- Whether an out-of-state professional corporation whose shares are held in part by an ESOP administered by licensed CPAs may qualify to do business in Oklahoma under the Oklahoma Professional Entity Act.
- Whether the same professional corporation may register and receive a permit to practice public accounting in Oklahoma under the Oklahoma Accountancy Act.
Holdings
- An out-of-state professional corporation may qualify to do business in Oklahoma under the Oklahoma Professional Entity Act when the ESOP's shares are legally owned by trustees who are licensed accountants, even if unlicensed employees hold equitable interests as ESOP participants, assuming compliance with the other statutory requirements.
- An out-of-state professional corporation that qualifies under the Professional Entity Act may register and receive a permit to practice public accounting under the Oklahoma Accountancy Act when the ESOP shares are legally owned by licensed CPA trustees and the firm otherwise satisfies the statutory requirements.
Key quotations
“For any professional corporation --domestic or qualified foreign--only individuals who are licensed or otherwise permitted to practice the relevant profession may hold an ownership interest.” (¶9)
“An out-of-state accounting firm formed as a professional corporation that is owned by an Employee Stock Ownership Plan ("ESOP") is eligible to (1) qualify to do business in Oklahoma pursuant to the Oklahoma Professional Entity Act, 18 O.S.2021 & Supp.2024, §§ 801 - 819, and (2) register and receive a permit to practice public accounting from the Oklahoma Accountancy Board pursuant to the Oklahoma Accountancy Act, 59 O.S.2021 & Supp.2024, §§ 15.1 -- 15.38, so long as the ESOP's trustees are licensed accountants.” (¶19)
Factual background
An out-of-state accounting firm converted from a limited liability partnership to a professional corporation, with an ESOP holding forty-two percent of the firm's shares. The ESOP is administered by five trustees, each of whom is a certified public accountant, while some ESOP participants may be unlicensed employees. The firm sought to qualify to do business in Oklahoma and renew its permit to provide professional accounting services.
Procedural history
The Oklahoma Accountancy Board requested an Attorney General opinion after an out-of-state accounting firm converted from a limited liability partnership to a professional corporation and sought to renew its Oklahoma permit. The request asked whether the firm's ESOP ownership structure prevented qualification to do business under the Oklahoma Professional Entity Act or registration and permitting under the Oklahoma Accountancy Act.