AN ACT to create and enact a new section to chapter 43-02.2 of the North Dakota Century Code, relating to ownership of accounting firms by qualified plans; and to amend and reenact subsection 3 of section 10-31-04 and subsection 3 of section 43-02.2-06 of the North Dakota Century Code, relating to minority ownership of an accounting firm.
Summary
HB 1156 amends North Dakota law governing ownership of accounting firms and professional organizations. The bill updates the rules for permit-to-practice eligibility so that, in addition to the existing requirement that a simple majority of ownership and voting rights be held by licensed accountants, the minority ownership interest may also be held by a qualified plan under the Internal Revenue Code, including an employee stock ownership plan (ESOP). It also clarifies that professional organizations formed to provide services under chapters 43-02.2 and 43-03 may have minority owners.
The bill further creates a new provision allowing an accounting firm to be wholly owned by a qualified plan, so long as specified professional-control conditions are met. Those conditions include that at least 51 percent of the beneficial ownership of the plan belongs to North Dakota or other recognized-jurisdiction CPAs or licensed public accountants, all in-state practitioners hold valid licenses, and a simple majority of the firm’s board of directors are licensed accountants. In effect, the bill expands permissible ownership structures for accounting firms while preserving professional licensure and control requirements.
Impact
HB 1156 changes chapters 10-31 and 43-02.2 of the North Dakota Century Code by broadening who may hold ownership interests in accounting firms and by expressly authorizing firm ownership through qualified retirement plans, including ESOPs. It preserves the state’s licensing and governance safeguards by requiring licensed accountants to retain majority ownership or control benchmarks, depending on the ownership structure. The bill affects accounting firms, CPAs, licensed public accountants, professional organizations, and retirement plans that hold business interests.
Sentiment
The bill appears to have been received very positively and without recorded opposition. It passed the House 91-0 and the Senate 47-0, indicating broad bipartisan support. The lack of committee transcript material suggests there was little publicly recorded controversy or debate around the measure.
Contention
No notable contention is reflected in the available record. The main policy issue inherent in the bill is balancing expanded ownership flexibility for accounting firms—especially through employee ownership or retirement-plan structures—against the traditional requirement that licensed professionals maintain control. The bill resolves that issue by keeping licensure and board-majority safeguards in place, which likely reduced opposition from regulators or the profession.