CPA Ontario Introduces New Regulations Governing Alternative Practice Structures

Key takeaways

• Alternative practice structures (APS) in accounting create new regulatory requirements in Ontario, aiming to clarify effective control of CPA firms.
• The amended Regulation 10-1 introduces a definition of ‘effective control’ and requires disclosure of arrangements that affect it.
• Firms must now obtain registrar approval for changes related to effective control and significant structural changes, with advanced notice required.

Background

Alternative practice structures (APS), already firmly established in the United States, are generating significant interest and activity in the Canadian market, particularly in regard to accounting firms.

At a basic level, implementing an APS involves an accounting firm transferring all lines of business not required to be held in a Chartered Professional Accountants (CPA)-owned firm, together with back-office and administrative functions, to a service company that is not subject to regulatory ownership constraints and can therefore raise equity financing via private equity or the public markets. CPA Ontario previously released bulletins commenting on APS, but had not updated its regulations or provided specific guidance as to whether and to what extent such structures are permissible in Ontario.

CPA Ontario has now amended Regulation 10-1, effective September 17, 2026, to introduce new requirements relating to the “effective control” of CPA firms. Navigating these regulations will be of critical importance to any accounting firm or investor wishing to implement an APS or APS-like structure, whether as part of, or in anticipation of, an equity financing transaction. This Update summarizes the key regulatory changes and their implications for registered firms and their advisors.

Key amendments

New definition of ‘effective control’

The amended Regulation 10-1 introduces a definition of “effective control”. This means the ability to direct the affairs and assets of an organization, or to make significant decisions, directly or indirectly, such as through the ownership of voting interests, the appointment of directors, or through other means.

Accounting firms in Ontario must be 100% owned by licensed CPAs. The concept of effective control goes beyond formal legal ownership to capture governance arrangements, contractual rights, financial relationships and other mechanisms that enable a party to direct or significantly influence important decisions.

Consequences of effective control

Registration requirements for firms now include two new conditions directed at effective control:

• Disclosure of effective control arrangements (section 3.3). An applicant firm must disclose all “arrangements and business arrangements in respect of effective control of the firm, if any.”
• No impermissible effective control (section 3.4). An applicant firm must not have “entered into any agreement or business arrangement that may impact effective control of the firm as it relates to the ability of the firm and the members associated with it to meet their obligations under the Act, Code, by-laws and Regulations, and attests to this being the case.”

Read together, the above requirements suggest agreements and business arrangements involving effective control are permissible only if they are appropriately disclosed to CPA Ontario and they do not impact effective control of the firm as it relates to the ability of the firm and its members to meet their obligations under Chartered Professional Accountants of Ontario Act, 2017, and CPA Ontario’s Code of Professional Conduct, General By‑Law and Regulations (collectively, the Act, Code, by-laws and Regulations.”) It remains unclear how broadly CPA Ontario will apply the latter prohibition.

The consequence of non-compliance with these regulations is non-renewal and de-registration, as discussed below.

Expanded continuing disclosure obligations and approval requirement

Regulation 10-1 expands firms’ ongoing disclosure obligations in several ways. Importantly, changes disclosed pursuant to the new regulations are subject to the registrar’s consent, so the amended regulation effectively imposes a regulatory approval requirement on APS and APS-like structures where none existed previously.

• 30‑day advance disclosure of changes to effective control information (section 18.2A). In respect of sections 3.3 and 3.4, a firm must disclose to the registrar any changes in the information submitted and/or attested to in its application for registration as a firm 30 days prior to any implementation of the change.
• 30‑day advance disclosure of significant structural changes (section 18.2B). A firm must disclose to the registrar any significant change in the practice, composition or structure of the firm 30 days prior to implementation. This includes
  • a merger, acquisition, closure or dissolution of the firm
  • any change in shareholder, director, officer or articles of incorporation
  • entry into agreements and business arrangements in respect of effective control of the firm.
• Disclosure of agreements that may impact effective control (section 18.2C). A firm must disclose to the registrar if it has entered into any agreement or business arrangement that may impact effective control of the firm as it relates to the ability of the firm and the members associated with it to meet their obligations under the Act, Code, by‑laws and Regulations.

These changes supplement the existing requirement in section 18.2, which continues to require firms to disclose to the registrar any changes in the information submitted and/or attested to in their application for registration as a firm within 30 days of the change. The new provisions add a forward‑looking obligation for matters relating to effective control and significant practice or structural changes. Notification must now occur at least 30 days before implementation. As noted above, all such changes are subject to the registrar’s approval.

CPA Ontario’s parallel guidance states that this advance notification is intended to allow the registrar to assess whether proposed arrangements remain consistent with the firm’s continued eligibility for registration.

New renewal framework for firm registration

The amendments introduce a renewal mechanism that is closely linked to changes in firm structure and effective control:

• Renewal where changes are not approved (section 19B.1). Where changes in the information submitted by a firm pursuant to section 19 are not approved by the registrar, the firm must apply for renewal of its registration by making an application for renewal in the prescribed form and paying the prescribed fee.
• Registrar may deem renewal application required (section 19B.2). Where information disclosed under sections 18.2B and 18.2C, or other information that comes to the registrar’s attention, may indicate that a change in the approved firm structure has occurred or is going to occur, the registrar may deem that an application for renewal is required.
• No renewal where effective control is relinquished (section 19B.3). The registrar shall not renew the registration of a firm that has, or intends to, relinquish effective control contrary to section 3.4.
• Deregistration where registration not renewed (section 19B.4). A firm whose registration has not been renewed shall be deregistered.

In substance, the registrar gains an additional gatekeeping point at renewal, with an express prohibition on renewing registrations where effective control has been, or will be, relinquished in a way that is inconsistent with Regulation 10-1.

Expanded appeal rights

Section 36 has been amended so that a person who is refused registration or renewal as a firm may appeal the registrar’s decision to the Admission and Registration Committee. Appeal rights remain available where a firm is registered subject to restrictions and/or conditions on practice, becomes subject to restrictions and/or conditions on practice, is suspended or is deregistered.

Implications for CPA firms and their advisors

The amendments, together with CPA Ontario’s guidance on alternative practice structures and effective control, have several practical implications.

Alternative practice structures and private equity investment

With these amendments, CPA Ontario has indicated it intends to exercise a high degree of oversight and scrutiny over any APS transactions and structures in Ontario. The regulations also underscore the fact that the typical APS model used in U.S. transactions will not translate directly to Canada. The economics and governance mechanisms of any proposed APS in Canada will need to be carefully developed and tailored in light of these new regulations and the rapidly evolving regulatory landscape in other provinces.

In particular, management services agreements, debt instruments and other contractual arrangements commonly used in APS should be carefully assessed, as they may affect governance, decision‑making authority or the firm’s ability to meet its professional obligations. The CPA Ontario guidance accompanying Regulation 10-1 states that arrangements which in substance transfer control or significant influence to non‑CPAs are incompatible with the requirement that firms be controlled by CPA Ontario members.

An assessment of effective control therefore needs to look beyond headline ownership percentages to consider

• governance rights and approval authorities (for example, vetoes, reserved matters and board composition)
• economic arrangements (including incentive structures and priority returns)
• contractual restrictions (such as non‑compete, exclusivity and termination rights)
• decision‑making structures across the professional firm and any related service entities.

For significant arrangements, firms should consider documenting their analysis of why effective control remains with CPAs, as this may assist in responding to registrar queries and in demonstrating that the firm has consciously assessed compliance with Regulation 10-1.

Existing governance arrangements and future transactions

For some CPA firms, the new requirements may warrant a review of current management services agreements, strategic partnerships, shareholder and partnership agreements, debt arrangements and other contracts to confirm that effective control remains with CPAs who are subject to CPA Ontario’s oversight and professional obligations, and that current structures are consistent with Regulation 10-1 and the accompanying guidance.

Proactive disclosure and regulatory engagement

The move from a predominantly retrospective obligation (disclosure within 30 days after a change) to a prospective model (disclosure at least 30 days before implementation) is significant. Firms must now

• identify, at an early stage, proposed changes to structure, governance or control that may be material for effective control
• build regulatory notification into transaction timetables for mergers, acquisitions, external investments and any contracts that could affect effective control
• anticipate that the registrar may, in some cases, require a renewal application and may decline to renew where effective control will no longer rest with CPAs, leading to deregistration

Where proposed structures are novel or complex, for example, where private equity investors or other non‑CPAs will have significant economic rights or governance influence, early engagement with CPA Ontario’s Registrar’s Office may help clarify expectations and reduce execution risk. Firms that take these steps will be better placed to assess their current structures, evaluate potential business models and investment opportunities, and maintain compliance with CPA Ontario’s ownership and effective control requirements.