Section 288-11-004 - Partnerships, Professional Corporations, Limited Liability Companies and other Permissible Forms of Practice; General Requirements; Ownership004.01 If a natural person who is not a certified public accountant in this or some other state or jurisdiction is permitted under Section 1 - 162.01 of the Act to be an owner of a business entity licensed in Nebraska to practice public accounting then: 004.01A Such person shall not hold himself or herself out as a certified public accountant.004.01B Such person shall not hold himself or herself out to the general public or any client of such business entity licensed in Nebraska by the use of the term owner, partner, shareholder, director, officer or limited liability company member for purposes of describing his or her status in the business entity, regardless of whether such person may occupy such position by reason of common law, statutory law, ownership, or election unless with a disclaimer indicating such person is not a CPA. Such person may hold himself or herself out as a principal.004.01C The name of such person shall be provided to the Board by a business entity in connection with the granting or renewal of a permit in Nebraska to such business entity, and such person shall be in compliance with the provisions of Section 1-162.0(b) through (i) and (2) of the Public Accountancy Act.004.02Limitations; Equity Ownership. Natural persons who are not certified public accountants in this or any other state or jurisdiction but who are owners of a business entity licensed in Nebraska to practice public accounting, shall not directly or indirectly, including as a beneficiary, (a) hold, in the aggregate, more than forty-nine (49%) of such business entity's equity capital or voting rights, or (b) receive, in the aggregate, more than forty-nine (49%) of such business entity's profits or losses, or (c) exceed in number 49% of the total number of natural persons who are owners of such business entity.004.03Limitations; Use of Designation Principal. A person who is an owner and who is licensed in this state or any other state or jurisdiction as a certified public accountant may not hold himself or herself out as a principal.004.04Other forms of practice. These rules shall be applied to individuals and to any business entity licensed in Nebraska to practice public accounting in a manner consistent with carrying out the intent of these rules.004.05Eligibility; Disqualification; Owners. With respect to owners who are not licensed in this state or any other state or jurisdiction as certified public accountants, if at any time the board determines that any such owner no longer is eligible to be an owner by virtue of not being in compliance with the criteria set forth in Section 1-162.01 of the Public Accountancy Act, such owner and the business entity in which ownership exists shall be notified that if a board hearing is not requested within thirty (30) days of the date of mailing notification of such determination, an order will then be entered that such owner must divest himself, herself or itself of ownership in the business entity within sixty (60) days of entry of the order.004.06Professional Corporations; other requirements. The principal executive officer of a professional corporation licensed in Nebraska to practice public accounting shall be an owner and a director who is a licensed certified public accountant. Directors and officers who are not licensees shall not exercise any authority whatsoever over professional matters relating to the practice of public accountancy.004.07 A non-natural person (hereafter "Parent Company"), other than an employee stock ownership plan, permitted under Section 1-162.01 of the Act to be an owner of a business entity licensed in Nebraska under Section 1 -136 of the Act (hereafter "Nebraska permit holder") shall: 004.07A Provide to the Board the name of the Parent Company and the names of all owners in connection with the granting or renewal of a permit in Nebraska of the Nebraska permit holder; and004.07B Remain in compliance with the provisions of Section 1-162.01 of the Act, and demonstrate to the Board upon application or renewal for a firm permit for the Nebraska permit holder, that (1) any other non-natural person owning any profits and losses, equity or voting interest in the Parent Company also meets the requirements of 11.004.07 and; (2) the natural persons who are either owners or who have an ownership or beneficial interest, directly or indirectly, in such Parent Company shall, as if all were direct owners of the Nebraska Permit holder, meet the requirements of Section 1-162.01(1)(b) through (i) of the Act.004.08 If an owner of a business entity licensed in Nebraska to practice public accountancy is an employee stock ownership plan ("ESOP"), it shall comply with the following conditions: 004.08A No shares of stock in the licensed business entity may be held by a nonemployee, former employee, or person not actively participating in the licensed business entity. Shares of stock distributed from an ESOP and immediately put back to the business entity for repurchase shall not be considered to be held by a terminated participant or beneficiary. The licensed business entity must meet any requirements of law that would allow the business entity to restrict ownership of shares of stock to active employees and the ESOP and to restrict participants' right to demand a distribution in the form of stock in the ESOP.004.08B Unallocated shares under the ESOP shall be treated for the purposes of compliance with Section 1-162.01(b) through (e) of the Act as if such unallocated shares are allocated each year to eligible participants in the ESOP based on a uniform allocation method as allowed by laws governing an ESOP. The trustees of the ESOP shall specify the results of such allocation in connection with the granting or renewal of a permit in Nebraska of the Nebraska permit holder.004.08C If under Section 1-162.01(k) a special independent trustee or fiduciary is appointed, the special trustee or fiduciary may not exercise any authority whatsoever over professional matters relating to the practice of public accountancy.004.08D Although the trustee of the ESOP may be the legal owner of the shares of stock held in the ESOP, the Board shall look through the ESOP to all beneficial owners in the ESOP to determine compliance with Section 1-162.01(b) through (e) of the Act. The Board shall disregard any vesting rights to any shares of stock in determining the beneficial ownership under the ESOP. Furthermore, only those participants who have a stock account in the ESOP shall be taken into account as beneficial owners of the licensed business entity.004.08E All shares of stock allocated, directly or allocated pursuant to 004.08B, to beneficial owners in an ESOP shall be aggregated with any shares of stock directly owned by such natural persons to determine compliance with Section 1-162.01(b) through (e) of the Act.288 Neb. Admin. Code, ch. 11, § 004
Amended effective 9/22/2019