Frequently Asked Questions

 

Who needs a Pre-69 corporate charter?

Any business offering engineering or surveying services in North Carolina will need to be registered as a Professional Corporation. The Professional Corporation Act states: “a professional corporation may issue shares of its capital stock only to a licensee as defines in GS 55B-2.” This section of the law goes on to state: “Provided, it shall be lawful in the case of professional corporations rendering services as defined in Chapters 83A, 89A, 89C, 89E, and 89F, for nonlicensed employees of the corporation to own not more than one-third of the total issued and outstanding shares of the corporation.”   

 

The law allows for an exemption from this requirement in GS 55B-15(a)(1) which states: “This Chapter shall not apply to the following: (1) A corporation which prior to June 5, 1969, was permitted by law to render professional services or the corporate successor  of that corporation by merger or otherwise by operation of law, provided there is no substantial change in the direct or indirect beneficial ownership of the shares of that corporation as the result of the merger or other transaction. For purposes of this subdivision, a change of twenty percent (20%) or less shall not be considered substantial.”

 

So, anyone who does not meet the 2/3 stock requirements for establishing or buying an engineering or surveying company, can avoid the requirements of GS 55B by purchasing a Pre-69 corporation.

 

What kind of companies have you helped?

• Publicly traded companies acquiring a NC engineering firm

• Private equity owned companies acquiring a NC engineering firm

• Large national or regional engineering companies opening offices in NC or acquiring a NC engineering firm.

• Contractors that wanted to enter the engineering business

• Non-licensed individuals that wanted to start an engineering business

 

What laws should I know about?

GS 89C The North Carolina Engineering and Land Surveying Act

GS 55B Professional Corporation Act

 

What rules should I know about?

NC Administrative Code Title 21- Occupational Licensing Boards and Commissions, Chapter 56 – Engineers and Surveyors

 

How does this work?

An entity that buys a Pre-69 normally either uses that corporation to operate their NC business or merges the Pre-69 into the company they want to operate in NC so that company becomes the corporate successor and exempt from GS 55B.

 

Do you provide legal services?

No. We are not a law firm. We sent years researching, finding and buying these old engineering companies. We sell the engineering corporations. We have worked with several law firms and can recommend experienced attorneys familiar with North Carolina Professional Corporation Act.

 

Do these Pre-69s have any liabilities?

Not to our knowledge. To minimize this risk, we have targeted finding corporations that have been administratively dissolved for years – almost all have been dissolved beyond any statue of limitations. We check for employer and income tax liens, property taxes, and liens and judgements. We cannot say with 100% certainty that there are no liabilities, but it is highly unlikely since they have been dormant for so many years.

 

Are they still administratively dissolved?

No. Each corporation we have for sale has been reinstated and in good standing with the NC Department of Revenue, NC Secretary of State and IRS. All the back taxes, penalties, interest and fees have been paid to clear them to be reinstated.

 

Are they registered with the North Carolina Board of Examiners for Engineers and Surveyors?

No. A resident Professional Engineer shall be the resident licensee at only one place of business at one time. Since I am co-founder and Principal of Three Oaks Engineering. We cannot register these corporations with the Board. Since these are empty, shell companies not offering services, registration is not required.

 

How do I know the Board will accept the corporation as a Pre-69?

Each corporation has a Confirmation of Exemption from GS 55B letter from the Board signed by the Board Counsel. We will not buy a corporation unless the Board Counsel concurs that it meets the eligibility for GS 55B-15(a)(1).

 

Does the Pre-69 allow me to do engineering and surveying or just engineering?

Engineering prior to 1975 included surveying, since a PE could survey with the PE license and did not have to have a separate PLS license until 1975.  The answer is yes, an engineering Pre-69 firm can be licensed to do surveying, provided all other requirements for resident professional are met.

 

Can I do other professional services such as architecture, landscape architecture, geology, or soil science? 

Each of these professional services have their own laws and regulations. Please read the state law and consult with your attorney. Architecture (GS 83A), Landscape Architecture (GS 89A), Geologist (GS 89E), Soil Science (GS 89F)

 

Is the corporation a C-corporation or Subchapter S?

We have both and do not change the election because if we changed from S to C, a corporation can only re-elect to be a S-Corp five years after converting back to C-Corp. This could potentially prevent a new owner from operating as a S-Corp. Therefore, we do not change how the corporation is taxed.

 

Once I have the Pre-69 is anything else required?

Yes. Prior to practicing or offering to practice engineering or land surveying services, the corporation must make application for licensure and comply with all the requirements, including, but not limited to, having a NC licensed PE employed by the company in responsible charge of the professional work in each location that provides engineering or land surveying for NC projects and as a resident professional in any NC location.

 

How do I know you have good title to the all the shares of the corporation?

We can provide a redacted copy of the Bill of Sale for the company. Under the Representations, Warranties and Covenants by Seller, Section (a) is Ownership; Authority; Title which is a lengthy legal representation. “Seller is the sole legal, beneficial, and record owner of the Shares and such Shares constitute all of the issued and outstanding capital stock of the Corporation.” 

 

Do you have the corporate book and corporate records?

Since the corporation was administratively dissolved for years, almost always the corporate book and records are either lost or destroyed. The articles of incorporation are on the NC Secretary of State’s webpage. We reconstitute and clean up the corporate records. We provide a board of director’s consent to clean up the corporate records, stock leger, stock certificate and re-issued bylaws. These are very generic and will not tell you anything about the company’s history.

 

Can you provide me the names of some of the companies you have worked with?

Most of the deals we have done are under a Non-Disclosure Agreement. We are not at liberty to release any details of any of the deals. Most of the deals involve an acquisition, therefore all the terms of the deal are confidential. However, we can provide you the names of attorneys that we have worked on these deals as references.

 

How much does a Pre-69 corporation cost?

Just like everything else, the price is driven by supply and demand. The number of engineering firms formed prior to 1969 is fixed, so demand outweighs supply. These are not cheap but a relatively small price to pay if an acquisition is involved. Please call for a current market price (919) 818-6401 or email jim.buck64@gmail.com.

 

How long does this process take?

You have already done the hardest part – finding one that is available for sale. If the Pre-69 is being purchased to operate, the process is very quick. The Pre-69 would need to be registered at the Board. This would be a matter of weeks.

 

If the Pre-69 is being merged into another corporation, this will take more time but can be done in less than a month. The longest time is getting the review and approval of the transaction from the Board Counsel. The attorneys normally write the Board Counsel with the details of the transaction and request an opinion letter that it meets the requirements of GS 55B-15(a)(1).