Frequently Asked Questions
Who needs a Pre-69 corporate charter?
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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.”
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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.”
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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.
Why would an out-of-state engineering firm need a Pre-1969 corporation in North Carolina?
North Carolina's Professional Corporation Act contains ownership requirements that can create challenges for some out-of-state engineering firms, publicly traded companies, private equity-backed firms, and other companies with ownership structures that do not conform to the Act's requirements. Certain corporations incorporated before June 5, 1969 may qualify for the exemption provided by N.C.G.S. § 55B-15(a)(1). Acquiring a qualifying Pre-1969 corporation can therefore provide a pathway for an engineering firm to establish operations in North Carolina. Buyers should consult their legal counsel and the North Carolina Board of Examiners for Engineers and Surveyors regarding their specific circumstances.
Can a publicly traded or private equity-owned engineering company operate in North Carolina?
Yes, but North Carolina's professional corporation ownership requirements can present challenges for publicly traded and private equity-owned engineering companies. A corporation that qualifies for the Pre-1969 exemption under N.C.G.S. § 55B-15(a)(1) may provide an alternative corporate structure for entering the North Carolina engineering market. We specialize in identifying, acquiring, reinstating, and selling corporations that may qualify for this exemption.
Can a Canadian or international engineering company use a Pre-1969 corporation to enter North Carolina?
A Canadian or other international engineering company seeking to practice engineering in North Carolina may encounter the same professional ownership requirements that apply to other firms. A qualifying Pre-1969 North Carolina corporation may provide a pathway for companies whose ownership structure would otherwise make compliance with the Professional Corporation Act difficult. Each company's circumstances are different, and buyers should confirm their proposed structure with legal counsel and the North Carolina Board of Examiners for Engineers and Surveyors.
What kind of companies have you helped?
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Publicly traded companies acquiring a NC engineering firm
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Private equity owned companies acquiring a NC engineering firm
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Large national or regional engineering companies opening offices in NC or acquiring a NC engineering firm.
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Contractors that wanted to enter the engineering business
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Non-licensed individuals that wanted to start an engineering business
What laws should I know about?
What rules should I know about?
What is the N.C.G.S. § 55B-15(a)(1) Pre-1969 exemption?
N.C.G.S. § 55B-15(a)(1) provides an exemption from certain provisions of North Carolina's Professional Corporation Act for qualifying corporations that were incorporated before June 5, 1969. This exemption is the basis for what we refer to as a “Pre-1969 Engineering Corporation.” We research the corporate history and original Articles of Incorporation of potential corporations to determine whether they appear to meet the requirements of the exemption before acquiring and reinstating them.
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 spent 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.
Can my company acquire a Pre-1969 engineering corporation and merge it into our existing company?
Depending on the buyer's corporate structure and proposed transaction, a qualifying Pre-1969 corporation may be acquired and subsequently used in a merger or other corporate reorganization. The structure of the transaction is important because the buyer will want to preserve the corporation's eligibility for the Pre-1969 exemption. We provide the corporate history and records available to us, but buyers should work with their legal counsel to determine the appropriate acquisition and post-closing structure.
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 statute of limitations. We check for employer and income tax liens, property taxes, and liens and judgments. 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 an 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 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 ledger, 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.
Are Pre-1969 North Carolina engineering corporations available for sale?
Yes. We periodically have qualifying Pre-1969 North Carolina corporations available for acquisition. These corporations are finite and increasingly difficult to locate because they must have been incorporated before June 5, 1969 and meet the requirements necessary to qualify for the exemption. Availability changes as corporations are acquired and sold. Contact us to discuss current availability and your company's requirements.
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.
What types of companies typically acquire Pre-1969 engineering corporations?
Potential buyers include large national engineering firms, publicly traded engineering and infrastructure companies, private equity-backed engineering firms, Canadian and international engineering companies, and other firms whose ownership structures may not conform to North Carolina's professional corporation ownership requirements. A Pre-1969 corporation can be particularly valuable when North Carolina market entry is part of a larger acquisition, merger, or geographic expansion.