How changes to Ontario Architects Act helps companies expand
Recent changes in ownership restrictions on Ontario architecture firms are making it easier for companies to form partnerships and grow their businesses, according to speakers at a recent education event.
Before the provincial Architects Act was amended, at least 51 per cent of shares of architectural firms were required to be held by architects or professional engineers, said Elaine Pantel, principal for assurance and business advisory at Shimmerman Penn , an accounting, audit and consulting firm. The other 49 per cent of shares had to be held by employees of that firm.
But now, she said, there are fewer restrictions on who can hold the other 49 per cent of shares.
Pantel made her remarks to an audience of about 50 professionals in architecture, engineering and design at the Verity in downtown Toronto. The event, dubbed “Building your firm through strategic alliances,” was organized by Shimmerman Penn.
Pantel said with the new Architects Act, a third-party investor can participate in the ownership of an architecture firm, allowing the company to raise capital to expand, hire more employees, invest in computer resources or add space.
The event also included a panel comprised of senior officials from three Toronto architecture firms. They were asked what opportunities are available from the Architects Act changes.
“The most exciting part for us was the ability to start forming strategic partnerships with people who may help us with business development, because that’s an area which is challenging for many architecture firms,” said Susan Ruptash, managing principal at Quadrangle Architects.
“I think having the freedom to choose who your shareholders are opens that opportunity to think strategically about your business, not just about the architectural and design services you provide.”
Lind Nyman, director at Parkin Architects Ltd., said easing restrictions on who can be a shareholder helps architectural firms reward employees who are not architects by allowing them to share in profits.
Pantel said she knows of one firm that wanted an employee as a partner but, under the previous law, was only able to give the person a “beefed-up bonus plan.”
Now that up to 49 per cent of voting shares can be held by anyone, she said, shareholders could include part-time employees, family members, retired employees and outside investors.
Pantel said the amended law allows more flexibility on holding companies. Previously, there could only be one holding company, but now each shareholder can decided on their own if they want to have a holding company.
“Holding companies are a very effective tax planning tool” to protect assets and invest surpluses, she said.