Key Features of Professional Corporations
Ensuring professional liability is not limited by incorporation:
In general, the corporate form insulates shareholders in their personal capacity from corporate liability. The professional corporation provisions ensure that personal professional liability of those professionals who choose to operate their practices through a professional corporation will not be limited.
Role of professional governing bodies:
The governing bodies of regulated professions will be responsible for the certification or licensing of professional corporations that fall under their jurisdiction. In addition, the governing bodies will be able to “look through” professional corporations and hold the professional shareholders accountable for their actions.
Naming a professional corporation:
The name of the professional corporation must include the words “Professional Corporation” or “Société Professionnelle” and cannot be a number name.
Ownership restrictions for professional corporations:
The professional incorporation legislation allows one or more members of the same profession to be shareholders in a professional corporation. All officers and directors of the professional corporation are required to be shareholders of the corporation.
Business activities which can be undertaken:
The professional corporation may not carry on a business other than the practice of the profession; however, this shall not be construed to prevent the corporation from carrying on activities that are related to, or ancillary to, the practice of the profession, including the temporary investment of surplus funds earned by the corporation.
Professions Affected by Professional Corporation Provisions
Members of the following professions would be eligible to operate a professional corporation:
- Chartered accountants under the Chartered Accountants Act; certified general accountants under the Certified General Accountants Association of Ontario Act; and lawyers under the Law Society Act (responsibility of the Ministry of the Attorney General).
- Audiologists, chiropodists including podiatrists, chiropractors, dental hygienists, dental surgeons, dental technologists, denturists, dieticians, massage therapists, medical laboratory technologists, medical radiation technologists, midwives, nurses, occupational therapists, opticians, optometrists, pharmacists, physicians and surgeons, physiotherapists, psychologists, speech language pathologists, and respiratory therapists under the Regulated Health Professions Act (responsibility of the Ministry of Health and Long-Term Care).
- Social workers and social service workers under the Social Work and Social Service Work Act (responsibility of the Ministry of Community and Social Services).
- Veterinarians under the Veterinarians Act (responsibility of the Ministry of Agriculture, Food and Rural Affairs).
Prior to the enactment of this legislation, professionals were prohibited from incorporating their practices except as specifically permitted by the statute regulating the particular profession.
The status of corporations that were in compliance with the law before the coming in force of the professional corporation amendments would, therefore, be unchanged.
Establishing a Professional Corporation
Regulated professionals who wish to incorporate their practices should consult the Companies Branch of the Ministry of Consumer and Business Services for Ontario incorporation requirements, and their governing body for conditions of incorporation specific to their profession.
FEB