Professional Corporations

Question 1

What professions trigger professional corporation requirements?

Answer 1

architects, attorneys, CPAs, doctors, engineers, physicians

Question 2

What is required of corporations performing professional services?

Answer 2

• Only licensed professionals may be officers, directors, or shareholders.
• Only professional services, and related ancillary services, may be performed.
• The business must have “professional service”, “professional corporation”, “PC” or “PS” in the name. (or PLLC or PLLP)

Question 3

What must PC’s do to ensure the members are only licensed professionals?

Answer 3

The bylaws must contain buyout provisions if one of the members becomes disqualified to practice in the state or dies. Appraisal rights apply.

Question 4

How is tort liability determined with PCs?

Answer 4

Members are individually liable for their own negligence and that of subordinates under their direct supervision. The members may have a right of indemnification form the PC.

Question 5

How is contract liability handled with PCs?

Answer 5

Shareholders will not usually be liable on contracts of a bankrupt PC. (E.g., a corporate lease.)