What is a Professional Corporation?

Definition

A “professional corporation” is a corporation organized under M.G.L. Chapter 156A for the purpose of rendering one or more professional services. According to the statute, professional services include:

1. physicians and surgeons;
2. chiropractors;
3. podiatrists;
4. engineers;
5. electrologists;
6. physical therapists;
7. psychologists;
8. certified public accountants;
9. public accountants;
10. dentists;
11. veterinarians;
12. optometrists;
13. attorneys-at-law;
14. acupuncturists; and
15. any other type of service rendered pursuant to a license issued under the laws of the Commonwealth if the regulating board permits or does not prohibit such incorporation.

All of the above listed professions may also incorporate under Chapter 156B except to the extent expressly prohibited or limited by the regulating boards (doctors, lawyers, dentists, CPAs and accountants are so prohibited).

Articles of Organization

The articles of organization for a professional corporation must comply with Section 12 and Section 13 of Chapter 156B and also include:

1. the professional service(s) to be rendered;

2. the names and residence address of all of the original shareholders, directors, and officers;

3. a certificate by the appropriate regulating board or boards that each of the incorporators, the president and any vice presidents, a majority of the directors, and each shareholder is duly licensed to render a professional service permitted by the articles of organization.

The name of every professional corporation shall include the word “professional corporation”, “corporation”, or “incorporated” or the abbreviation “P”, “Corp.”, or “Inc.”

Shares of a professional corporation may be issued only to:

1. licensed professionals;

2. general partnerships of which all partners are licensed professionals; and

3. professional corporations authorized by their charter to engage in the service rendered by the issuing corporation.

Articles of Amendment/Merger/Consolidation
Professional corporations which cease to render professional services or which are permitted to render their services as a business corporation may change their status to a business corporation by merging into or consolidating with a business corporation or by filing articles of amendment to change their name and purpose, if necessary.

Professional corporations may also merge or consolidate with another corporation, domestic or foreign if every shareholder of each corporation is qualified to own shares of the resulting or surviving corporation.

Dissolutions
Professional corporations may dissolve voluntarily in the same manner as business corporations. The Secretary of the Commonwealth may involuntarily dissolve a professional corporations if:

1. if the corporation does not redeem the shares of a shareholder as provided in Section 12 or Section 13 of Chapter 156A;
2. the corporation fails to comply with Chapter 156A; or
3. upon receipt of a certificate from the appropriate regulating board stating that such corporation has failed to comply with the requirements of such boards so as to give cause for its dissolution and stating the facts to support such dissolution. A copy of such certificate must be given to the corporation at least sixty days in advance of the dissolution.

Foreign Professional Corporations
Chapter 774 of the Acts of 1985 requires foreign professional corporations which maintain an office in the Commonwealth or whose shareholders, officers or directors conduct any activity in the Commonwealth so as to require licensing, register to do business by filing a Certificate of Registration with the Corporations Division. Foreign corporations may register to render professional services if the name meets the requirements of Chapter 181; the purpose is one which a domestic corporation may organize for; and all the shareholders, a majority of the directors and all its officers except the treasurer, assistant treasurer, clerk, assistant clerk or secretary and assistant secretary are duly qualified to render professional services in the Commonwealth.

A corporation registers by filing with the Secretary of the Commonwealth:

1. a foreign registration certificate;
2. evidence of legal existence from the jurisdiction of incorporation; and
3. an exhibit to the foreign professional corporation certificate which states:
a. a description of the professional services to be rendered in the Commonwealth;
b. the name and residence address of all shareholders, directors, and officers of the professional corporation and a designation of which of them will render professional services in the Commonwealth;

c. a statement that a majority of the directors and all of the officers (except the treasurer, clerk, secretary, assistant treasurer, assistant clerk and assistant secretary) are natural persons licensed to render a professional service permitted by the articles of organization and that all the shareholders are such persons, general partnerships comprised of such persons, or professional corporations authorized to render such professional services; and

d. a certificate by the appropriate regulating board(s) that all shareholders, directors, officers and employers who will render a professional service in the Commonwealth are duly licensed to do so.

A foreign corporation’s certificate of registration may be revoked by the Secretary of the Commonwealth for failure to comply with the provisions of Chapter 156A applicable to it or upon receipt of a certificate from any regulating board with jurisdiction that such corporation has failed to comply with the requirements of such authority so as to give cause for revocation of registration.

The annual report of a domestic or foreign professional corporation shall list the name and residence of all shareholders and contain a certification that all shareholders or all partners of a shareholder which is a general partnership are duly licensed to render one or more professional services for which the corporation was organized or are professional corporations authorized to render such services, in addition to the information required by M.G.L. Chapter 156B, Section 109 or M.G.L. Chapter 181, Section 4. A duplicate copy of the annual report must also be filed with the regulatory board.